-----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, LsoVdYV3cJ5jDGIf3BxJi1VXq6nNwVuFiahHsXKaJ7m9Z/qFlpa+ew5FGQkFWw9m oEP1enH9BHtoOAzyt65Rpg== 0000950129-98-000702.txt : 19980223 0000950129-98-000702.hdr.sgml : 19980223 ACCESSION NUMBER: 0000950129-98-000702 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 32 FILED AS OF DATE: 19980220 EFFECTIVENESS DATE: 19980220 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: SEC FILE NUMBER: 033-44611 FILM NUMBER: 98546360 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-06463 FILM NUMBER: 98546361 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: 77046 485BPOS 1 AIM INTERNATIONAL FUNDS, INC. - AMENDMENT #14 1 As filed with the Securities and Exchange Commission on February 20, 1998 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. 14 X ---- --- and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 16 X ---- --- (Check appropriate box or boxes.) AIM INTERNATIONAL FUNDS, INC. ------------------------------------------------- (Exact Name of Registrant as Specified in Charter) 11 Greenway Plaza, Suite 100, Houston, TX 77046 ------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (713) 626-1919 Charles T. Bauer 11 Greenway Plaza, Suite 100, Houston, TX 77046 ------------------------------------------------- (Name and Address of Agent for Service) Copy to: P. Michelle Grace, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP 11 Greenway Plaza, Suite 100 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) X immediately upon filing pursuant to paragraph (b) - ----- on (date) 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. Title of Securities Being Registered: Common Stock - -------------------------------------------------- 3 CROSS REFERENCE SHEET (AS REQUIRED BY RULE 495) N-1A ITEM NO. - ------------- I. AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND 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; Organization of the Company Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management; General Information Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . [included in annual report] Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . Summary; How to Purchase Shares 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 Purchase Shares; How to Redeem Shares Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable II. AIM INTERNATIONAL EQUITY FUND 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 and Other Investment Techniques; Risk Factors; Investment Restrictions; Organization of the Company 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; How to Purchase Share 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 Purchase Shares; How to Redeem Shares Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
4 CROSS REFERENCE SHEET (AS REQUIRED BY RULE 495) III. AIM ASIAN GROWTH FUND AIM EUROPEAN DEVELOPMENT FUND AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND AIM INTERNATIONAL EQUITY FUND 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; Miscellaneous Information 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
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. 5 [AIM LOGO THE AIM FAMILY OF FUNDS--Registered Trademark-- APPEARS HERE] AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND (SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.) PROSPECTUS FEBRUARY 20, 1998 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. 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 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 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 February 20, 1998, has been filed with the United States Securities and Exchange Commission (the "SEC") and is incorporated herein by reference. The Statement of Additional Information is available without charge upon written request to the Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling (800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the Statement of Additional Information, material incorporated by reference, and other information regarding the Funds. Additional information about the Funds may also be obtained on the Web at http://www.aimfunds.com. THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 6 TABLE OF CONTENTS
PAGE PAGE ---- ---- SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF THE FUNDS................................ 4 FUNDS--Registered Trademark--.......... A-1 Table of Fees and Expenses............. 4 Introduction to The AIM Family of Financial Highlights................... 6 Funds............................... A-1 Performance............................ 15 How to Purchase Shares................. A-1 Investment Objectives and Policies..... 15 Terms and Conditions of Purchase of the Hedging Strategies..................... 18 AIM Other Investment Techniques............ 19 Funds............................... A-2 Risk Factors........................... 21 Special Plans.......................... A-9 Investment Restrictions................ 23 Exchange Privilege..................... A-11 Portfolio Turnover..................... 23 How to Redeem Shares................... A-13 Management............................. 23 Determination of Net Asset Value....... A-17 Organization of the Company............ 27 Dividends, Distributions and Tax Matters............................. A-18 General Information.................... A-20 APPENDIX A............................... A-21 APPENDIX B............................... A-23 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 six separate series 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 the Funds' investment objectives and policies, see "Investment Objectives and Policies." The Company also offers other classes of shares in three other investment portfolios, AIM ASIAN GROWTH FUND ("ASIAN FUND"), AIM EUROPEAN DEVELOPMENT FUND ("EUROPEAN FUND") and AIM INTERNATIONAL EQUITY FUND ("EQUITY FUND") (collectively, with AGGRESSIVE GROWTH FUND, GROWTH FUND and INCOME FUND, the "Funds") each of which pursues unique investment objectives. All such other Funds offer multiple classes of shares to different types of investors. The shares of the other Funds of the Company have different sales charges and expenses, which may affect performance. To obtain information about ASIAN FUND, EUROPEAN FUND or EQUITY FUND, call (800) 347-4246. See "General Information." 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 subsidiaries, manages or advises over 50 investment company portfolios encompassing a broad range of investment objectives. 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 (the "Administrative Services Agreement"), AIM is reimbursed by each Fund for its costs of performing, or arranging for the performance of, certain accounting and other administrative services for each Fund. Under a transfer agency and service agreement (the "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, Class B or Class C 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. 2 7 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. Class C Shares -- Shares are offered at net asset value, without an initial sales charge, and are subject to a contingent deferred sales charge of 1% on certain redemptions made within one year of the date such shares were purchased. 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 anticipated 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 or Class C shares 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. ("AIM Distributors") will reject any order for purchase of more than $250,000 for Class B shares. PURCHASING SHARES. Initial investments in any 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., 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, Class B and Class C 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." Holders of Class C shares may redeem all or a portion of their shares at net asset value on any business day, less a 1% contingent deferred sales charge for redemptions made within one year from the date such shares were purchased. See "How to Redeem Shares -- Multiple Distribution System." DISTRIBUTIONS. AGGRESSIVE GROWTH FUND and 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. INCOME FUND declares dividends from net investment income on a daily basis and pays such dividends monthly. 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 of the Funds may be reinvested at net asset value without payment of a sales charge in the Funds' shares or may be invested in shares of the other funds in The AIM Family of Funds. See "Dividends, Distributions and Tax Matters" and "Special Plans." THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE MARKS OF A I M MANAGEMENT GROUP INC. 3 8 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 for Class A and Class B shares 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, 1997. The fees and expenses for Class C shares set forth in the table are based on the estimated average net assets of Class C shares of the Funds for the period August 4, 1997 (date sales commenced) to October 31, 1997. 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 INCOME GROWTH FUND GROWTH FUND FUND -------------------------------- -------------------------------- -------- CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A -------- -------- -------- -------- -------- -------- -------- Shareholder Transaction Expenses Maximum sales load imposed on purchase of shares (as a % of offering price)............... 4.75% None None 4.75% None None 4.75% Maximum sales load on reinvested dividends and distributions.... None None None None None None None Deferred sales load (as a % of original purchase price or redemption proceeds, whichever is lower)............... None* 5.00% 1.00% None* 5.00% 1.00% None* Redemption fee......... None None None None None None None Exchange fee........... None None None None None None None Annual Fund Operating Expenses (as a % of average net assets) Management fees........ 0.87% 0.87% 0.87% 0.85% 0.85% 0.85% 0.09%** Rule 12b-1 distribution plan payments........ 0.50% 1.00% 1.00% 0.50% 1.00% 1.00% 0.50% Other expenses......... 0.38% 0.43% 0.43% 0.41% 0.44% 0.44% 0.66% ----- ----- ----- ----- ----- ----- ----- Total fund operating expenses...... 1.75% 2.30% 2.30% 1.76% 2.29% 2.29% 1.25%** ===== ===== ===== ===== ===== ===== ===== INCOME FUND --------------------- CLASS B CLASS C -------- -------- Shareholder Transaction Expenses Maximum sales load imposed on purchase of shares (as a % of offering price)............... None 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)............... 5.00% 1.00% Redemption fee......... None None Exchange fee........... None None Annual Fund Operating Expenses (as a % of average net assets) Management fees........ 0.09%** 0.09%** Rule 12b-1 distribution plan payments........ 1.00% 1.00% Other expenses......... 0.67% 0.67% ----- ----- Total fund operating expenses...... 1.76%** 1.76%** ===== =====
- --------------- * 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." ** After fee waivers. If management fees had not been waived for INCOME FUND, management fees would have been 0.70%, and total fund operating expenses would have been 1.86%, 2.37% and 2.37% (annualized) for the Class A shares, Class B shares and Class C 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........................................ $ 64 $ 65 $ 60 3 years....................................... $100 $100 $ 85 5 years....................................... $138 $138 $113 10 years...................................... $244 $245 $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 9 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................................................. $ 73 $ 73 $ 68 3 years................................................ $102 $102 $ 85 5 years................................................ $143 $143 $115 10 years............................................... $250* $249* $194*
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................................................. $ 23 $ 23 $ 18 3 years................................................ $ 72 $ 72 $ 55 5 years................................................ $123 $123 $ 95 10 years............................................... $250* $249* $194*
- --------------- * Reflects the conversion to Class A shares eight years following the end of the calendar month in which a purchase was made; therefore years nine and ten reflect Class A expenses. An investor would pay the following expenses on a $1,000 investment in Class C 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.................................................... $33 $33 $28 3 years................................................... $72 $72 $55
An investor would pay the following expenses on the same $1,000 investment in Class C shares of the Funds, assuming no redemption at the end of each time period:
AGGRESSIVE GROWTH GROWTH INCOME FUND FUND FUND ---------- ------ ------ 1 year.................................................... $23 $23 $18 3 years................................................... $72 $72 $55
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, Class B shares and Class C 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. 5 10 - -------------------------------------------------------------------------------- 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 outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (date operations commenced) through October 31, 1994 and for a Class C share of each of the Funds outstanding during the period August 4, 1997 (date sales commenced) through October 31, 1997. 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
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH ------------------------------------ OCTOBER 31, 1997 1996 1995 1994 ---------- -------- -------- ------------- CLASS A SHARE Net asset value, beginning of period................ $ 15.76 $ 13.09 $ 10.22 $ 10.00 Income from investment operations: Net investment income (loss)...................... (0.15)(a) (0.09)(a) (0.09)(a) -- Net gains (losses) on securities (both realized and unrealized)................................. 1.67 2.81 2.96 0.22 ---------- -------- -------- -------- Total from investment operations.................. 1.52 2.72 2.87 0.22 ---------- -------- -------- -------- Less distributions: Distributions from net realized gains............. -- (0.05) -- -- ---------- -------- -------- -------- Net asset value, end of period...................... $ 17.28 $ 15.76 $ 13.09 $ 10.22 ========== ======== ======== ======== Total return(b)..................................... 9.65% 20.83% 28.08% 2.20% ========== ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted).......... $1,242,505 $919,319 $186,029 $ 18,410 ========== ======== ======== ======== Ratio of expenses to average net assets........... 1.75%(c)(d) 1.83% 2.11% 2.02%(e)(f) ========== ======== ======== ======== Ratio of net investment income (loss) to average net assets...................................... (0.88)%(c) (0.62)% (0.68)% 0.27%(f)(g) ========== ======== ======== ======== Portfolio turnover rate........................... 57% 44% 64% 2% ========== ======== ======== ======== Average brokerage commission rate paid(h)......... $ 0.0131 $ 0.0155 N/A N/A ========== ======== ======== ========
- --------------- (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 $1,175,400,376. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 4.03% (annualized). (f) Annualized. (g) After fee waivers and/or expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (1.74)% (annualized). (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 6 11
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH ------------------------------------ OCTOBER 31, 1997 1996 1995 1994 ---------- -------- -------- ------------- CLASS B SHARE Net asset value, beginning of period................ $ 15.58 $ 13.02 $ 10.21 $10.00 Income from investment operations: Net investment income (loss)...................... (0.24)(a) (0.17)(a) (0.14)(a) -- ---------- -------- -------- ------ Net gains (losses) on securities (both realized and unrealized)................................. 1.66 2.78 2.95 0.21 ---------- -------- -------- ------ Total from investment operations.................. 1.42 2.61 2.81 0.21 ---------- -------- -------- ------ Less distributions: Distributions from net realized gains............. -- (0.05) -- -- ---------- -------- -------- ------ Net asset value, end of period...................... $ 17.00 $ 15.58 $ 13.02 $10.21 ========== ======== ======== ====== Total return(b)..................................... 9.11% 20.09% 27.52% 2.10% ========== ======== ======== ====== Ratios/supplemental data: Net assets, end of period (000s omitted).......... $1,241,999 $807,215 $118,199 $6,201 ========== ======== ======== ====== Ratio of expenses to average net assets........... 2.30%(c)(d) 2.37% 2.62% 2.54%(e)(f) ========== ======== ======== ====== Ratio of net investment income (loss) to average net assets...................................... (1.44)%(c) (1.16)% (1.19)% (0.25)%(f)(g) ========== ======== ======== ====== Portfolio turnover rate........................... 57% 44% 64% 2% ========== ======== ======== ====== Average brokerage commission rate paid(h)......... $ 0.0131 $ 0.0155 N/A N/A ========== ======== ======== ======
- --------------- (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 $1,117,630,574. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average assets would have been the same. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 4.43% (annualized). (f) Annualized. (g) After fee waivers and/or expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (2.14)% (annualized). (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 7 12
PERIOD AUGUST 4, THROUGH OCTOBER 31, 1997 ----------- CLASS C SHARE Net asset value, beginning of period........................ $ 18.39 Income from investment operations: Net investment income (loss).............................. (0.04)(a) Net gains (losses) on securities (both realized and unrealized)............................................. (1.35) ------- Total from investment operations.......................... (1.39) ------- Less distributions: Distributions from net realized gains..................... -- ------- Net asset value, end of period.............................. $ 17.00 ======= Total return(b)............................................. (7.56)% ======= Ratios/supplemental data: Net assets, end of period (000s omitted).................. $ 4,676 ======= Ratio of expenses to average net assets................... 2.36%(c)(d) ======= Ratio of net investment income (loss) to average net assets.................................................. (1.50)%(c) ======= Portfolio turnover rate................................... 57% ======= Average brokerage commission rate paid(e)................. $0.0131 =======
- --------------- (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 annualized and based on average net assets of $2,556,355. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average assets would have been the same. (e) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 8 13 AIM GLOBAL GROWTH FUND
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH ---------------------------------- OCTOBER 31, 1997 1996 1995 1994 --------- -------- -------- ------------- CLASS A SHARE Net asset value, beginning of period................ $ 14.20 $ 12.32 $ 10.23 $10.00 Income from investment operations: Net investment income (loss)...................... (0.04) (0.01) (0.02) -- Net gains (losses) on securities (both realized and unrealized)................................ 2.49 2.11 2.11 0.23 -------- -------- -------- ------ Total from investment operations.................. 2.45 2.10 2.09 0.23 -------- -------- -------- ------ Less distributions: Dividends from net investment income.............. -- -- (0.004) -- Distributions from net realized gains............. -- (0.22) -- -- -------- -------- -------- ------ Total distributions............................... -- (0.22) (0.004) -- -------- -------- -------- ------ Net asset value, end of period...................... $ 16.65 $ 14.20 $ 12.32 $10.23 ======== ======== ======== ====== Total return(a)..................................... 17.25% 17.26% 20.48% 2.30% ======== ======== ======== ====== Ratios/supplemental data: Net assets, end of period (000s omitted).......... $178,917 $114,971 $ 23,754 $3,093 ======== ======== ======== ====== Ratio of expenses to average net assets(b)........ 1.76%(c)(d) 1.93% 2.12% 1.95%(e) ======== ======== ======== ====== Ratio of net investment income (loss) to average net assets(f).................................. (0.30)%(c) (0.13)% (0.28)% 0.10%(e) ======== ======== ======== ====== Portfolio turnover rate........................... 96% 82% 79% 6% ======== ======== ======== ====== Average brokerage commission rate(g).............. $ 0.0239 $ 0.0234 N/A N/A ======== ======== ======== ======
- --------------- (a)Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b)After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.94%, 2.98% and 5.67% (annualized) for the periods 1996-1994, respectively. (c)Ratios are based on average net assets of $155,717,515. (d)Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been the same. (e)Annualized. (f)After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for the periods 1996-1994, respectively. (g)The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 9 14
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH -------------------------------------- OCTOBER 31, 1997 1996 1995 1994 ------------- -------- -------- ------------- CLASS B SHARE Net asset value, beginning of period............ $ 14.05 $ 12.26 $ 10.22 $10.00 Income from investment operations: Net investment income (loss).................. (0.11) (0.05) (0.04) -- Net gains (losses) on securities (both realized and unrealized)................... 2.45 2.06 2.08 0.22 -------- -------- -------- ------ Total from investment operations.............. 2.34 2.01 2.04 0.22 -------- -------- -------- ------ Less distributions: Distributions from net realized capital gains......................................... -- (0.22) -- -- -------- -------- -------- ------ Total distributions........................... -- (0.22) -- -- -------- -------- -------- ------ Net asset value, end of period.................. $ 16.39 $ 14.05 $ 12.26 $10.22 ======== ======== ======== ====== Total return(a)................................. 16.65% 16.60% 19.96% 2.20% ======== ======== ======== ====== Ratios/supplemental data: Net assets, end of period (000s omitted)...... $224,225 $121,848 $ 17,157 $1,277 ======== ======== ======== ====== Ratio of expenses to average net assets(b).... 2.29%(c)(d) 2.48% 2.64% 2.51%(e) ======== ======== ======== ====== Ratio of net investment income (loss) to average net assets(f)...................... (0.83)%(c) (0.69)% (0.79)% (0.47)%(e) ======== ======== ======== ====== Portfolio turnover rate....................... 96% 82% 79% 6% ======== ======== ======== ====== Average brokerage commission rate(g).......... $ 0.0239 $ 0.0234 N/A N/A ======== ======== ======== ======
- --------------- (a) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.49%, 3.38% and 6.20% (annualized) for the periods 1996-1994, respectively. (c) Ratios are based on average net assets of $184,750,715. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for the periods 1996-1994, respectively. (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 10 15
PERIOD AUGUST 4, THROUGH OCTOBER 31, 1997 ---------------- CLASS C SHARE Net asset value, beginning of period........................ $ 17.39 Income from investment operations: Net investment income (loss).............................. (0.03) Net gains (losses) on securities (both realized and unrealized)............................................ (0.97) ------- Total from investment operations.......................... (1.00) ------- Net asset value, end of period.............................. $ 16.39 ======= Total return(a)............................................. (5.75)% ======= Ratios/supplement data: Net assets, end of period (000s omitted).................. $ 1,100 ======= Ratio of expenses to average net assets(b)................ 2.29%(c) ======= Ratio of net investment income (loss) to average net assets(b).............................................. (0.83)% ======= Portfolio turnover rate................................... 96% ======= Average brokerage commission rate(d)...................... $0.0239 =======
- --------------- (a) Does not deduct sales charges and periods for less than one year, total returns are not annualized. (b) Ratios are annualized and based on average net assets of $628,292. (c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been the same. (d) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 11 16 AIM GLOBAL INCOME FUND
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH -------------------------------- OCTOBER 31, 1997 1996 1995 1994 --------- ------- ------- ------------- CLASS A SHARE Net asset value, beginning of period..................... $ 10.85 $ 10.74 $ 10.02 $10.00 Income from investment operations: Net investment income.................................. 0.72 0.79(a) 0.79 0.08 Net gains (losses) on securities (both realized and unrealized)......................................... 0.21 0.25 0.75 0.01 ------- ------- ------- ------ Total from investment operations....................... 0.93 1.04 1.54 0.09 ------- ------- ------- ------ Less distributions: Dividends from investment income....................... (0.72) (0.81) (0.82) (0.07) Distributions from net realized capital gains.......... (0.13) (0.12) -- -- ------- ------- ------- ------ Total distributions.................................... (0.85) (0.93) (0.82) (0.07) ------- ------- ------- ------ Net asset value, end of period........................... $ 10.93 $ 10.85 $ 10.74 $10.02 ======= ======= ======= ====== Total return(b).......................................... 9.05% 10.22% 16.07% 0.93% ======= ======= ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted)...................................... $30,924 $21,926 $10,004 $2,661 ======= ======= ======= ====== Ratio of expenses to average net assets(g)............. 1.25%(d)(e) 1.25% 1.25% 1.25%(f) ======= ======= ======= ====== Ratio of net investment income to average net assets(d)........................................... 6.54%(d) 7.27% 7.38% 6.01%(f) ======= ======= ======= ====== Portfolio turnover rate................................ 61% 83% 128% 6% ======= ======= ======= ======
- --------------- (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) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.86%, 2.02%, 3.03% and 5.61% (annualized) for the periods 1997-1994, respectively. (d) Ratios are based on average net assets of $27,582,444. (e) Ratios include expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been 1.24%. (f) Annualized. (g) After fee waivers and/or expenses reimbursements. The ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements were 5.93%, 6.51%, 5.59% and 1.65% (annualized) for the periods 1997-1994, respectively. 12 17
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH -------------------------------------- OCTOBER 31, 1997 1996 1995 1994 ------------- -------- -------- ------------- CLASS B SHARE Net asset value, beginning of period............ $ 10.84 $ 10.73 $ 10.01 $10.00 Income from investment operations: Net investment income......................... 0.67 0.74(a) 0.74 0.07 Net gains (losses) on securities (both realized and unrealized)................... 0.21 0.24 0.75 0.01 -------- -------- -------- ------ Total from investment operations.............. 0.88 0.98 1.49 0.08 -------- -------- -------- ------ Less distributions: Dividends from investment income.............. (0.67) (0.75) (0.77) (0.07) -------- -------- -------- ------ Distributions from net realized gains......... (0.13) (0.12) -- -- -------- -------- -------- ------ Total distributions........................... (0.80) (0.87) (0.77) (0.07) -------- -------- -------- ------ Net asset value, end of period.................. $ 10.92 $ 10.84 $ 10.73 $10.01 ======== ======== ======== ====== Total return(b)................................. 8.48% 9.66% 15.56% 0.79% ======== ======== ======== ====== Ratios/supplemental data: Net assets, end of period (000s omitted)...... $ 25,121 $ 16,787 $ 4,207 $ 362 ======== ======== ======== ====== Ratio of expenses to average net assets(c).... 1.76%(d)(e) 1.75% 1.74% 1.73%(f) ======== ======== ======== ====== Ratio of net investment income to average net assets(g)...................... 6.03%(d) 6.77% 6.88% 3.59%(f) ======== ======== ======== ====== Portfolio turnover rate....................... 61% 83% 128% 6% ======== ======== ======== ======
- --------------- (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) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.37%, 2.53%, 3.57% and 22.09% (annualized) for the periods 1997-1994, respectively. (d) Ratios are based on average net assets of $21,915,481. (e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have remained the same. (f) Annualized. (g) After fee waivers and/or expense reimbursements. The ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were 5.42%, 6.00% and 5.05% and (16.77)% (annualized) for the periods 1997-1994, respectively. 13 18
PERIOD AUGUST 4, THROUGH OCTOBER 31, 1997 ----------- CLASS C SHARE Net asset value, beginning of period........................ $ 10.76 Income from investment operations: Net investment income..................................... 0.15(a) Net gains (losses) on securities (both realized and unrealized)............................................ 0.17 ------- Total from investment operations.......................... 0.32 ------- Less distributions: Dividends from net investment income...................... (0.13) Distributions from net realized gains..................... (0.03) Total distributions....................................... (0.16) Net asset value, end of period.............................. $ 10.92 ======= Total return(b)............................................. 2.99% ======= Ratios/supplemental data: Net assets, end of period (000s omitted).................. $ 242 ======= Ratio of expenses to average net assets(c)................ 1.76%(d)(e) ======= Ratio of net investment income to average net assets(f).............................................. 6.03%(c)(d) ======= Portfolio turnover rate................................... 61% =======
- --------------- (a) Calculated using average shares outstanding. (b) Does not deduct sales charges and periods for less than one year, total returns are not annualized. (c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.37% (annualized). (d) Ratios are annualized and based on average net assets of $98,262. (e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have remained the same. (f) After fee waivers and/or expense reimbursements. Ratio of net investment income to average net assets prior to fee waivers and/or expense reimbursements was 5.42% (annualized). 14 19 - -------------------------------------------------------------------------------- PERFORMANCE The performance of each Fund may be quoted in advertising in terms of total return, and the performance of 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. 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. Further information regarding the Funds' performance is contained in the Funds' annual reports to shareholders, which are available upon request and without charge. Standardized total return for Class A shares of a Fund reflects the deduction of the maximum initial sales charge at the time of purchase. Standardized total return for Class B shares of a Fund reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period. Standardized total return for Class C shares of a Fund reflects the deduction of a 1% contingent deferred sales charge, if applicable, 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 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 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 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 AGGRESSIVE GROWTH FUND as equivalent to a complete investment program. 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 15 20 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 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 AGGRESSIVE GROWTH FUND and 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 AGGRESSIVE GROWTH FUND and 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 AGGRESSIVE GROWTH FUND and 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, AGGRESSIVE GROWTH FUND and 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 are listed on a recognized securities exchange or traded in an over-the-counter market. Each of these Funds may satisfy the foregoing requirement in part by investing 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. Each of AGGRESSIVE GROWTH FUND and GROWTH FUND may invest up to 20% of its total assets in securities convertible into or exchangeable for equity securities of foreign and domestic issuers which (except in the case of ADRs, EDRs and other securities representing underlying securities of foreign issuers) are listed on a recognized securities exchange or traded in an over-the-counter market. 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, AGGRESSIVE GROWTH FUND and 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." AGGRESSIVE GROWTH FUND and 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. AGGRESSIVE GROWTH FUND and 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. 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. 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 16 21 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. 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. 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. INCOME FUND will generally invest in the securities of issuers located in at least four countries, including the United States. 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. 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 INCOME FUND will invest at least 65% of its total assets in non-convertible debt securities of foreign and domestic issuers, it may invest up to 10% of its total assets in common stocks, preferred stocks and similar equity securities of foreign and domestic issuers. INCOME FUND may also invest up to 10% of its total assets in convertible debt securities of foreign and domestic issuers. 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 INCOME FUND may invest, see Appendix A to this Prospectus.) During the fiscal year ended October 31, 1997, the percentage of 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......................................................... 31.94% Aa.......................................................... 12.86% A........................................................... 14.12% Baa......................................................... 10.91% Ba.......................................................... 6.75% B........................................................... 18.28% Caa......................................................... 0.54% Ca.......................................................... 0.00% C........................................................... 0.00% D........................................................... 0.00% Unrated..................................................... 4.60% ------- 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. 17 22 The value of the debt securities in which 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 INCOME FUND. 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 AGGRESSIVE GROWTH FUND, GROWTH FUND and 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 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 liquid assets 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 "collar." 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 hedge the value of its portfolio against changes in market conditions or in exchange rates between currencies (including the U.S. dollar). 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 18 23 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. None of the Funds will enter into a position hedging commitment if, as a result thereof, (1) AGGRESSIVE GROWTH FUND or GROWTH FUND would have more than 10% of the value of their respective total assets committed to such contracts, or (2) 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. 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 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; 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. CASH MANAGEMENT AND TEMPORARY DEFENSIVE MEASURES. AIM may invest a portion of the assets of the Funds in (i) cash or short-term Money Market Obligations, (ii) U.S. government obligations or investment grade (high quality) corporate bonds or other debt securities, and (iii) taxable municipal securities, when such positions are deemed advisable in light of economic or market conditions or for daily cash management purposes. In addition, AIM may invest, for temporary defensive purposes, all or substantially all of the assets of the Funds in the securities described above. 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. Examples of such obligations include U.S. Treasury obligations and repurchase agreements secured by such obligations, bankers' acceptances, certificates of deposit, repurchase agreements, time deposits and commercial paper, and U.S. Government agencies' securities. Money Market Obligations such as 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. To the extent that any of the Funds is invested to a significant degree in cash or cash equivalent Money Market Obligations, U.S. government obligations or investment grade (high quality) corporate bonds or other debt securities, or taxable municipal securities, its ability to achieve its investment objective or objectives may be adversely affected. Under normal circumstances, neither AGGRESSIVE GROWTH FUND nor GROWTH FUND will invest more than 35% of the value of its total assets in high-grade short-term securities, 19 24 including repurchase agreements. Under normal circumstances, INCOME FUND will maintain at least 20% of its total assets in securities of U.S. issuers. U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. 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 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 invest in reverse repurchase agreements, which involve the sale of securities held by the Fund, with an agreement that the Fund will repurchase the securities at an agreed upon price and date. Each Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. At the time it enters into a reverse repurchase agreement, the Fund will segregate liquid assets having a dollar value equal to the repurchase price. Reverse repurchase agreements are considered borrowings by the Fund under the 1940 Act. Reverse repurchase agreements involve the risk that the market value of securities retained by a Fund in lieu of liquidation may decline below the repurchase price of the securities sold by a Fund which it is obligated to repurchase. This risk, if encountered, could cause a reduction on the net asset value of a Fund's shares. AGGRESSIVE GROWTH FUND and GROWTH FUND currently intend to enter into reverse repurchase agreements only for temporary or emergency purposes and not as a means of increasing income. 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. SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. Each Fund may purchase securities on a "when-issued" basis, that is, delivery of and payment of 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). Each Fund also may purchase or sell securities on a delayed delivery basis. The payment obligation and the interest rate that will be received on the delayed delivery securities are fixed at the time the buyer enters into the commitment. Each Fund will only make commitments to purchase when-issued or delayed delivery securities with the intention of actually acquiring such securities, but each Fund may sell these securities before the settlement date if it is 20 25 deemed advisable. If a Fund purchases a when-issued security or enters into a delayed delivery agreement, the Fund's custodian bank will segregate liquid assets in an amount at least equal to the when-issued commitment or delayed delivery agreement commitment. DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage prepayment risks, 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 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 AGGRESSIVE GROWTH FUND nor GROWTH FUND will purchase additional securities when any borrowings from banks exceed 5% of each Fund's respective total assets. Reverse repurchase agreement transactions and dollar roll transactions are considered borrowings under the 1940 Act. Any investment gains made by 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 may invest up to 15% of its net assets in securities that are illiquid. Illiquid securities include securities that have no readily available market quotations and cannot be disposed of promptly (within seven days) in the normal course of business at a price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933. Unregistered securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities. Limitations on the resale of unregistered securities may have an adverse effect on their marketability, which may prevent the Fund from disposing of them promptly at reasonable prices. The Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations. The Company's Board of Directors is responsible for developing and establishing guidelines and procedures for determining the liquidity of Rule 144A securities on behalf of the Funds and monitoring AIM's implementation of the guidelines and procedures. INVESTMENT IN OTHER INVESTMENT COMPANIES. Each of the Funds may invest in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. - -------------------------------------------------------------------------------- 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. 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. 21 26 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 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). 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 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 INCOME FUND can meet redemption requests. The achievement of 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. 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). 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 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 22 27 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, except that the Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 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. 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 AGGRESSIVE GROWTH FUND and 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 each 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 AGGRESSIVE GROWTH FUND or GROWTH FUND, such Fund will not make any additional purchases of securities for investment purposes. Neither AGGRESSIVE GROWTH FUND nor 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 and except that the Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 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. 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. For additional information regarding income taxes and brokerage practices, see the Fund's Statement of Additional Information. - -------------------------------------------------------------------------------- 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 agreement with State Street Bank and Trust Company as custodian, 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. Information concerning the Board of Directors may be found in the Statement of Additional Information. 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. AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its subsidiaries, engages in the business of investment management on an international basis. For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance Project, see "General Information -- Year 2000 Compliance Project." 23 28 INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the investment advisor to each Fund pursuant to a Master Investment Advisory Agreement, dated as of February 28, 1997. A I M was organized in 1976 and, together with its subsidiaries, manages or advises over 50 investment company portfolios encompassing a broad range of investment objectives. 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. ADMINISTRATOR. AIM and the Company have entered into an Administrative Services Agreement dated as of February 28, 1997, pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Funds. 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. 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 approximately 135 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, Clas G. Olsson, Paul A. Rogge, Barrett K. Sides and Kenneth A. Zschappel are primarily responsible for the day-to-day management of 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. He has been associated with AIM and/or its subsidiaries since 1989 and began working as an investment professional in 1987. Mr. Kippes is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1994. He has been associated with AIM and/or its subsidiaries since he began working as an investment professional in 1989. Mr. Rogge is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1994. He has been associated with AIM and/or its subsidiaries since he began working as an investment professional in 1991. Mr. Sides is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. He has been associated with AIM and/or its subsidiaries since he began working as an investment professional in 1990. Mr. Olsson is an Investment Officer of AIM Capital and has been responsible for the Fund since 1997. He has been associated with AIM and/or its subsidiaries since 1994 and began working as an investment professional in 1994. Prior to 1994, Mr. Olsson was a broker assistant with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Mr. Zschappel is Assistant Vice President of AIM Capital and has been responsible for the Fund since January 1998. He has been associated with AIM and/or its subsidiaries since he began working as an investment professional in 1990. Monika H. Degan, A. Dale Griffin, III, Clas G. Olsson, Paul A. Rogge, Jonathan C. Schoolar and Barrett K. Sides are primarily responsible for the day-to-day management of GROWTH FUND. Background information for Mr. Griffin, Mr. Olsson, Mr. Rogge and Mr. Sides 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. Olsson has been responsible for the Fund since 1997. Mr. Sides has been responsible for the Fund since 1995. Ms. Degan is an Investment Officer of AIM Capital and has been responsible for the Fund since 1997. She has been associated with AIM and/or its subsidiaries since 1995 and began working as an investment professional in 1990. Prior to 1995, Ms. Degan was a Senior Financial Analyst for Shell Oil Co. Pension Trust. Mr. Schoolar 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. He has been associated with AIM and/or its subsidiaries since 1986 and began working as an investment professional in 1984. Robert G. Alley, John L. Pessarra and Carolyn L. Gibbs are primarily responsible for the day-to-day management of 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. He has been associated with AIM and/or its subsidiaries since 1992 and began working as an investment professional in 1973. Mr. Pessarra is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1994. He has been associated with AIM and/or its subsidiaries since 1990 and began working as an investment professional in 1985. Ms. Gibbs is Vice President of AIM Capital and has been responsible for the Fund since 1995. She has been associated with AIM and/or its subsidiaries since 1992 and began working as an investment professional in 1983. 24 29 FEES AND EXPENSES. 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%
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, 1997, each Fund paid the following compensation to AIM for its advisory services, and the total expenses of each class of such Fund were, stated as a percentage of that class' average daily net assets, as follows:
CLASS A CLASS B CLASS C COMPENSATION EXPENSE EXPENSE EXPENSE* TO AIM RATIO RATIO RATIO ------------ ------- ------- -------- Aggressive Growth Fund....................... 0.87% 1.75% 2.30% 2.30% Growth Fund.................................. 0.85% 1.76% 2.29% 2.29% Income Fund.................................. 0.09% 1.25% 1.76% 1.76%
- --------------- * For the period August 4, 1997 (date sales commenced) to October 31, 1997. For the fiscal year ended October 31, 1997, AIM waived advisory fees for INCOME FUND which represented 0.61% of such Fund's average daily net assets. For the year ended October 31, 1997, 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...................................... 0.00% Growth Fund................................................. 0.03% Income Fund................................................. 0.15%
In addition, the Company and A I M Fund Services, Inc., 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 INCOME FUND until such time as in AIM's judgment, the Fund has 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 AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of Class A, Class B and Class C shares of the Funds. The address of A I M Distributors, Inc. 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 25 30 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. DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master Distribution Plan applicable to Class A and Class C shares of each Fund (the "Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of financing any activity that is intended to result in the sale of Class A and Class C shares of each Fund. Under the Class A and C Plan, the Company may compensate AIM Distributors an aggregate amount of 0.50% of the average daily net assets of Class A shares of each Fund on an annualized basis and an aggregate amount of 1.00% of the average daily net assets of Class C shares of each Fund on an annualized basis. The Class A and C Plan is designed to compensate AIM Distributors, on a quarterly basis, for certain promotional and other sales-related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of a Fund. Payments can also be directed by AIM Distributors to selected institutions who have entered into service agreements with respect to Class A and Class C shares of each Fund and who provide continuing personal services to their customers who own Class A and Class C shares of a Fund. The service fees payable to selected institutions are calculated at the annual rate of 0.25% of the average daily net asset value of those Fund shares that are held in such institution's customers' accounts which were purchased on or after a prescribed date set forth in the Plan. Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of a Fund, in amounts of up to 0.25% of the average net assets of the Fund attributable to the customers of such dealers or financial institutions are characterized as a service fee, and payments to dealers and other financial institutions in excess of such amount and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Company with respect to a Fund. The Class A and C Plan does not obligate a Fund to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Class A and C Plan on behalf of a Fund. Thus, under the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, a Fund will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee. Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. Class B Plan. 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 and C 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. 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. 26 31 - -------------------------------------------------------------------------------- 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 six investment portfolios: the Funds, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, 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 Company's other portfolios are offered to investors pursuant to separate prospectuses. The authorized capital stock of the Company consists of 4,000,000,000 shares of common stock with a par value of $0.001 per share, of which 200,000,000 shares are designated Class A shares, 200,000,000 shares are designated Class B shares and 200,000,000 shares are designated Class C shares of each investment portfolio of the Company, and the balance of which are unclassified. Class A shares, Class B shares and Class C shares of the same Fund represent interests in that Fund's assets and have identical voting, dividend, liquidation and other rights on the same terms and conditions, except that each class of shares bears differing class-specific expenses (such as those associated with the shareholder servicing of their shares) and is subject to differing sales loads (which may affect performance), 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, Class B shares and Class C 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 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. As of February 2, 1998, Merrill Lynch, Pierce, Fenner & Smith Incorporated was the owner of record of 26.14% and 46.94% of the outstanding Class B shares and Class C shares, respectively, of AGGRESSIVE GROWTH FUND. As of February 2, 1998, Merrill Lynch, Pierce, Fenner & Smith Incorporated was the owner of record of 36.29% of the outstanding Class C shares of GROWTH FUND. As long as Merrill Lynch, Pierce, Fenner & Smith Incorporated owns over 25% of such shares, it may be presumed to be in "control" of the Class B shares and Class C shares of AGGRESSIVE GROWTH FUND and the Class C shares of GROWTH FUND, as defined in the 1940 Act. 27 32 THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER ASSISTANCE IS (800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME). INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS--Registered Trademark-- - -------------------------------------------------------------------------------- INTRODUCTION TO THE AIM FAMILY OF FUNDS THE AIM FAMILY OF FUNDS consists of the following mutual funds: AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**) AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**) AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND AIM GLOBAL INCOME FUND
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM REAL ESTATE FUND will not be available until on or about March 3, 1998. (**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve 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, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or subject to a contingent deferred sales charge upon redemption, as described below. 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 Arrangement ("IRA") or Roth IRA is $250. There are no minimum initial investment requirements applicable to money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension ("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA") 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 MCF-02/98 A-1 33 For additional information or assistance, investors should call the Client Services Department of AFS at: (800) 959-4246 Shares of any AIM Funds not named on the cover of this Prospectus are offered pursuant to separate prospectuses. Copies of other prospectuses may be obtained by calling (800) 347-4246. INITIAL AND SUBSEQUENT 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: A I M Fund Services, Inc. RFB: Fund name, Reference Number (16 character limit) OBI: Shareholder Name, Shareholder Account Number (70 character limit)
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. 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. 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. BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic funds transfer, please contact the Client Services Department of AFS for detail. - -------------------------------------------------------------------------------- TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS Shares of the AIM Funds, including Class A shares (the "Class A shares") of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be purchased at their respective net asset value plus a sales charge as indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and Class B shares (the "Class B shares") and Class C shares ("Class C shares") of the Multiple Class Funds are sold at net asset value subject to a contingent deferred sales charge payable upon certain redemptions. These contingent deferred sales charges are described under the caption "How to Redeem Shares -- Multiple Distribution System." Securities dealers and other persons entitled to receive compensation for selling or servicing shares of a Multiple Class Fund may receive different compensation for selling or servicing one particular class of shares over another class in the same Multiple Class Fund. Factors an investor should consider prior to purchasing Class A, Class B or Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described below under "Special Information Relating to Multiple Class Funds." For information on purchasing any of the AIM Funds and to receive a prospectus, please call (800) 347-4246. As described below, the sales charge otherwise applicable to a purchase of shares of a fund may be reduced if certain conditions are met. In order to take advantage of a reduced sales charge, the prospective investor or his dealer must advise AIM Distributors that the conditions for obtaining a reduced sales charge have been met. Net asset value is determined in the manner described under the caption "Determination of Net Asset Value." The following tables show the sales charge and dealer concession at various investment levels for the AIM Funds. MCF-02/98 A-2 34 SALES CHARGES AND DEALER CONCESSIONS GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT 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: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
DEALER CONCESSION INVESTOR'S SALES CHARGE ---------- -------------------------- AS A AS A AS A PERCENTAGE PERCENTAGE PERCENTAGE OF THE OF THE PUBLIC OF THE NET PUBLIC AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING SINGLE TRANSACTION PRICE INVESTED PRICE ----------------------- ------------- ---------- ---------- Less than $ 50,000 4.75% 4.99% 4.00% $ 50,000 but less than $ 100,000 4.00 4.17 3.25 $100,000 but less than $ 250,000 3.75 3.90 3.00 $250,000 but less than $ 500,000 2.50 2.56 2.00 $500,000 but less than $1,000,000 2.00 2.04 1.60
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/ or advance a service fee on such transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED, AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES." MCF-02/98 A-3 35 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 the Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM TAX-FREE INTERMEDIATE FUND.
DEALER CONCESSION INVESTOR'S SALES CHARGE ---------- -------------------------- AS A AS A AS A PERCENTAGE PERCENTAGE PERCENTAGE OF THE OF THE PUBLIC OF THE NET PUBLIC AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING SINGLE TRANSACTION PRICE INVESTED PRICE ----------------------- ------------- ---------- ---------- Less than $ 100,000 1.00% 1.01% 0.75% $100,000 but less than $ 250,000 0.75 0.76 0.50 $250,000 but less than $1,000,000 0.50 0.50 0.40
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/or advance a service fee on such transactions. ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933. In addition to amounts paid to dealers as a dealer concession out of the initial sales charge paid by investors, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers who sell a minimum dollar amount of the shares of the AIM Funds during a specified period of time. In some instances, these incentives may be offered only to certain dealers who have sold or may sell significant amounts of shares. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. See "Contingent Deferred Sales Charge Program for Large Purchases." AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.00% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record on April 30, 1995 who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions. MCF-02/98 A-4 36 TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund (other than AIM MONEY MARKET FUND, as described below) received prior to the close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE Close") on any business day of an AIM Fund will be confirmed at the price next determined. Orders received after NYSE Close will be confirmed at the price determined on the next business day of the AIM Fund. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent. Any loss resulting from the dealer's failure to submit an order within the prescribed time frame will be borne by that dealer. Please see "How to Purchase Shares -- Purchases by Wire" for information on obtaining a reference number for wire orders, which will facilitate the handling of such orders and ensure prompt credit to an investor's account. A "business day" of an AIM Fund is any day on which the NYSE is open for business. It is expected that the NYSE will be closed during the next twelve months on Saturdays and Sundays and on the days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE. An investor who uses a check to purchase shares will be credited with the full number of shares purchased at the time of receipt of the purchase order, as previously described. However, in the event of a redemption or exchange of such shares, the investor may be required to wait up to ten business days before the redemption proceeds are sent. This delay is necessary in order to ensure that the check has cleared. If the check does not clear, or if any investment order must be cancelled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors. SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds currently offer two or more classes of shares through separate distribution systems (the "Multiple Distribution System"). Although each class of shares of a particular Multiple Class Fund represents an interest in the same portfolio of investments, each class is subject to a different distribution structure and, as a result, differing expenses. This Multiple Distribution System allows investors to select the class that is best suited to the investor's needs and objectives. In considering the options afforded by the Multiple Distribution System, investors should consider both the applicable initial sales charge or contingent deferred sales charge, as well as the ongoing expenses borne by each class of shares and other relevant factors, such as whether his or her investment goals are long-term or short-term. CLASS A SHARES are sold subject to the initial sales charges described above and are subject to the other fees and expenses described herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of an investor who wishes to establish a dollar cost averaging program, pursuant to which Class A shares an investor owns may be exchanged at net asset value for Class A shares of another Multiple Class Fund or shares of another AIM Fund which is not a Multiple Class Fund, subject to the terms and conditions described under the caption "Exchange Privilege -- Terms and Conditions of Exchanges." CLASS B SHARES are sold without an initial sales charge. Thus, the entire purchase price of Class B shares is immediately invested in Class B shares. Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the average daily net assets of a Multiple Class Fund attributable to Class B shares. See the discussion under the caption "Management -- Distribution Plans." In addition, Class B shares redeemed within six years from the date such shares were purchased are subject to a contingent deferred sales charge ranging from 5% for redemptions made within the first year to 1% for redemptions made within the sixth year. No contingent deferred sales charge will be imposed if Class B shares are redeemed after six years from the date such shares were purchased. Redemptions of Class B shares and associated charges are further described under the caption "How to Redeem Shares -- Multiple Distribution System." Class B shares will automatically convert into Class A shares of the same Multiple Class Fund (together with a pro rata portion of all Class B shares acquired through the reinvestment of dividends and distributions) eight years from the end of the calendar month in which the purchase of Class B shares was made. Following such conversion of their Class B shares, investors will be relieved of the higher Rule 12b-1 Plan payments associated with Class B shares. See "Management -- Distribution Plans." CLASS C SHARES are sold without an initial sales charge. Thus the entire purchase price of Class C shares is immediately invested in Class C shares. Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the average daily net assets of a Multiple Class Fund attributable to Class C shares. See the discussion under the caption "Management -- Distribution Plans." In addition, Class C shares redeemed within one year from the date such shares were purchased are subject to a 1.00% contingent deferred sales charge. No contingent deferred sales charge will be imposed if Class C shares are redeemed after one year from the date such shares were purchased. Redemptions of Class C shares and associated charges are further described under the caption "How to Redeem Shares -- Multiple Distribution System." AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales charge and are not subject to a contingent deferred sales charge; however, they are subject to the other fees and expenses described in the prospectus for AIM MONEY MARKET FUND. TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any business day of the Fund will be confirmed at the price next determined. Net asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND. MCF-02/98 A-5 37 SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the amortized cost method of valuing the securities it holds and rounds its per share net asset value to the nearest whole cent, it is anticipated that the net asset value of the shares of such funds will remain constant at $1.00 per share. However, there is no assurance that each Money Market Fund can maintain a $1.00 net asset value per share. In order to earn dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase is made, purchase payments in the form of federal funds must be received by the Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by payments in any other form, or payments in the form of federal funds received after such time but prior to NYSE Close, will begin to earn dividends on the next business day following the date of purchase. The Money Market Funds generally will not issue share certificates but will record investor holdings in noncertificate form and regularly advise the shareholder of his ownership position. SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon written request by a shareholder to AIM Distributors or the Transfer Agent. Otherwise, such shares will be held on the shareholder's behalf by the applicable AIM Fund(s) and be recorded on the books of such fund(s). See "Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares -- Redemptions by Telephone" for restrictions applicable to shares issued in certificate form. Please note that certificates will not be issued for shares held in prototype retirement plans. MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect for at least one year and the shareholder has not made an additional purchase in that account within the preceding six calendar months and (2) the value of such account drops below $500 for three consecutive months as a result of redemptions or exchanges, the fund has the right to redeem the account, after giving the shareholder 60 days' prior written notice, unless the shareholder makes additional investments within the notice period to bring the account value up to $500. If a fund determines that a shareholder has provided incorrect information in opening an account with a fund or in the course of conducting subsequent transactions with the fund related to such account, the fund may, in its discretion, redeem the account and distribute the proceeds of such redemption to the shareholder. REDUCTIONS IN INITIAL SALES CHARGES Reductions in the initial sales charges shown in the sales charge tables (quantity discounts) apply to purchases of shares of the AIM Funds that are otherwise subject to an initial sales charge, provided that such purchases are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges. The term "purchaser" means: - an individual and his or her spouse and children, including any trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, Roth IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) Plan (unless such 403(b) plan qualifies as the purchaser as defined below); - a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), provided that: a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the funds will not accept contributions submitted with respect to individual participants); b. each transmittal must be accompanied by a single check or wire transfer; and c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal; - a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code) and 457 plans, although more than one beneficiary or participant is involved; - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE IRA accounts should be linked; - 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 vir- MCF-02/98 A-6 38 tue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein. (1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI. To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date. If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he must give written notice to AIM Distributors. If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, a cancellation of the LOI will automatically be effected. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time. (2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also qualify for reduced initial sales charges based upon such purchaser's existing investment in shares of any of the AIM Funds (except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of the proposed purchase. Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds (except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds) owned by such purchaser, calculated at their then current public offering price. If a purchaser so qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money then being invested by such purchaser and not just to the portion that exceeds the breakpoint above which a reduced sales charge applies. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum 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, MCF-02/98 A-7 39 Distributions and Tax Matters"); (b) exchanges of shares of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a fund. Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A shares of the particular AIM Fund(s) whose shares they owned on such date, at net asset value (without payment of a sales charge) for as long as they continuously own Class A shares of such AIM Fund(s) having a market value of at least $500. In addition, discretionary advised clients of any investment advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM CHARTER FUND on November 17, 1986, and have held such Class A shares at all times subsequent to such date, may purchase Class A shares of the applicable AIM Fund(s) at the net asset value of such shares. The following persons may purchase shares of the AIM Funds through AIM Distributors without payment of an initial sales charge: (a) A I M Management Group Inc. ("AIM Management") and its affiliated companies; (b) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, children, parents and parents of spouse) of any such person, of AIM Management or its affiliates or of certain mutual funds which are advised or managed by AIM, or any trust established exclusively for the benefit of such persons; (c) any employee benefit plan established for employees of AIM Management or its affiliates; (d) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, children, parents and parents of spouse) of any such person, or of CIGNA Corporation or of any of its affiliated companies, or of First Data Investor Services Group (formerly The Shareholders Services Group, Inc.); (e) any investment company sponsored by CIGNA Investments, Inc. or any of its affiliated companies for the benefit of its directors' deferred compensation plans; (f) discretionary advised clients of AIM or AIM Capital; (g) registered representatives and employees of dealers who have entered into agreements with AIM Distributors (or financial institutions that have arrangements with such dealers with respect to the sale of shares of the AIM Funds) and any member of the immediate family (including spouse, children, parents and parents of spouse) of any such person, provided that purchases at net asset value are permitted by the policies of such person's employer; (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; and (i) employees of Triformis Inc. In addition, shares of any AIM Fund may be purchased at net asset value, without payment of a sales charge, by pension, profit-sharing or other employee benefit plans created pursuant to a plan qualified under Section 401 of the Code or plans under Section 457 of the Code, or employee benefit plans created pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of the Code. Such plans will qualify for purchases at net asset value provided that (1) the total amount invested in the plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an employer-sponsored plan with at least 100 eligible employees, or (4) all of the plan's transactions are executed through a single financial institution or service organization who has entered into an agreement with AIM Distributors with respect to their use of the AIM Funds in connection with such accounts. Section 403(b) plans sponsored by public educational institutions will not be eligible for net asset value purchases based on the aggregate investment made by the plan or the number of eligible employees. Participants in such plans will be eligible for reduced sales charges based solely on the aggregate value of their individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay investment dealers or other financial service firms for share purchases of the Load Funds (as defined on page A-10 herein) sold at net asset value to an employee benefit plan in accordance with this paragraph as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of the net asset value of any Class A shares of AIM LIMITED MATURITY TREASURY FUND 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. MCF-02/98 A-8 40 FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund named on the cover page, AIM Distributors and its agents will use their best efforts to provide notice of any such actions through correspondence with broker-dealers and existing shareholders, supplements to the AIM Funds' prospectuses, or other appropriate means, and will provide sixty (60) days' notice in the case of termination or material modification to the exchange privilege discussed under the caption "Exchange Privilege." - -------------------------------------------------------------------------------- SPECIAL PLANS Except as noted below, each AIM Fund provides the special plans described below for the convenience of its shareholders. Once established, there is no obligation to continue to invest through a plan, and a shareholder may terminate a plan at any time. Special plan applications and further information, including details of any fees which are charged to a shareholder investing through a plan, may be obtained by written request, directed to AFS at the address provided under "How to Purchase Shares," or by calling the Client Services Department of AFS at (800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN SUCH A PLAN. SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder who owns shares which are not subject to a contingent deferred sales charge, can arrange for monthly, quarterly or annual amounts (but not less than $50) to be drawn against the balance of his account in the designated AIM Fund. Shareholders who own shares subject to a contingent deferred sales charge, can only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal Plan. Payment of this amount can be made on any day of the month the shareholder specifies, except the thirtieth or thirty-first day of each month in which a payment is to be made. A minimum account balance of $5,000 is required to establish a Systematic Withdrawal Plan, but there is no requirement thereafter to maintain any minimum investment. With respect to shares subject to a contingent deferred sales charge (all classes) no contingent deferred sales charge will be imposed on withdrawals made under a Systematic Withdrawal Plan, provided that the amounts withdrawn under such a plan do not exceed on an annual basis 12% of the account value at the time the shareholder elects to participate in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to shares subject to a contingent deferred sales charge that exceed on an annual basis 12% of such account will be subject to a contingent deferred sales charge on the amounts exceeding 12% of the account value at the time the shareholder elects to participate in the Systematic Withdrawal Plan. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption. Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect. 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 regular systematic investments may establish an Automatic Investment Plan. Under this plan withdrawal is made on the shareholder's bank account in the amount specified by the shareholder (minimum $50 per investment, per account) and on a day or date(s) specified by the shareholder. The proceeds are invested in shares of the designated AIM Fund at the applicable offering price determined on the date of the withdrawal. 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; dividends and distributions attributable to Class C shares may be reinvested in Class C shares of the same fund or in Class C shares of another Multiple Class Fund; and dividends and distributions attributable to AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional shares of such fund, in Class A shares of another Multiple Class Fund or in shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends, Distributions and MCF-02/98 A-9 41 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 HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TAX-EXEMPT CASH 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; Roth IRA plans; SARSEP plans; SEP plans; and SIMPLE IRA 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-02/98 A-10 42 - -------------------------------------------------------------------------------- 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, listed below and referred to herein as the "Load Funds," are sold at a public offering price that includes a maximum sales charge of 5.50% or 4.75% of the public offering price of such shares; Class A shares (or shares which normally involve the payment of initial sales charges) of certain of the AIM Funds, listed below and referred to herein as the "Lower Load Funds," are sold at a public offering price that includes a maximum sales charge of 1.00% of the public offering price of such shares; and Class A shares or shares of certain other funds, listed below and referred to herein as the "No Load Funds," are sold at net asset value, without payment of a sales charge. LOAD FUNDS: LOWER LOAD FUNDS: AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND CLASS A FUND -- CLASS A -- CLASS A AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS: VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A AIM CAPITAL DEVELOPMENT AIM MONEY MARKET FUND -- CLASS A FUND -- CLASS A AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND AIM CONSTELLATION FUND -- CLASS A FUND -- CLASS A AIM TAX-EXEMPT BOND FUND AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A FUND -- CLASS A AIM VALUE FUND -- CLASS A AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on the terms described on the chart below, except that (i) 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 AIM Cash Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B shares may be exchanged only for Class B shares; (v) Class C shares may only be exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares. MCF-02/98 A-11 43 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 FUNDS: LOWER LOAD NO LOAD ------------------------------ FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C ----- -------------- ----------------------- ----------------- -------------- -------------- Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable Funds.......... No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable were directly purchased. Net Load shares were Asset Value if No Load shares acquired upon exchange were acquired upon exchange of of shares of any Load shares of any Load Fund or any Fund or any Lower Load Lower Load Fund. Fund; otherwise, Offering Price. Multiple Class Funds: Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS: Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable Funds.......... acquired upon exchange of any Load Fund. Otherwise, difference in sales charge will apply. No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable were directly purchased. Net Load shares were Asset Value if No Load shares acquired upon exchange were acquired upon exchange of of shares of any Load shares of any Load Fund. Fund or any Lower Load Difference in sales charge will Fund; otherwise, Of- apply if No Load shares were fering Price. acquired upon exchange of Lower Load Fund shares. Multiple Class Funds: Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
An exchange is permitted only in the following circumstances: (a) if the funds offer more than one class of shares, the exchange must be between the same class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C shares of another Multiple Class Fund; (b) the dollar amount of the exchange must be at least equal to the minimum investment applicable to the shares of the fund acquired through such exchange; (c) the shares of the fund acquired through exchange must be qualified for sale in the state in which the shareholder resides; (d) the exchange must be made between accounts having identical registrations and addresses; (e) the full amount of the purchase price for the shares being exchanged must have already been received by the fund; (f) the account from which shares have been exchanged must be coded as having a certified taxpayer identification number on file or, in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must have been received by the fund; (g) newly acquired shares (through either an initial or subsequent investment) are held in an account for at least ten business days, and all other shares are held in an account for at least one day, prior to the exchange; and (h) certificates representing shares must be returned before shares can be exchanged. There is no fee for exchanges among the AIM Funds. THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER. THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE. Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are redeemed at their net asset value as determined at NYSE Close on the day that an exchange request in proper form (described below) is received. Exchange requests received MCF-02/98 A-12 44 after NYSE Close will result in the redemption of shares at their net asset value at NYSE Close on the next business day. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends (See "Dividends, Distributions and Tax Matters -- Dividends and Distributions," below), and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange. Shares purchased by check may not be exchanged until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." In the event of unusual market conditions, AIM Distributors reserves the right to reject any exchange request, if, in the judgment of AIM Distributors, the number of requests or the total value of the shares that are the subject of the exchange places a material burden on a fund. For example, the number of exchanges by investment managers making market timing exchanges may be limited. EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a written request to AFS. The request should contain the account registration and account number, the dollar amount or number of shares to be exchanged, and the names of the funds from which and into which the exchange is to be made. The request should comply with all of the requirements for redemption by mail, except those required for redemption of IRAs. See "How to Redeem Shares." EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange by telephone. If a shareholder does not wish to allow telephone exchanges by any person in his account, he should decline that option on the account application. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach AFS by telephone, he may also request exchanges by telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by the Transfer Agent as long as such request is received prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any telephone exchange request that they reasonably believe to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge will not be imposed in connection with exchanges among Class B shares or among Class C shares. For purposes of determining a shareholder's holding period of Class B or Class C shares in the calculation of the applicable contingent deferred sales charge, the period of time during which Class B or Class C shares were held prior to an exchange will be added to the holding period of the applicable Class B or Class C shares acquired in an exchange. - -------------------------------------------------------------------------------- HOW TO REDEEM SHARES Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the obligation of the fund(s) named on the cover page to redeem shares, AIM Distributors also repurchases shares. Although a contingent deferred sales charge may be applicable to certain redemptions, as described below, there is no redemption fee imposed when shares are redeemed or repurchased; however, dealers may charge service fees for handling repurchase transactions. MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under the Multiple Distribution System may be redeemed on any business day of a Multiple Class Fund at the net asset value per share next determined following receipt of the redemption order, as described under the caption "Timing and Pricing of Redemption Orders," less the applicable contingent deferred sales charge shown in the table below. No deferred sales charge will be imposed (i) on redemptions of Class B shares following six years from the date such shares were purchased, (ii) on Class B shares acquired through reinvestments of dividends and distributions attrib- MCF-02/98 A-13 45 utable to Class B shares or (iii) on amounts that represent capital appreciation in the shareholder's account above the purchase price of the Class B shares.
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 and distributions; third, of shares held for more than six years from the date such shares were purchased; and fourth, of shares held less than six years from the date such shares were purchased. The applicable sales charge will be applied against the lesser of the current market value of shares redeemed or their original cost. Class C Shares. Class C shares purchased under the Multiple Distribution System may be redeemed on any business day of a Multiple Class Fund at the net asset value per share next determined following receipt of the redemption order, as described under the caption "Timing and Pricing of Redemption Orders," less a 1% contingent deferred sales charge. No deferred sales charge will be imposed (i) on redemptions of Class C shares following one year from the date such shares were purchased; (ii) on Class C shares acquired through reinvestment of dividends and distributions attributable to Class C shares; (iii) on amounts that represent capital appreciation in the shareholder's account above the purchase price of the Class C shares; (iv) on redemptions of additional purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these funds (shareholders whose broker/dealers maintain a single omnibus account with the Transfer Agent on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995 from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996). Waivers. Contingent deferred sales charges on Class B and Class C shares will be waived on redemptions (1) following the death or post-purchase disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust (provided AIM Distributors is notified of such death or post-purchase disability at the time of the redemption request and is provided with satisfactory evidence of such death or post-purchase disability), (2) in connection with certain distributions from individual retirement accounts, custodial accounts maintained pursuant to Code Section 403(b), deferred compensation plans qualified under Code Section 457 and plans qualified under Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do not exceed on an annual basis 12% of the value of the shareholder's investment in Class B or Class C shares at the time the shareholder elects to participate in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to liquidate a shareholder's account if the aggregate net asset value of shares held in the account is less than the designated minimum account size described in the prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in Class B or Class C shares and (6) of Class C shares where such investor's dealer of record, due to the nature of the investor's account, notifies AIM Distributors prior to the time of investment that the dealer waives the payment otherwise payable to the dealer described in the fifth paragraph under the caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds." Waiver category (1) above applies only to redemptions of Class B or Class C shares held at the time of death or initial determination of post-purchase disability. Waiver category (2) above applies only to redemptions resulting from: (i) required minimum distributions to plan participants or beneficiaries who are age 70- 1/2 or older, and only with respect to that portion of such distributions which does not exceed 12% annually of the participant's or beneficiary's account value in a particular AIM Fund; (ii) in kind transfers of assets where the participant or beneficiary notifies AIM Distributors of such transfer no later than the time such transfer occurs; (iii) tax-free rollovers or transfers of assets to another Retirement Plan invested in Class B or Class C shares of one or more Multiple Class Funds; (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. MCF-02/98 A-14 46 CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for purchases of Class B and Class C shares of a Multiple Class Fund and purchases of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN 18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds participating in this program, see "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the lesser of the value of the shares redeemed (excluding reinvested dividends and capital gain distributions) or the total original cost of such shares. In determining whether a contingent deferred sales charge is payable, and the amount of any such charge, shares not subject to the contingent deferred sales charge are redeemed first (including shares purchased by reinvested dividends and capital gains distributions and amounts representing increases from capital appreciation), and then other shares are redeemed in the order of purchase. No such charge will be imposed upon exchanges unless the shares acquired by exchange are redeemed within 18 months of the date the shares were originally purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired through an exchange of shares which previously were subject to the 1% contingent deferred sales charge will be credited with the period of time such exchanged shares were held, and (ii) shares of any Load Fund which are subject to the 1% contingent deferred sales charge and which were acquired through an exchange of shares of a Lower Load Fund or a No Load Fund which previously were not subject to the 1% contingent deferred sales charge will not be credited with the period of time such exchanged shares were held. The charge will be waived in the following circumstances: (1) redemptions of shares by employee benefit plans ("Plans") qualified under Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the Code and sponsored by nonprofit organizations as defined under Section 501(c)(3) of the Code, where shares are being redeemed in connection with employee terminations or withdrawals, and (a) the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being redeemed were purchased by an employer-sponsored Plan with at least 100 eligible employees; provided, however, that Plans created under Section 403(b) of the Code which are sponsored by public educational institutions shall qualify under (a), (b) or (c) above on the basis of the value of each Plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the Plan or on the number of eligible employees; (2) redemptions of shares following the death or post-purchase disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of shares purchased at net asset value by private foundations or endowment funds where the initial amount invested was at least $1,000,000; (4) redemptions of shares purchased by an investor in amounts of $1,000,000 or more where such investor's dealer of record, due to the nature of the investor's account, notifies AIM Distributors prior to the time of investment that the dealer waives the payments otherwise payable to the dealer as described in the third paragraph under the caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do not exceed on an annual basis 12% of the value of the shareholder's investment in Class A shares at the time the shareholder elects to participate in the Systematic Withdrawal Plan. REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the Transfer Agent. Upon receipt of a redemption request in proper form, payment will be made as soon as practicable, but in any event will normally be made within seven days after receipt. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." Requests for redemption must include: (a) original signatures of each registered owner exactly as the shares are registered; (b) the Fund and the account number of shares to be redeemed; (c) share certificates, either properly endorsed or accompanied by a duly executed stock power, for the shares to be redeemed if such certificates have been issued and the shares are not in the custody of the Transfer Agent; (d) signature guarantees, as described below; and (e) any additional documents that may be required for redemption by corporations, partnerships, trusts or other entities. The burden is on the shareholder to inquire as to whether any additional documentation is required. Any request not in proper form may be rejected and in such case must be renewed in writing. In addition to these requirements, shareholders who have invested in a fund to establish an IRA, should include the following information along with a written request for either partial or full liquidation of fund shares: (a) a statement as to whether or not the shareholder has attained age 59- 1/2; and (b) a statement as to whether or not the shareholder elects to have federal income tax withheld from the proceeds of the liquidation. REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone. If a shareholder does not wish to allow telephone redemptions by any person in his account, he should decline that option on the account application. The telephone redemption feature can be used only if: (a) the redemption proceeds are to be mailed to the address of record or transferred electronically or wired to the pre-authorized bank account; (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 in the appropriate form if they reasonably believe such request to be gen- MCF-02/98 A-15 47 uine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that same business day. If the redemption order is received after 11:30 a.m. and prior to NYSE Close, the redemption will be made at the next determined net asset value and payment will generally be transmitted on the next business day. REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the appropriate authorization form, shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement accounts or qualified plans. Checks may be drawn in any amount of $250 or more. Checks drawn against insufficient shares in the account, against shares held less than ten business days, or in amounts of less than the applicable minimum will be returned to the payee. The payee of the check may cash or deposit it in the same way as an ordinary bank check. When a check is presented to the Transfer Agent for payment, the Transfer Agent will cause a sufficient number of shares of such fund to be redeemed to cover the amount of the check. Shareholders are entitled to dividends on the shares redeemed through the day on which the check is presented to the Transfer Agent for payment. TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds (other than AIM MONEY MARKET FUND) are redeemed at their net asset value next computed after a request for redemption in proper form (including signature guarantees and other required documentation for written redemptions) is received by the Transfer Agent, except that shares that are subject to a contingent deferred sales charge, may be subject to the imposition of deferred sales charges that will be deducted from the redemption proceeds. See "Multiple Distribution System" and "Contingent Deferred Sales Charge Program for Large Purchases." Orders for the redemption of shares received in proper form prior to NYSE Close on any business day of an AIM Fund will be confirmed at the price determined as of the close of that day. Orders received after NYSE Close will be confirmed at the price determined on the next business day of an AIM Fund. Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or NYSE Close on any business day of the Fund will be confirmed at the price next determined. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis. Any resulting loss from the dealer's failure to submit a request for redemption within the prescribed time frame will be borne by that dealer. Telephone redemption requests must be made by NYSE Close on any business day of an AIM Fund and will be confirmed at the price determined as of the close of that day. No AIM Fund will accept requests which specify a particular date for redemption or which specify any special conditions. Payment of the proceeds of redeemed shares is normally made within seven days following the redemption date. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special handling (such as wiring of funds or expedited delivery services) may be made by the Transfer Agent. The right of redemption may not be suspended or the date of payment upon redemption postponed except under unusual circumstances such as when trading on the NYSE is restricted or suspended. Payment of the proceeds of redemptions relating to shares for which checks sent in payment have not yet cleared will be delayed until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. SIGNATURE GUARANTEES. A signature guarantee is designed to protect the investor, the AIM Funds, AIM Distributors, and their agents by verifying the signature of each investor seeking to redeem, transfer, or exchange shares of an AIM Fund. Examples of when signature guarantees are required are: (1) redemptions by mail in excess of $50,000; (2) redemptions by mail if the proceeds are to be paid to someone other than the name(s) in which the account is registered; (3) written redemptions requesting proceeds to be sent 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 or electronic funds transfer 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 MCF-02/98 A-16 48 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 Class A shares of any AIM Fund at the net asset value next computed after receipt by the Transfer Agent of the funds to be reinvested; provided, however, if the redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject to the difference in sales charge between the shares redeemed and the shares the proceeds are reinvested in. The shareholder must ask the Transfer Agent for such privilege at the time of reinvestment. A realized gain on the redemption is taxable, and reinvestment may alter any capital gains payable. If there has been a loss on the redemption and shares of the same fund are repurchased, all of the loss may not be tax deductible, depending on the timing and amount reinvested. Under the Code, if the redemption proceeds of fund shares on which a sales charge was paid are reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales charge within 90 days of the payment of the sales charge, the shareholder's basis in the fund shares redeemed may not include the amount of the sales charge paid, thereby reducing the loss or increasing the gain recognized from the redemption; however, the shareholder's basis in the fund shares purchased will include the sales charge. Each AIM Fund may amend, suspend or cease offering this privilege at any time as to shares redeemed after the date of such amendment, suspension or cessation. This privilege may only be exercised once each year by a shareholder with respect to each AIM Fund. Shareholders who are assessed a contingent deferred sales charge in connection with the redemption of Class A shares and who subsequently reinvest a portion or all of the value of the redeemed shares in Class A shares of any AIM Fund within 90 days after such redemption may do so at net asset value if such privilege is claimed at the time of reinvestment. Such reinvested proceeds will not be subject to either a front-end sales charge at the time of reinvestment or an additional contingent deferred sales charge upon subsequent redemption. In order to exercise this reinvestment privilege, the shareholder must notify the Transfer Agent of his or her intent to do so at the time of reinvestment. This reinvestment privilege does not apply to Class B or Class C shares. - -------------------------------------------------------------------------------- DETERMINATION OF NET ASSET VALUE The net asset value per share (or share price) of each AIM Fund is determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with respect to AIM MONEY MARKET FUND), on each "business day" of a fund as previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of an AIM Fund's share will be determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the NYSE.The net asset value per share is calculated by subtracting a class' liabilities from its assets and dividing the result by the total number of class shares outstanding. The determination of net asset value per share is made in accordance with generally accepted accounting principles. Among other items, liabilities include accrued expenses and dividends payable, and total assets include portfolio securities valued at their market value, as well as income accrued but not yet received. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the fund's officers and in accordance with methods which are specifically authorized by its governing Board of Directors or Trustees. Short-term obligations with maturities of 60 days or less, and the securities held by the Money Market Funds, are valued at amortized cost as reflecting fair value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of an AIM Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which the values of the securities are determined and the close of the NYSE which will not be reflected in the computation of an AIM Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the applicable AIM Fund. MCF-02/98 A-17 49 - -------------------------------------------------------------------------------- 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 ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually AIM BALANCED FUND......................... declared and paid quarterly annually annually AIM BLUE CHIP FUND........................ declared and paid annually annually annually AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually AIM CHARTER FUND.......................... declared and paid quarterly annually annually AIM CONSTELLATION FUND.................... declared and paid annually annually annually AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually AIM GROWTH FUND........................... declared and paid annually annually annually AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually AIM INCOME FUND........................... declared daily; paid monthly annually annually AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually 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 a class are reinvested in additional shares of such class, absent an election by a shareholder to receive cash or to have such dividends and distributions reinvested in like shares of another Multiple Class Fund, to the extent permitted. For funds that do not declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. For funds that declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the payable date. Shareholders may elect, by written notice to the Transfer Agent, to receive such distributions, or the dividend portion thereof, in cash, or to invest such dividends and distributions in shares of another fund in the AIM Funds; provided that (i) dividends and distributions attributable to Class B shares may only be reinvested in Class B shares, (ii) dividends and distributions attributable to Class C shares may only be reinvested in Class C shares (iii) dividends and distributions attributable to Class A shares may not be reinvested in Class B or Class C shares, and (iv) dividends and distributions attributable to the AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in any Class B or Class C shares. Investors who have not previously selected such a reinvestment option on the account application form may contact the Transfer Agent at any time to obtain a form to authorize such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales charges, and shares so purchased are automatically credited to the account of the shareholder. Dividends on Class B and Class C shares are expected to be lower than those for Class A shares or AIM Cash Reserve Shares because of higher distribution fees paid by Class B and Class C shares. Dividends on all shares may also be affected by other class-specific expenses. Changes in the form of dividend and distribution payments may be made by the shareholder at any time by notice to the Transfer Agent and are effective as to any subsequent payment if such notice is received by the Transfer Agent prior to the record date of such MCF-02/98 A-18 50 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 HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are exempt from federal tax. Dividends paid by a fund (other than capital gain distributions) may qualify for the federal 70% dividends received deduction for corporate shareholders to the extent of the qualifying dividends received by the fund on domestic common or preferred stock. It is not likely that dividends received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY FUND, 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 FUND will qualify for this dividends received deduction. Shortly after the end of each year, shareholders will receive information regarding the amount and federal income tax treatment of all distributions paid during the year. Certain dividends declared in October, November or December of a calendar year are taxable to shareholders as though received on December 31 of that year if paid to shareholders during January of the following calendar year. No gain or loss will be recognized by shareholders upon the automatic conversion of Class B shares of a Multiple Class Fund into Class A shares of such Fund. With respect to tax-exempt shareholders, distributions from the Funds will not be subject to federal income taxation to the extent permitted under the applicable tax- exemption. For each redemption of a fund's shares by a non-exempt shareholder, the fund or the securities dealer effecting the transaction is required to file an information return with the IRS. TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON. Under existing provisions of the Code, nonresident alien individuals, foreign partnerships and foreign corporations may be subject to federal income tax withholding at a 30% rate on ordinary income dividends and distributions (other than exempt-interest dividends and capital gain dividends) and return of capital distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption. DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL INFORMATION. TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required to include the "exempt-interest" portion of dividends paid by the Tax-Exempt Funds in their gross income for federal income tax purposes. However, shareholders will be required to report the receipt of exempt-interest dividends and other tax-exempt interest on their federal income tax returns. Moreover, exempt-interest dividends from the Tax-Exempt Funds may be subject to state income taxes, may give rise to a federal alternative minimum tax liability, may affect the amount of social security benefits subject to federal income tax, may affect the deductibility of interest on certain indebtedness of the shareholder, and may have other collateral federal income tax consequences. The Tax-Exempt Funds may invest in Municipal Securities the interest on which will constitute an item of tax preference and which therefore could give rise to a federal alternative minimum tax liability for shareholders, and may invest up to 20% of their net assets in such securities and MCF-02/98 A-19 51 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 FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes dividends paid by mutual funds out of interest on U.S. Treasury and certain other U.S. Government obligations, and investors should consult with their own tax advisors concerning the availability of such exemption. AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so, each of these funds may elect to pass through to shareholders credits for foreign taxes paid. If the fund makes such an election, a shareholder who receives a distribution (1) will be required to include in gross income his proportionate share of foreign taxes allocable to the distribution and (2) may claim a credit or deduction for such share for his taxable year in which the distribution is received, subject to the general limitations imposed on the allowance of foreign tax credits and deductions. Shareholders should also note that certain gains or losses attributable to fluctuations in exchange rates or foreign currency forward contracts may increase or decrease the amount of income of the fund available for distribution to shareholders, and should note that if such losses exceed other income during a taxable year, the fund would not be able to pay ordinary income dividends. - -------------------------------------------------------------------------------- GENERAL INFORMATION CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, serves as custodian for the portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds. A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend payment agent. LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon legal matters. SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should be directed to an A I M Fund Services, Inc. Client Services Representative by calling (800) 959-4246. The Transfer Agent may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM Management and its subsidiaries rely on both internal software systems as well as external software systems provided by third parties. Many software systems in use today are unable to distinguish between the year 2000 from the year 1900. This defect if not cured will likely adversely affect the services that AIM Management, its subsidiaries and other service providers provide the AIM Funds and their shareholders. To address this issue, AIM Management and its subsidiaries, together with independent technology consultants, are undertaking a comprehensive Year 2000 Compliance Project (the "Project"). The Project consists of three phases, namely (i) inventorying every software application in use at AIM Management and its subsidiaries, as well as remote, third party software systems on which AIM Management and its subsidiaries rely, (ii) identifying those applications that may not function properly after December 31, 1999, and (iii) correcting and subsequently testing those applications that may not function properly after December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has commenced. The Project is scheduled to be completed during the fourth quarter of 1998. Software applications acquired by AIM Management and its subsidiaries after completion of the Project will be reviewed to confirm Year 2000 compliance upon installation MCF-02/98 A-20 52 OTHER INFORMATION. This Prospectus sets forth basic information that investors should know about the fund(s) named on the cover page prior to investing. Recipients of this Prospectus will be provided with a copy of the annual report of the fund(s) to which this Prospectus relates, upon request and without charge. If several members of a household own shares of the same fund, only one annual or semi-annual report will be mailed to that address. To receive additional copies, please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional Information has been filed with the SEC and is available upon request and without charge, by writing or calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov that contains the Statement of Additional Information, material incorporated by reference, and other information regarding the Fund. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from this Prospectus, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. MCF-02/98 A-21 53 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 RATINGS SERVICES 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-22 54 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-23 55 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-24 56 The minimum size of a FNMA pool is $1 million of mortgage loans. Registered holders purchase Certificates in amounts not less than $25,000. FNMA Certificates are marketed by the servicing lender banks, usually through securities dealers. The lender of a single lender pool typically markets all Certificates based on that pool, and lenders of multiple lender pools market Certificates based on a pro rata interest in the aggregate pool. The amount of FNMA Certificates currently outstanding is limited. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE MAES" -- are mortgage-backed securities which represent a partial ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, commercial banks and savings and loan associations. Each mortgage loan included in the pool is either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgages is assembled, and, after being approved by GNMA, is offered to investors through securities dealers. GNMA is a U.S. Government corporation within the Department of Housing and Urban Development. GNMA Certificates differ from bonds in that the principal is paid back monthly by the borrower over the term of the loan rather than returned in a lump sum at maturity. GNMA Certificates are called "modified pass-through" securities because they entitle the holder to receive its proportionate share of all interest and principal payments owed on the mortgage pool, net of fees paid to the issuer and GNMA, regardless of whether or not the mortgagor actually makes the payment. Payment of principal of and interest on GNMA Certificates of the "modified pass-through" type is guaranteed by GNMA and backed by the full faith and credit of the U.S. Government. The average life of a GNMA Certificate is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures will usually result in the return on the greater part of principal invested far in advance of the maturity of the mortgages in the pool. Foreclosures impose little risk to principal investment because of the GNMA guarantee. As the prepayment rates of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. However, statistics published by the Federal Housing Authority indicate that the average life of a single-family dwelling mortgage with 25- to 30-year maturity, the type of mortgage which backs the vast majority of GNMA Certificates, is approximately 12 years. It is therefore customary practice to treat GNMA Certificates as 30-year mortgage-backed securities which prepay fully in the twelfth year. As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates, the coupon rate of interest of GNMA Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the Certificates. The yield which will be earned on GNMA Certificates may vary from their coupon rates for the following reasons: (i) Certificates may be issued at a premium or discount, rather than at par; (ii) Certificates may trade in the secondary market at a premium or discount after issuance; (iii) interest is earned and compounded monthly which has the effect of raising the effective yield earned on the Certificates; and (iv) the actual yield of each Certificate is affected by the prepayment of mortgages included in the mortgage pool underlying the Certificates and the rate at which principal so prepaid is reinvested. In addition, prepayment of mortgages included in the mortgage pool underlying a GNMA Certificate purchased at a premium may result in a loss to the Fund. Due to the large amount of GNMA Certificates outstanding and active participation in the secondary market by securities dealers and investors, GNMA Certificates are highly liquid instruments. Prices of GNMA Certificates are readily available from securities dealers and depend on, among other things, the level of market rates, the Certificate's coupon rate and the prepayment experience of the pool of mortgages backing each Certificate. GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES -- are participation certificates issued by the General Services Administration of the U.S. Government. MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the Department of Transportation of the U.S. Government. NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with the provisions of Title IV of the Housing and Urban Development Act of 1968, as supplemented and extended by Title VII of the Housing and Urban Development Act of 1970, the payment of which is guaranteed by the U.S. Government. PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and long-term bonds issued by public housing and urban renewal agencies in connection with programs administered by the Department of Housing and Urban Development of the U.S. Government, the payment of which is secured by the U.S. Government. SBA DEBENTURES -- are debentures fully guaranteed as to principal and interest by the Small Business Administration of the U.S. Government. SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing Association. TITLE XI BONDS -- are bonds issued in accordance with the provisions of Title XI of the Merchant Marine Act of 1936, as amended, the payment of which is guaranteed by the U.S. Government. WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds issued by the Washington Metropolitan Area Transit Authority and are guaranteed by the Secretary of Transportation of the U.S. Government. A-25 57 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. Transfers to Minors Other Organization Other Organization 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 for the Requester of Form W-9 (which can be obtained from the IRS) and includes, among others, the following: - - a corporation - - an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7) - - the United States or any of its agencies or instrumentalities - - a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities - - a foreign government or any of its political subdivisions, agencies or instrumentalities - - an international organization or any of its agencies or instrumentalities - - a foreign central bank of issue - - a dealer in securities or commodities required to register in the U.S. or a possession of the U.S. - - a futures commission merchant registered with the Commodity Futures Trading Commission - - a real estate investment trust - - an entity registered at all times during the tax year under the Investment Company Act of 1940 - - a common trust fund operated by a bank under Section 584(a) - - a financial institution - - a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List - - a trust exempt from tax under Section 664 or described in Section 4947 Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding. NOTE: Section references are to sections of the Code. IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment. MCF-AAF-02/98 B-1 58 NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 remains in effect for three calendar years beginning with the calendar year in which it is received by the Fund. Such shareholders may, however, be subject to appropriate withholding as described in the Prospectus under "Dividends, Distributions and Tax Matters." SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone exchange privilege at any time without notice. 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"). SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), present or future, with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor (see the applicable Fund's prospectus under the caption "How to Redeem Shares -- Redemptions by Mail"). MCF-AAF-02/98 B-2 59 [AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark-- Investment Advisor A I M Advisors, Inc. 11 Greenway Plaza, Suite 100 Houston, TX 77046-1173 Transfer Agent A I M Fund Services, Inc. P.O. Box 4739 Houston, 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 Houston, TX 77002 For more complete information about any other Fund in The AIM Family of Funds--Registered Trademark--, including charges and expenses, please call (800) 347-4246 or write to A I M Distributors, Inc. and request a free prospectus. Please read the prospectus carefully before you invest or send money. GLO-PRO-1 60 [AIM LOGO THE AIM FAMILY OF FUNDS--Registered Trademark-- APPEARS HERE] AIM INTERNATIONAL EQUITY FUND (A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.) PROSPECTUS FEBRUARY 20, 1998 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. 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 February 20, 1998, has been filed with the United States Securities and Exchange Commission (the "SEC") and is incorporated herein by reference. The Statement of Additional Information is available without charge upon written request to the Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling (800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the Statement of Additional Information, material incorporated by reference, and other information regarding the Fund. Additional information about the Fund may also be obtained on the Web at http://www.aimfunds.com. 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 61 TABLE OF CONTENTS
PAGE PAGE ---- ---- SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF THE FUND................................. 4 FUNDS--Registered Trademark--.......... A-1 Table of Fees and Expenses............. 4 Introduction to The AIM Family of Financial Highlights................... 6 Funds............................... A-1 Performance............................ 8 How to Purchase Shares................. A-1 Investment Objective and Policies...... 9 Terms and Conditions of Purchase of the Hedging Strategies and Other Investment AIM Funds........................... A-2 Techniques.......................... 10 Special Plans.......................... A-9 Risk Factors........................... 12 Exchange Privilege..................... A-11 Investment Restrictions................ 13 How to Redeem Shares................... A-13 Management............................. 13 Determination of Net Asset Value....... A-17 Organization of the Company............ 16 Dividends, Distributions and Tax Matters............................. A-18 General Information.................... A-20 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 six separate series portfolios. This Prospectus relates to AIM INTERNATIONAL EQUITY FUND (the "Fund"). The Company also offers other classes of shares in five other investment portfolios, AIM ASIAN GROWTH FUND ("ASIAN FUND"), AIM EUROPEAN DEVELOPMENT FUND ("EUROPEAN FUND"), AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND ("GROWTH FUND") and AIM GLOBAL INCOME FUND ("INCOME FUND"), (collectively, with AIM INTERNATIONAL EQUITY FUND, the "Funds") each of which pursues unique investment objectives. All such other Funds offer multiple classes of shares to different types of investors. The shares of the other Funds of the Company have different sales charges and expenses, which may affect performance. To obtain information about ASIAN FUND, EUROPEAN FUND, AGGRESSIVE GROWTH FUND, GROWTH FUND, or INCOME FUND, call (800) 347-4246. See "General Information." 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 70% of its total assets in marketable equity securities (including common and preferred stock, depositary receipts for stock and other securities having the characteristics of stock) of companies located outside the United States ("foreign companies") which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. The Fund may also invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign companies which are listed on a recognized foreign securities exchange or traded on a foreign over-the-counter market. 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 subsidiaries, manages or advises over 50 investment company portfolios encompassing a broad range of investment objectives. Under the terms of the Advisory Agreement, AIM supervises all aspects of the 2 62 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 (the "Administrative Services Agreement"), AIM is reimbursed by the Fund for its costs of performing, or arranging for the performance of, certain accounting and other administrative services for the Fund. Under a transfer agency and service agreement ("the 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. MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C 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. Class C Shares -- Shares are offered at net asset value, without an initial sales charge, and are subject to a contingent deferred sales charge of 1% on certain redemptions made within one year of the date such shares were purchased. Class C 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 or Class C shares 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 or Class C shares to the investor who qualifies for reduced initial sales charges, as described below. Therefore, A I M Distributors, Inc. ("AIM Distributors") intends to reject any order for purchase of more than $250,000 for Class B shares. PURCHASING SHARES. Initial investments in any 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., 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, Class B and Class C 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." Holders of Class C shares of the Fund may redeem all or a portion of their shares at net asset value on any business day, less a 1% contingent deferred sales charge for redemptions made within one year from the date such shares were purchased. Class C shares redeemed after one year from the date such shares were purchased 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 of the Fund may be reinvested at net asset value without payment of a sales charge in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See "Dividends, Distributions and Tax Matters" and "Special Plans." THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE MARKS OF A I M MANAGEMENT GROUP INC. 3 63 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 for Class A and Class B shares 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, 1997. The fees and expenses for Class C shares set forth in the table are based on the estimated average net assets of Class C shares of the Fund for the period August 4 (date sales commenced) to October 31, 1997. 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 A CLASS B CLASS C ------- ------- ------- Shareholder Transaction Expenses Maximum sales load imposed on purchase of shares (as a % of offering price)...................................... 5.50% None None Maximum sales load on reinvested dividends and distributions........................................... None None None Deferred sales load (as a % of original purchase price or redemption proceeds, whichever is lower)................ None* 5.00% 1.00% Redemption fee............................................ None None None Exchange fee.............................................. None None None Annual Fund Operating Expenses (as a % of average net assets) Management fees** (after fee waivers)..................... 0.89% 0.89% 0.89% Rule 12b-1 distribution plan payments..................... 0.30% 1.00% 1.00% Other expenses............................................ 0.28% 0.36% 0.36% ----- ----- ----- Total fund operating expenses**....................... 1.47% 2.25% 2.25% ===== ===== =====
- ------------ * 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." ** If management fees had not been waived, the management fees would have been 0.93% and total fund operating expenses would have been 1.51%, 2.28% and 2.28% for the Class A shares, Class B shares and Class C shares, respectively. 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.................................................... $ 69 3 years................................................... $ 99 5 years................................................... $131 10 years.................................................. $221
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................................................... $ 73 3 years.................................................. $100 5 years.................................................. $140 10 years.................................................. $239*
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................................................... $ 23 3 years.................................................. $ 70 5 years.................................................. $120 10 years.................................................. $239*
- ------------ * Reflects the conversion to Class A shares eight years following the end of the calendar month in which a purchase was made; therefore years nine and ten reflect Class A expenses. 4 64 An investor would pay the following expenses on a $1,000 investment in Class C shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the end of each time period: 1 year.................................................... $33 3 years................................................... $70
An investor would pay the following expenses on the same $1,000 investment in Class C shares of the Fund, assuming no redemption at the end of each time period. 1 year.................................................... $23 3 years................................................... $70
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, Class B shares and Class C 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. 5 65 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Shown below are per share income and capital changes for a Class A share of the Fund outstanding during each of the years in the five-year period ended October 31, 1997, and the period April 7, 1992 (effective date of registration statement) through October 31, 1992, and for a Class B share of the Fund outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (date sales commenced) through October 31, 1994 and for a Class C share of the Fund outstanding during the period August 4, 1997 (date sales commenced) through October 31, 1997. 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, 1997 1996 1995 1994 1993 1992 ---------- ---------- -------- -------- -------- ------------- CLASS A SHARE Net asset value, beginning of period....... $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88 $ 8.74(h) Income from investment operations: Net investment income.................... 0.04(a) 0.04(a) 0.01 0.02 0.02 0.01 Net gains on securities (both realized and unrealized)........................ 1.68 2.07 0.62 1.31 3.29 0.13 ---------- ---------- -------- -------- -------- -------- Total from investment operations......... 1.72 2.11 0.63 1.33 3.31 0.14 ---------- ---------- -------- -------- -------- -------- Less distributions: Dividends from net investment income..... (0.02) (0.01) (0.04) (0.01) (0.01) -- Distributions from net realized gains.... (0.43) (0.38) (0.44) -- -- -- ---------- ---------- -------- -------- -------- -------- Total distributions...................... (0.45) (0.39) (0.48) (0.01) (0.01) -- ---------- ---------- -------- -------- -------- -------- Net asset value, end of period............. $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88 ========== ========== ======== ======== ======== ======== Total return(b)............................ 11.43% 15.79% 5.24% 10.94% 37.36% 1.65% ========== ========== ======== ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted)............................... $1,577,390 $1,108,395 $654,764 $708,159 $372,282 $122,663 ========== ========== ======== ======== ======== ======== Ratio of expenses to average net assets(c).............................. 1.47%(d)(e) 1.58% 1.67% 1.64% 1.78% 1.85%(i) ========== ========== ======== ======== ======== ======== Ratio of net investment income to average net assets(f).......................... 0.24%(d) 0.25% 0.10% 0.22% 0.28% 0.27%(i) ========== ========== ======== ======== ======== ======== Portfolio turnover rate.................. 50% 66% 68% 67% 62% 23% ========== ========== ======== ======== ======== ======== Average brokerage commission rate(g)..... $ 0.0168 $ 0.0192 N/A N/A N/A N/A ========== ========== ======== ======== ======== ========
- --------------- (a) Calculated using average shares outstanding. (b) Does not deduct sales charges and for periods less than 1 year, total returns are not annualized. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements are 1.51%, 1.60%, 1.68 and 1.89% (annualized), respectively for 1997-1995 and 1992. (d) Ratios are based on average net assets of $1,416,524,861. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (f)After fee waivers and/or expense reimbursements. Ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements are 0.20%, 0.22%, 0.09% and 0.22% (annualized), respectively for 1997-1995 and 1992. (g)The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. (h)Net asset value at 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. (i)Annualized. 6 66
PERIOD SEPTEMBER 15, YEAR ENDED OCTOBER 31, THROUGH ----------------------------------- OCTOBER 31, 1997 1996 1995 1994 -------- -------- ------- ------------- CLASS B SHARE Net asset value, beginning of period..................... $ 15.13 $ 13.54 $ 13.49 $ 13.42 Income from investment operations: Net investment income (loss)........................... (0.09)(a) (0.07)(a) (0.09) (0.01) Net gains on securities (both realized and unrealized).......................................... 1.66 2.04 0.61 0.08 -------- -------- ------- ------- Total from investment operations....................... 1.57 1.97 0.52 0.07 -------- -------- ------- ------- Less distributions: Dividends from net investment income................... -- -- (0.03) -- Distributions from net realized gains.................. (0.43) (0.38) (0.44) -- -------- -------- ------- ------- Total distributions.................................... (0.43) (0.38) (0.47) -- -------- -------- ------- ------- Net asset value, end of period........................... $ 16.27 $ 15.13 $ 13.54 $ 13.49 ======== ======== ======= ======= Total return(b).......................................... 10.61% 14.88% 4.35% 0.52% ======== ======== ======= ======= Ratios/supplemental data: Net assets, end of period (000s omitted)................. $678,809 $368,355 $51,964 $ 4,833 ======== ======== ======= ======= Ratio of expenses to average net assets(c)............. 2.25%(d)(e) 2.35% 2.55% 2.53%(f) ======== ======== ======= ======= Ratio of net investment income (loss) to average net assets(g)............................................ (0.53)%(d) (0.53)% (0.78)% (0.67)%(f) ======== ======== ======= ======= Portfolio turnover rate................................ 50% 66% 68% 67% ======== ======== ======= ======= Average brokerage commission rate(h)................... $ 0.0168 $ 0.0192 N/A N/A ======== ======== ======= =======
- --------------- (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) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements are 2.28%, 2.37% and 2.56%, respectively for 1997-1995. (d) Ratios are based on average net assets of $558,130,289. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been 2.24%. (f) Annualized. (g) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements are (0.57)%, (0.55)% and (0.79)%, respectively for 1997-1995. (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 7 67
PERIOD AUGUST 4, THROUGH OCTOBER 31, 1997 ----------- CLASS C SHARES Net asset value, beginning of period........................ $ 17.64 Income from investment operations: Net investment income (loss).............................. (0.02)(a) Net gains (losses) on securities (both realized and unrealized)............................................. (1.35) ------- Total from investment operations.......................... (1.37) ------- Less distributions: Dividends from net investment income...................... -- Distributions from net realized gains..................... -- ------- Total distributions....................................... -- ------- Net asset value, end of period.............................. $ 16.27 ======= Total return(b)............................................. (7.77)% ======= Ratios/supplemental data: Net assets, end of period (000s omitted).................. $12,829 ======= Ratio of expenses to average net assets(c)................ 2.27%(d)(e) ======= Ratio of net investment income (loss) to average net assets(f)............................................... (0.55)%(d) ======= Portfolio turnover rate................................... 50% ======= Average brokerage commission rate(g)...................... $0.0168 =======
- --------------- (a) Calculated using average shares outstanding. (b) Does not deduct sales charges and for periods less than one year, total return is not annualized. (c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 2.30% (annualized). (d) Ratio is annualized and based on average net assets of $5,564,501. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been 2.26%. (f) After fee waivers and/or expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (0.59)% (annualized). (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. - -------------------------------------------------------------------------------- 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. 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 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. Standardized total return for Class C shares reflects the deduction of a 1% contingent deferred sales charge, if applicable, 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 8 68 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 70% of its total assets in marketable equity securities, including common stock, preferred stock, depositary receipts for stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company) of foreign companies which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter-market. The Fund may satisfy the foregoing requirement in part by investing 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. The Fund may also invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign companies which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. 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. 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. AIM may invest a portion of the Fund's assets in (i) cash or high-grade short-term securities, including repurchase agreements, commercial paper, time deposits and master notes, denominated either in U.S. dollars or foreign currencies, (ii) U.S. government obligations or investment grade (high quality) corporate bonds or other debt securities, and (iii) taxable municipal securities, when such positions are deemed advisable in light of economic or market conditions or for daily cash management purposes. In addition, AIM may invest, for temporary defensive purposes, all or substantially all of the Fund's assets in the securities described above. To the extent that the Fund is invested to a significant degree in cash, high-grade short-term securities, U.S. government obligations, investment grade (high quality) corporate bonds or other debt securities, or taxable municipal securities, its ability to achieve its investment objective of growth of capital may be adversely affected. Under normal circumstances, the Fund will invest no more than 20% of the value of its total assets in high-grade short-term securities. 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 9 69 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 and may purchase 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 put or call options. 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's custodian segregates liquid assets 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. 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 "collar." 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 10 70 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 hedge the value of its portfolio against changes in market conditions or in exchange rates between currencies (including the U.S. dollar). 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 and asset coverage requirements 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. 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. 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. REPURCHASE AGREEMENTS. The Fund 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 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. The Fund may invest in reverse repurchase agreements, which involve the sale of securities held by the Fund, with an agreement that the Fund will repurchase the securities at an agreed upon price and date. The Fund may em- 11 71 ploy reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. At the time it enters into a reverse repurchase agreement, the Fund will segregate liquid assets having a dollar value equal to the repurchase price. Reverse repurchase agreements are considered borrowings by the Fund under the 1940 Act. The Fund may enter into reverse repurchase agreements in amounts not exceeding 33 1/3% of the value of its total assets. Reverse repurchase agreements involve the risk that the market value of securities retained by the Fund in lieu of liquidation may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase. This risk, if encountered, could cause a reduction in the net asset value of the Fund's shares. 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. SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may purchase securities on a "when-issued" basis, that is, delivery of and payment of 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 Fund also may purchase or sell securities on a delayed delivery basis. The payment obligation and the interest rate that will be received on the delayed delivery securities are fixed at the time the buyer enters into the commitment. The Fund will only make commitments to purchase when-issued or delayed delivery securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable. If the Fund purchases a when-issued security or enters into a delayed delivery agreement, the Fund's custodian bank will segregate liquid assets in an amount at least equal to the when-issued commitment or delayed delivery agreement commitment. 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 may invest up to 15% of its net assets in securities that are illiquid. Illiquid securities include securities that have no readily available market quotations and cannot be disposed of promptly (within seven days) in the normal course of business at a price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933. Unregistered securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities. Limitations on the resale of unregistered securities may have an adverse effect on their marketability, which may prevent the Fund from disposing of them promptly at reasonable prices. The Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations. The Company's Board of Directors is responsible for developing and establishing guidelines and procedures for determining the liquidity of Rule 144A securities on behalf of the Fund and monitoring AIM's implementation of the guidelines and procedures. INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. - -------------------------------------------------------------------------------- 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. 12 72 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 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 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. - -------------------------------------------------------------------------------- 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 and except that the Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 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, except that the Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 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. 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. 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 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. Information concerning the Board of Directors may be found in the Statement of Additional Information. 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. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its subsidiaries, engages in the business of investment management on an international basis. For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance Project, see "General Information -- Year 2000 Compliance Project." 13 73 INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to a Master Investment Advisory Agreement dated as of February 28, 1997. AIM was organized in 1976 and, together with its subsidiaries, manages or advises over 50 investment company portfolios encompassing a broad range of investment objectives. 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. ADMINISTRATOR. AIM and the Company have entered into a Master Administrative Services Agreement, dated as of February 28, 1997, pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Fund. 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. 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. 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 approximately 135 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. A. Dale Griffin, III, Clas G. Olsson, Paul A. Rogge and Barrett K. Sides are primarily responsible for the day-to-day management of the 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 1992. He has been associated with AIM and/or its subsidiaries since 1989 and began working as an investment professional in 1987. Mr. Olsson is an Investment Officer of AIM Capital and has been responsible for the Fund since 1997. He has been associated with AIM and/or its subsidiaries since 1994 and began working as an investment professional in 1994. Prior to 1994, Mr. Olsson was a broker assistant trainee with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Mr. Rogge is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1992. He has been associated with AIM and/or its subsidiaries since he began working as an investment professional in 1991. Mr. Sides is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. He has been associated with AIM and/or its subsidiaries since he began working as an investment professional in 1990. FEES AND EXPENSES. For the year ended October 31, 1997, the Fund paid AIM an amount for its advisory services which represented 0.89% 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, 1997, 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 1.47% of the Class A shares' average daily net assets. The Class B shares' total expenses for such year were 2.25% of the Class B shares' average daily net assets. The Class C shares' total expenses for the period August 4, 1997 (date sales commenced) through October 31, 1997 were 2.25% of the Class C shares' average daily net assets. In addition, the Company and A I M Fund Services, Inc. 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 fees 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, 1997, AIM waived advisory fees for the Fund which represented 0.04% 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 AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of Class A, Class B and Class C shares of the Fund. The address of A I M Distributors, Inc. 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 14 74 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. Class A and C Plan. The Company has adopted a Master Distribution Plan applicable to Class A and Class C shares of the Fund (the "Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of financing any activity that is intended to result in the sale of Class A and Class C shares of the Fund. Under the Class A and C Plan, the Company may compensate AIM Distributors an aggregate amount of 0.30% of the average daily net assets of Class A shares of the Fund on an annualized basis and an aggregate amount of 1.00% of the average daily net assets of Class C shares of the Fund on an annualized basis. The Class A and C Plan is designed to compensate AIM Distributors, on a quarterly basis, for certain promotional and other sales-related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of the Fund. Payments can also be directed by AIM Distributors to selected institutions who have entered into service agreements with respect to Class A and Class C shares of the Fund and who provide continuing personal services to their customers who own Class A and Class C shares of the Fund. The service fees payable to selected institutions are calculated at the annual rate of 0.25% of the average daily net asset value of those Fund shares that are held in such institution's customers' accounts which were purchased on or after a prescribed date set forth in the Plan. Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Fund, in amounts of up to 0.25% of the average net assets of the Fund attributable to the customers of such dealers or financial institutions are characterized as a service fee, and payments to dealers and other financial institutions in excess of such amount and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Company with respect to the Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Class A and C Plan on behalf of the Fund. Thus, under the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Fund will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee. Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. Class B Plan. 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 and C 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 the 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 15 75 rather as agent, for the Fund in making such payments. 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 six investment portfolios: the Fund, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT 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 separate prospectuses. The authorized capital stock of the Company consists of 4,000,000,000 shares of common stock with a par value of $0.001 per share, of which 200,000,000 shares are designated Class A shares, 200,000,000 shares are designated Class B shares and 200,000,000 shares are designated Class C shares of each investment portfolio of the Company, and the balance of which are unclassified. Class A shares, Class B shares and Class C 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 ex-penses (such as those associated with the shareholder servicing of their shares) and is subject to differing sales loads (which may affect performance), 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, Class B shares and Class C 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. As of February 2, 1998, Merrill Lynch, Pierce, Fenner & Smith Incorporated was the owner of record of 33.13%, 36.84% and 47.42% of the outstanding Class A, Class B and Class C shares, respectively, of the Fund. As long as Merrill Lynch, Pierce, Fenner & Smith Incorporated owns over 25% of such shares, it may be presumed to be in "control" of the Class A, Class B and Class C shares of the Fund, as defined in the 1940 Act. 16 76 THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER ASSISTANCE IS (800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME). INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS--Registered Trademark-- - -------------------------------------------------------------------------------- INTRODUCTION TO THE AIM FAMILY OF FUNDS THE AIM FAMILY OF FUNDS consists of the following mutual funds: AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**) AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**) AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND AIM GLOBAL INCOME FUND
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM REAL ESTATE FUND will not be available until on or about March 3, 1998. (**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve 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, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or subject to a contingent deferred sales charge upon redemption, as described below. 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 Arrangement ("IRA") or Roth IRA is $250. There are no minimum initial investment requirements applicable to money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension ("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA") 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 MCF-02/98 A-1 77 For additional information or assistance, investors should call the Client Services Department of AFS at: (800) 959-4246 Shares of any AIM Funds not named on the cover of this Prospectus are offered pursuant to separate prospectuses. Copies of other prospectuses may be obtained by calling (800) 347-4246. INITIAL AND SUBSEQUENT 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: A I M Fund Services, Inc. RFB: Fund name, Reference Number (16 character limit) OBI: Shareholder Name, Shareholder Account Number (70 character limit)
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. 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. 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. BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic funds transfer, please contact the Client Services Department of AFS for detail. - -------------------------------------------------------------------------------- TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS Shares of the AIM Funds, including Class A shares (the "Class A shares") of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be purchased at their respective net asset value plus a sales charge as indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and Class B shares (the "Class B shares") and Class C shares ("Class C shares") of the Multiple Class Funds are sold at net asset value subject to a contingent deferred sales charge payable upon certain redemptions. These contingent deferred sales charges are described under the caption "How to Redeem Shares -- Multiple Distribution System." Securities dealers and other persons entitled to receive compensation for selling or servicing shares of a Multiple Class Fund may receive different compensation for selling or servicing one particular class of shares over another class in the same Multiple Class Fund. Factors an investor should consider prior to purchasing Class A, Class B or Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described below under "Special Information Relating to Multiple Class Funds." For information on purchasing any of the AIM Funds and to receive a prospectus, please call (800) 347-4246. As described below, the sales charge otherwise applicable to a purchase of shares of a fund may be reduced if certain conditions are met. In order to take advantage of a reduced sales charge, the prospective investor or his dealer must advise AIM Distributors that the conditions for obtaining a reduced sales charge have been met. Net asset value is determined in the manner described under the caption "Determination of Net Asset Value." The following tables show the sales charge and dealer concession at various investment levels for the AIM Funds. MCF-02/98 A-2 78 SALES CHARGES AND DEALER CONCESSIONS GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT 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: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
DEALER CONCESSION INVESTOR'S SALES CHARGE ---------- -------------------------- AS A AS A AS A PERCENTAGE PERCENTAGE PERCENTAGE OF THE OF THE PUBLIC OF THE NET PUBLIC AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING SINGLE TRANSACTION PRICE INVESTED PRICE ----------------------- ------------- ---------- ---------- Less than $ 50,000 4.75% 4.99% 4.00% $ 50,000 but less than $ 100,000 4.00 4.17 3.25 $100,000 but less than $ 250,000 3.75 3.90 3.00 $250,000 but less than $ 500,000 2.50 2.56 2.00 $500,000 but less than $1,000,000 2.00 2.04 1.60
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/ or advance a service fee on such transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED, AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES." MCF-02/98 A-3 79 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 the Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM TAX-FREE INTERMEDIATE FUND.
DEALER CONCESSION INVESTOR'S SALES CHARGE ---------- -------------------------- AS A AS A AS A PERCENTAGE PERCENTAGE PERCENTAGE OF THE OF THE PUBLIC OF THE NET PUBLIC AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING SINGLE TRANSACTION PRICE INVESTED PRICE ----------------------- ------------- ---------- ---------- Less than $ 100,000 1.00% 1.01% 0.75% $100,000 but less than $ 250,000 0.75 0.76 0.50 $250,000 but less than $1,000,000 0.50 0.50 0.40
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/or advance a service fee on such transactions. ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933. In addition to amounts paid to dealers as a dealer concession out of the initial sales charge paid by investors, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers who sell a minimum dollar amount of the shares of the AIM Funds during a specified period of time. In some instances, these incentives may be offered only to certain dealers who have sold or may sell significant amounts of shares. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. See "Contingent Deferred Sales Charge Program for Large Purchases." AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.00% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record on April 30, 1995 who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions. MCF-02/98 A-4 80 TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund (other than AIM MONEY MARKET FUND, as described below) received prior to the close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE Close") on any business day of an AIM Fund will be confirmed at the price next determined. Orders received after NYSE Close will be confirmed at the price determined on the next business day of the AIM Fund. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent. Any loss resulting from the dealer's failure to submit an order within the prescribed time frame will be borne by that dealer. Please see "How to Purchase Shares -- Purchases by Wire" for information on obtaining a reference number for wire orders, which will facilitate the handling of such orders and ensure prompt credit to an investor's account. A "business day" of an AIM Fund is any day on which the NYSE is open for business. It is expected that the NYSE will be closed during the next twelve months on Saturdays and Sundays and on the days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE. An investor who uses a check to purchase shares will be credited with the full number of shares purchased at the time of receipt of the purchase order, as previously described. However, in the event of a redemption or exchange of such shares, the investor may be required to wait up to ten business days before the redemption proceeds are sent. This delay is necessary in order to ensure that the check has cleared. If the check does not clear, or if any investment order must be cancelled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors. SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds currently offer two or more classes of shares through separate distribution systems (the "Multiple Distribution System"). Although each class of shares of a particular Multiple Class Fund represents an interest in the same portfolio of investments, each class is subject to a different distribution structure and, as a result, differing expenses. This Multiple Distribution System allows investors to select the class that is best suited to the investor's needs and objectives. In considering the options afforded by the Multiple Distribution System, investors should consider both the applicable initial sales charge or contingent deferred sales charge, as well as the ongoing expenses borne by each class of shares and other relevant factors, such as whether his or her investment goals are long-term or short-term. CLASS A SHARES are sold subject to the initial sales charges described above and are subject to the other fees and expenses described herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of an investor who wishes to establish a dollar cost averaging program, pursuant to which Class A shares an investor owns may be exchanged at net asset value for Class A shares of another Multiple Class Fund or shares of another AIM Fund which is not a Multiple Class Fund, subject to the terms and conditions described under the caption "Exchange Privilege -- Terms and Conditions of Exchanges." CLASS B SHARES are sold without an initial sales charge. Thus, the entire purchase price of Class B shares is immediately invested in Class B shares. Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the average daily net assets of a Multiple Class Fund attributable to Class B shares. See the discussion under the caption "Management -- Distribution Plans." In addition, Class B shares redeemed within six years from the date such shares were purchased are subject to a contingent deferred sales charge ranging from 5% for redemptions made within the first year to 1% for redemptions made within the sixth year. No contingent deferred sales charge will be imposed if Class B shares are redeemed after six years from the date such shares were purchased. Redemptions of Class B shares and associated charges are further described under the caption "How to Redeem Shares -- Multiple Distribution System." Class B shares will automatically convert into Class A shares of the same Multiple Class Fund (together with a pro rata portion of all Class B shares acquired through the reinvestment of dividends and distributions) eight years from the end of the calendar month in which the purchase of Class B shares was made. Following such conversion of their Class B shares, investors will be relieved of the higher Rule 12b-1 Plan payments associated with Class B shares. See "Management -- Distribution Plans." CLASS C SHARES are sold without an initial sales charge. Thus the entire purchase price of Class C shares is immediately invested in Class C shares. Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the average daily net assets of a Multiple Class Fund attributable to Class C shares. See the discussion under the caption "Management -- Distribution Plans." In addition, Class C shares redeemed within one year from the date such shares were purchased are subject to a 1.00% contingent deferred sales charge. No contingent deferred sales charge will be imposed if Class C shares are redeemed after one year from the date such shares were purchased. Redemptions of Class C shares and associated charges are further described under the caption "How to Redeem Shares -- Multiple Distribution System." AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales charge and are not subject to a contingent deferred sales charge; however, they are subject to the other fees and expenses described in the prospectus for AIM MONEY MARKET FUND. TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any business day of the Fund will be confirmed at the price next determined. Net asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND. MCF-02/98 A-5 81 SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the amortized cost method of valuing the securities it holds and rounds its per share net asset value to the nearest whole cent, it is anticipated that the net asset value of the shares of such funds will remain constant at $1.00 per share. However, there is no assurance that each Money Market Fund can maintain a $1.00 net asset value per share. In order to earn dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase is made, purchase payments in the form of federal funds must be received by the Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by payments in any other form, or payments in the form of federal funds received after such time but prior to NYSE Close, will begin to earn dividends on the next business day following the date of purchase. The Money Market Funds generally will not issue share certificates but will record investor holdings in noncertificate form and regularly advise the shareholder of his ownership position. SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon written request by a shareholder to AIM Distributors or the Transfer Agent. Otherwise, such shares will be held on the shareholder's behalf by the applicable AIM Fund(s) and be recorded on the books of such fund(s). See "Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares -- Redemptions by Telephone" for restrictions applicable to shares issued in certificate form. Please note that certificates will not be issued for shares held in prototype retirement plans. MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect for at least one year and the shareholder has not made an additional purchase in that account within the preceding six calendar months and (2) the value of such account drops below $500 for three consecutive months as a result of redemptions or exchanges, the fund has the right to redeem the account, after giving the shareholder 60 days' prior written notice, unless the shareholder makes additional investments within the notice period to bring the account value up to $500. If a fund determines that a shareholder has provided incorrect information in opening an account with a fund or in the course of conducting subsequent transactions with the fund related to such account, the fund may, in its discretion, redeem the account and distribute the proceeds of such redemption to the shareholder. REDUCTIONS IN INITIAL SALES CHARGES Reductions in the initial sales charges shown in the sales charge tables (quantity discounts) apply to purchases of shares of the AIM Funds that are otherwise subject to an initial sales charge, provided that such purchases are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges. The term "purchaser" means: - an individual and his or her spouse and children, including any trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, Roth IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) Plan (unless such 403(b) plan qualifies as the purchaser as defined below); - a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), provided that: a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the funds will not accept contributions submitted with respect to individual participants); b. each transmittal must be accompanied by a single check or wire transfer; and c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal; - a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code) and 457 plans, although more than one beneficiary or participant is involved; - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE IRA accounts should be linked; - 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 vir- MCF-02/98 A-6 82 tue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein. (1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI. To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date. If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he must give written notice to AIM Distributors. If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, a cancellation of the LOI will automatically be effected. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time. (2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also qualify for reduced initial sales charges based upon such purchaser's existing investment in shares of any of the AIM Funds (except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of the proposed purchase. Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds (except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds) owned by such purchaser, calculated at their then current public offering price. If a purchaser so qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money then being invested by such purchaser and not just to the portion that exceeds the breakpoint above which a reduced sales charge applies. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum 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, MCF-02/98 A-7 83 Distributions and Tax Matters"); (b) exchanges of shares of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a fund. Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A shares of the particular AIM Fund(s) whose shares they owned on such date, at net asset value (without payment of a sales charge) for as long as they continuously own Class A shares of such AIM Fund(s) having a market value of at least $500. In addition, discretionary advised clients of any investment advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM CHARTER FUND on November 17, 1986, and have held such Class A shares at all times subsequent to such date, may purchase Class A shares of the applicable AIM Fund(s) at the net asset value of such shares. The following persons may purchase shares of the AIM Funds through AIM Distributors without payment of an initial sales charge: (a) A I M Management Group Inc. ("AIM Management") and its affiliated companies; (b) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, children, parents and parents of spouse) of any such person, of AIM Management or its affiliates or of certain mutual funds which are advised or managed by AIM, or any trust established exclusively for the benefit of such persons; (c) any employee benefit plan established for employees of AIM Management or its affiliates; (d) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, children, parents and parents of spouse) of any such person, or of CIGNA Corporation or of any of its affiliated companies, or of First Data Investor Services Group (formerly The Shareholders Services Group, Inc.); (e) any investment company sponsored by CIGNA Investments, Inc. or any of its affiliated companies for the benefit of its directors' deferred compensation plans; (f) discretionary advised clients of AIM or AIM Capital; (g) registered representatives and employees of dealers who have entered into agreements with AIM Distributors (or financial institutions that have arrangements with such dealers with respect to the sale of shares of the AIM Funds) and any member of the immediate family (including spouse, children, parents and parents of spouse) of any such person, provided that purchases at net asset value are permitted by the policies of such person's employer; (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; and (i) employees of Triformis Inc. In addition, shares of any AIM Fund may be purchased at net asset value, without payment of a sales charge, by pension, profit-sharing or other employee benefit plans created pursuant to a plan qualified under Section 401 of the Code or plans under Section 457 of the Code, or employee benefit plans created pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of the Code. Such plans will qualify for purchases at net asset value provided that (1) the total amount invested in the plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an employer-sponsored plan with at least 100 eligible employees, or (4) all of the plan's transactions are executed through a single financial institution or service organization who has entered into an agreement with AIM Distributors with respect to their use of the AIM Funds in connection with such accounts. Section 403(b) plans sponsored by public educational institutions will not be eligible for net asset value purchases based on the aggregate investment made by the plan or the number of eligible employees. Participants in such plans will be eligible for reduced sales charges based solely on the aggregate value of their individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay investment dealers or other financial service firms for share purchases of the Load Funds (as defined on page A-10 herein) sold at net asset value to an employee benefit plan in accordance with this paragraph as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of the net asset value of any Class A shares of AIM LIMITED MATURITY TREASURY FUND 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. MCF-02/98 A-8 84 FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund named on the cover page, AIM Distributors and its agents will use their best efforts to provide notice of any such actions through correspondence with broker-dealers and existing shareholders, supplements to the AIM Funds' prospectuses, or other appropriate means, and will provide sixty (60) days' notice in the case of termination or material modification to the exchange privilege discussed under the caption "Exchange Privilege." - -------------------------------------------------------------------------------- SPECIAL PLANS Except as noted below, each AIM Fund provides the special plans described below for the convenience of its shareholders. Once established, there is no obligation to continue to invest through a plan, and a shareholder may terminate a plan at any time. Special plan applications and further information, including details of any fees which are charged to a shareholder investing through a plan, may be obtained by written request, directed to AFS at the address provided under "How to Purchase Shares," or by calling the Client Services Department of AFS at (800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN SUCH A PLAN. SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder who owns shares which are not subject to a contingent deferred sales charge, can arrange for monthly, quarterly or annual amounts (but not less than $50) to be drawn against the balance of his account in the designated AIM Fund. Shareholders who own shares subject to a contingent deferred sales charge, can only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal Plan. Payment of this amount can be made on any day of the month the shareholder specifies, except the thirtieth or thirty-first day of each month in which a payment is to be made. A minimum account balance of $5,000 is required to establish a Systematic Withdrawal Plan, but there is no requirement thereafter to maintain any minimum investment. With respect to shares subject to a contingent deferred sales charge (all classes) no contingent deferred sales charge will be imposed on withdrawals made under a Systematic Withdrawal Plan, provided that the amounts withdrawn under such a plan do not exceed on an annual basis 12% of the account value at the time the shareholder elects to participate in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to shares subject to a contingent deferred sales charge that exceed on an annual basis 12% of such account will be subject to a contingent deferred sales charge on the amounts exceeding 12% of the account value at the time the shareholder elects to participate in the Systematic Withdrawal Plan. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption. Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect. 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 regular systematic investments may establish an Automatic Investment Plan. Under this plan withdrawal is made on the shareholder's bank account in the amount specified by the shareholder (minimum $50 per investment, per account) and on a day or date(s) specified by the shareholder. The proceeds are invested in shares of the designated AIM Fund at the applicable offering price determined on the date of the withdrawal. 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; dividends and distributions attributable to Class C shares may be reinvested in Class C shares of the same fund or in Class C shares of another Multiple Class Fund; and dividends and distributions attributable to AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional shares of such fund, in Class A shares of another Multiple Class Fund or in shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends, Distributions and MCF-02/98 A-9 85 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 HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM TAX-EXEMPT CASH 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; Roth IRA plans; SARSEP plans; SEP plans; and SIMPLE IRA 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-02/98 A-10 86 - -------------------------------------------------------------------------------- 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, listed below and referred to herein as the "Load Funds," are sold at a public offering price that includes a maximum sales charge of 5.50% or 4.75% of the public offering price of such shares; Class A shares (or shares which normally involve the payment of initial sales charges) of certain of the AIM Funds, listed below and referred to herein as the "Lower Load Funds," are sold at a public offering price that includes a maximum sales charge of 1.00% of the public offering price of such shares; and Class A shares or shares of certain other funds, listed below and referred to herein as the "No Load Funds," are sold at net asset value, without payment of a sales charge. LOAD FUNDS: LOWER LOAD FUNDS: AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND CLASS A FUND -- CLASS A -- CLASS A AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS: VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A AIM CAPITAL DEVELOPMENT AIM MONEY MARKET FUND -- CLASS A FUND -- CLASS A AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND AIM CONSTELLATION FUND -- CLASS A FUND -- CLASS A AIM TAX-EXEMPT BOND FUND AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A FUND -- CLASS A AIM VALUE FUND -- CLASS A AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on the terms described on the chart below, except that (i) 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 AIM Cash Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B shares may be exchanged only for Class B shares; (v) Class C shares may only be exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares. MCF-02/98 A-11 87 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 FUNDS: LOWER LOAD NO LOAD ------------------------------ FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C ----- -------------- ----------------------- ----------------- -------------- -------------- Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable Funds.......... No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable were directly purchased. Net Load shares were Asset Value if No Load shares acquired upon exchange were acquired upon exchange of of shares of any Load shares of any Load Fund or any Fund or any Lower Load Lower Load Fund. Fund; otherwise, Offering Price. Multiple Class Funds: Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS: Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable Funds.......... acquired upon exchange of any Load Fund. Otherwise, difference in sales charge will apply. No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable were directly purchased. Net Load shares were Asset Value if No Load shares acquired upon exchange were acquired upon exchange of of shares of any Load shares of any Load Fund. Fund or any Lower Load Difference in sales charge will Fund; otherwise, Of- apply if No Load shares were fering Price. acquired upon exchange of Lower Load Fund shares. Multiple Class Funds: Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
An exchange is permitted only in the following circumstances: (a) if the funds offer more than one class of shares, the exchange must be between the same class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C shares of another Multiple Class Fund; (b) the dollar amount of the exchange must be at least equal to the minimum investment applicable to the shares of the fund acquired through such exchange; (c) the shares of the fund acquired through exchange must be qualified for sale in the state in which the shareholder resides; (d) the exchange must be made between accounts having identical registrations and addresses; (e) the full amount of the purchase price for the shares being exchanged must have already been received by the fund; (f) the account from which shares have been exchanged must be coded as having a certified taxpayer identification number on file or, in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must have been received by the fund; (g) newly acquired shares (through either an initial or subsequent investment) are held in an account for at least ten business days, and all other shares are held in an account for at least one day, prior to the exchange; and (h) certificates representing shares must be returned before shares can be exchanged. There is no fee for exchanges among the AIM Funds. THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER. THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE. Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are redeemed at their net asset value as determined at NYSE Close on the day that an exchange request in proper form (described below) is received. Exchange requests received MCF-02/98 A-12 88 after NYSE Close will result in the redemption of shares at their net asset value at NYSE Close on the next business day. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends (See "Dividends, Distributions and Tax Matters -- Dividends and Distributions," below), and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange. Shares purchased by check may not be exchanged until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." In the event of unusual market conditions, AIM Distributors reserves the right to reject any exchange request, if, in the judgment of AIM Distributors, the number of requests or the total value of the shares that are the subject of the exchange places a material burden on a fund. For example, the number of exchanges by investment managers making market timing exchanges may be limited. EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a written request to AFS. The request should contain the account registration and account number, the dollar amount or number of shares to be exchanged, and the names of the funds from which and into which the exchange is to be made. The request should comply with all of the requirements for redemption by mail, except those required for redemption of IRAs. See "How to Redeem Shares." EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange by telephone. If a shareholder does not wish to allow telephone exchanges by any person in his account, he should decline that option on the account application. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach AFS by telephone, he may also request exchanges by telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by the Transfer Agent as long as such request is received prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any telephone exchange request that they reasonably believe to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge will not be imposed in connection with exchanges among Class B shares or among Class C shares. For purposes of determining a shareholder's holding period of Class B or Class C shares in the calculation of the applicable contingent deferred sales charge, the period of time during which Class B or Class C shares were held prior to an exchange will be added to the holding period of the applicable Class B or Class C shares acquired in an exchange. - -------------------------------------------------------------------------------- HOW TO REDEEM SHARES Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the obligation of the fund(s) named on the cover page to redeem shares, AIM Distributors also repurchases shares. Although a contingent deferred sales charge may be applicable to certain redemptions, as described below, there is no redemption fee imposed when shares are redeemed or repurchased; however, dealers may charge service fees for handling repurchase transactions. MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under the Multiple Distribution System may be redeemed on any business day of a Multiple Class Fund at the net asset value per share next determined following receipt of the redemption order, as described under the caption "Timing and Pricing of Redemption Orders," less the applicable contingent deferred sales charge shown in the table below. No deferred sales charge will be imposed (i) on redemptions of Class B shares following six years from the date such shares were purchased, (ii) on Class B shares acquired through reinvestments of dividends and distributions attrib- MCF-02/98 A-13 89 utable to Class B shares or (iii) on amounts that represent capital appreciation in the shareholder's account above the purchase price of the Class B shares.
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 and distributions; third, of shares held for more than six years from the date such shares were purchased; and fourth, of shares held less than six years from the date such shares were purchased. The applicable sales charge will be applied against the lesser of the current market value of shares redeemed or their original cost. Class C Shares. Class C shares purchased under the Multiple Distribution System may be redeemed on any business day of a Multiple Class Fund at the net asset value per share next determined following receipt of the redemption order, as described under the caption "Timing and Pricing of Redemption Orders," less a 1% contingent deferred sales charge. No deferred sales charge will be imposed (i) on redemptions of Class C shares following one year from the date such shares were purchased; (ii) on Class C shares acquired through reinvestment of dividends and distributions attributable to Class C shares; (iii) on amounts that represent capital appreciation in the shareholder's account above the purchase price of the Class C shares; (iv) on redemptions of additional purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these funds (shareholders whose broker/dealers maintain a single omnibus account with the Transfer Agent on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995 from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996). Waivers. Contingent deferred sales charges on Class B and Class C shares will be waived on redemptions (1) following the death or post-purchase disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust (provided AIM Distributors is notified of such death or post-purchase disability at the time of the redemption request and is provided with satisfactory evidence of such death or post-purchase disability), (2) in connection with certain distributions from individual retirement accounts, custodial accounts maintained pursuant to Code Section 403(b), deferred compensation plans qualified under Code Section 457 and plans qualified under Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do not exceed on an annual basis 12% of the value of the shareholder's investment in Class B or Class C shares at the time the shareholder elects to participate in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to liquidate a shareholder's account if the aggregate net asset value of shares held in the account is less than the designated minimum account size described in the prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in Class B or Class C shares and (6) of Class C shares where such investor's dealer of record, due to the nature of the investor's account, notifies AIM Distributors prior to the time of investment that the dealer waives the payment otherwise payable to the dealer described in the fifth paragraph under the caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds." Waiver category (1) above applies only to redemptions of Class B or Class C shares held at the time of death or initial determination of post-purchase disability. Waiver category (2) above applies only to redemptions resulting from: (i) required minimum distributions to plan participants or beneficiaries who are age 70- 1/2 or older, and only with respect to that portion of such distributions which does not exceed 12% annually of the participant's or beneficiary's account value in a particular AIM Fund; (ii) in kind transfers of assets where the participant or beneficiary notifies AIM Distributors of such transfer no later than the time such transfer occurs; (iii) tax-free rollovers or transfers of assets to another Retirement Plan invested in Class B or Class C shares of one or more Multiple Class Funds; (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. MCF-02/98 A-14 90 CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for purchases of Class B and Class C shares of a Multiple Class Fund and purchases of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN 18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds participating in this program, see "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the lesser of the value of the shares redeemed (excluding reinvested dividends and capital gain distributions) or the total original cost of such shares. In determining whether a contingent deferred sales charge is payable, and the amount of any such charge, shares not subject to the contingent deferred sales charge are redeemed first (including shares purchased by reinvested dividends and capital gains distributions and amounts representing increases from capital appreciation), and then other shares are redeemed in the order of purchase. No such charge will be imposed upon exchanges unless the shares acquired by exchange are redeemed within 18 months of the date the shares were originally purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired through an exchange of shares which previously were subject to the 1% contingent deferred sales charge will be credited with the period of time such exchanged shares were held, and (ii) shares of any Load Fund which are subject to the 1% contingent deferred sales charge and which were acquired through an exchange of shares of a Lower Load Fund or a No Load Fund which previously were not subject to the 1% contingent deferred sales charge will not be credited with the period of time such exchanged shares were held. The charge will be waived in the following circumstances: (1) redemptions of shares by employee benefit plans ("Plans") qualified under Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the Code and sponsored by nonprofit organizations as defined under Section 501(c)(3) of the Code, where shares are being redeemed in connection with employee terminations or withdrawals, and (a) the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being redeemed were purchased by an employer-sponsored Plan with at least 100 eligible employees; provided, however, that Plans created under Section 403(b) of the Code which are sponsored by public educational institutions shall qualify under (a), (b) or (c) above on the basis of the value of each Plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the Plan or on the number of eligible employees; (2) redemptions of shares following the death or post-purchase disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of shares purchased at net asset value by private foundations or endowment funds where the initial amount invested was at least $1,000,000; (4) redemptions of shares purchased by an investor in amounts of $1,000,000 or more where such investor's dealer of record, due to the nature of the investor's account, notifies AIM Distributors prior to the time of investment that the dealer waives the payments otherwise payable to the dealer as described in the third paragraph under the caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do not exceed on an annual basis 12% of the value of the shareholder's investment in Class A shares at the time the shareholder elects to participate in the Systematic Withdrawal Plan. REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the Transfer Agent. Upon receipt of a redemption request in proper form, payment will be made as soon as practicable, but in any event will normally be made within seven days after receipt. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." Requests for redemption must include: (a) original signatures of each registered owner exactly as the shares are registered; (b) the Fund and the account number of shares to be redeemed; (c) share certificates, either properly endorsed or accompanied by a duly executed stock power, for the shares to be redeemed if such certificates have been issued and the shares are not in the custody of the Transfer Agent; (d) signature guarantees, as described below; and (e) any additional documents that may be required for redemption by corporations, partnerships, trusts or other entities. The burden is on the shareholder to inquire as to whether any additional documentation is required. Any request not in proper form may be rejected and in such case must be renewed in writing. In addition to these requirements, shareholders who have invested in a fund to establish an IRA, should include the following information along with a written request for either partial or full liquidation of fund shares: (a) a statement as to whether or not the shareholder has attained age 59- 1/2; and (b) a statement as to whether or not the shareholder elects to have federal income tax withheld from the proceeds of the liquidation. REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone. If a shareholder does not wish to allow telephone redemptions by any person in his account, he should decline that option on the account application. The telephone redemption feature can be used only if: (a) the redemption proceeds are to be mailed to the address of record or transferred electronically or wired to the pre-authorized bank account; (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 in the appropriate form if they reasonably believe such request to be gen- MCF-02/98 A-15 91 uine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that same business day. If the redemption order is received after 11:30 a.m. and prior to NYSE Close, the redemption will be made at the next determined net asset value and payment will generally be transmitted on the next business day. REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the appropriate authorization form, shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement accounts or qualified plans. Checks may be drawn in any amount of $250 or more. Checks drawn against insufficient shares in the account, against shares held less than ten business days, or in amounts of less than the applicable minimum will be returned to the payee. The payee of the check may cash or deposit it in the same way as an ordinary bank check. When a check is presented to the Transfer Agent for payment, the Transfer Agent will cause a sufficient number of shares of such fund to be redeemed to cover the amount of the check. Shareholders are entitled to dividends on the shares redeemed through the day on which the check is presented to the Transfer Agent for payment. TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds (other than AIM MONEY MARKET FUND) are redeemed at their net asset value next computed after a request for redemption in proper form (including signature guarantees and other required documentation for written redemptions) is received by the Transfer Agent, except that shares that are subject to a contingent deferred sales charge, may be subject to the imposition of deferred sales charges that will be deducted from the redemption proceeds. See "Multiple Distribution System" and "Contingent Deferred Sales Charge Program for Large Purchases." Orders for the redemption of shares received in proper form prior to NYSE Close on any business day of an AIM Fund will be confirmed at the price determined as of the close of that day. Orders received after NYSE Close will be confirmed at the price determined on the next business day of an AIM Fund. Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or NYSE Close on any business day of the Fund will be confirmed at the price next determined. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis. Any resulting loss from the dealer's failure to submit a request for redemption within the prescribed time frame will be borne by that dealer. Telephone redemption requests must be made by NYSE Close on any business day of an AIM Fund and will be confirmed at the price determined as of the close of that day. No AIM Fund will accept requests which specify a particular date for redemption or which specify any special conditions. Payment of the proceeds of redeemed shares is normally made within seven days following the redemption date. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special handling (such as wiring of funds or expedited delivery services) may be made by the Transfer Agent. The right of redemption may not be suspended or the date of payment upon redemption postponed except under unusual circumstances such as when trading on the NYSE is restricted or suspended. Payment of the proceeds of redemptions relating to shares for which checks sent in payment have not yet cleared will be delayed until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. SIGNATURE GUARANTEES. A signature guarantee is designed to protect the investor, the AIM Funds, AIM Distributors, and their agents by verifying the signature of each investor seeking to redeem, transfer, or exchange shares of an AIM Fund. Examples of when signature guarantees are required are: (1) redemptions by mail in excess of $50,000; (2) redemptions by mail if the proceeds are to be paid to someone other than the name(s) in which the account is registered; (3) written redemptions requesting proceeds to be sent 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 or electronic funds transfer 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 MCF-02/98 A-16 92 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 Class A shares of any AIM Fund at the net asset value next computed after receipt by the Transfer Agent of the funds to be reinvested; provided, however, if the redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject to the difference in sales charge between the shares redeemed and the shares the proceeds are reinvested in. The shareholder must ask the Transfer Agent for such privilege at the time of reinvestment. A realized gain on the redemption is taxable, and reinvestment may alter any capital gains payable. If there has been a loss on the redemption and shares of the same fund are repurchased, all of the loss may not be tax deductible, depending on the timing and amount reinvested. Under the Code, if the redemption proceeds of fund shares on which a sales charge was paid are reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales charge within 90 days of the payment of the sales charge, the shareholder's basis in the fund shares redeemed may not include the amount of the sales charge paid, thereby reducing the loss or increasing the gain recognized from the redemption; however, the shareholder's basis in the fund shares purchased will include the sales charge. Each AIM Fund may amend, suspend or cease offering this privilege at any time as to shares redeemed after the date of such amendment, suspension or cessation. This privilege may only be exercised once each year by a shareholder with respect to each AIM Fund. Shareholders who are assessed a contingent deferred sales charge in connection with the redemption of Class A shares and who subsequently reinvest a portion or all of the value of the redeemed shares in Class A shares of any AIM Fund within 90 days after such redemption may do so at net asset value if such privilege is claimed at the time of reinvestment. Such reinvested proceeds will not be subject to either a front-end sales charge at the time of reinvestment or an additional contingent deferred sales charge upon subsequent redemption. In order to exercise this reinvestment privilege, the shareholder must notify the Transfer Agent of his or her intent to do so at the time of reinvestment. This reinvestment privilege does not apply to Class B or Class C shares. - -------------------------------------------------------------------------------- DETERMINATION OF NET ASSET VALUE The net asset value per share (or share price) of each AIM Fund is determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with respect to AIM MONEY MARKET FUND), on each "business day" of a fund as previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of an AIM Fund's share will be determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the NYSE.The net asset value per share is calculated by subtracting a class' liabilities from its assets and dividing the result by the total number of class shares outstanding. The determination of net asset value per share is made in accordance with generally accepted accounting principles. Among other items, liabilities include accrued expenses and dividends payable, and total assets include portfolio securities valued at their market value, as well as income accrued but not yet received. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the fund's officers and in accordance with methods which are specifically authorized by its governing Board of Directors or Trustees. Short-term obligations with maturities of 60 days or less, and the securities held by the Money Market Funds, are valued at amortized cost as reflecting fair value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of an AIM Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which the values of the securities are determined and the close of the NYSE which will not be reflected in the computation of an AIM Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the applicable AIM Fund. MCF-02/98 A-17 93 - -------------------------------------------------------------------------------- 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 ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually AIM BALANCED FUND......................... declared and paid quarterly annually annually AIM BLUE CHIP FUND........................ declared and paid annually annually annually AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually AIM CHARTER FUND.......................... declared and paid quarterly annually annually AIM CONSTELLATION FUND.................... declared and paid annually annually annually AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually AIM GROWTH FUND........................... declared and paid annually annually annually AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually AIM INCOME FUND........................... declared daily; paid monthly annually annually AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually 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 a class are reinvested in additional shares of such class, absent an election by a shareholder to receive cash or to have such dividends and distributions reinvested in like shares of another Multiple Class Fund, to the extent permitted. For funds that do not declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. For funds that declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the payable date. Shareholders may elect, by written notice to the Transfer Agent, to receive such distributions, or the dividend portion thereof, in cash, or to invest such dividends and distributions in shares of another fund in the AIM Funds; provided that (i) dividends and distributions attributable to Class B shares may only be reinvested in Class B shares, (ii) dividends and distributions attributable to Class C shares may only be reinvested in Class C shares (iii) dividends and distributions attributable to Class A shares may not be reinvested in Class B or Class C shares, and (iv) dividends and distributions attributable to the AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in any Class B or Class C shares. Investors who have not previously selected such a reinvestment option on the account application form may contact the Transfer Agent at any time to obtain a form to authorize such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales charges, and shares so purchased are automatically credited to the account of the shareholder. Dividends on Class B and Class C shares are expected to be lower than those for Class A shares or AIM Cash Reserve Shares because of higher distribution fees paid by Class B and Class C shares. Dividends on all shares may also be affected by other class-specific expenses. Changes in the form of dividend and distribution payments may be made by the shareholder at any time by notice to the Transfer Agent and are effective as to any subsequent payment if such notice is received by the Transfer Agent prior to the record date of such MCF-02/98 A-18 94 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 HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are exempt from federal tax. Dividends paid by a fund (other than capital gain distributions) may qualify for the federal 70% dividends received deduction for corporate shareholders to the extent of the qualifying dividends received by the fund on domestic common or preferred stock. It is not likely that dividends received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY FUND, 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 FUND will qualify for this dividends received deduction. Shortly after the end of each year, shareholders will receive information regarding the amount and federal income tax treatment of all distributions paid during the year. Certain dividends declared in October, November or December of a calendar year are taxable to shareholders as though received on December 31 of that year if paid to shareholders during January of the following calendar year. No gain or loss will be recognized by shareholders upon the automatic conversion of Class B shares of a Multiple Class Fund into Class A shares of such Fund. With respect to tax-exempt shareholders, distributions from the Funds will not be subject to federal income taxation to the extent permitted under the applicable tax- exemption. For each redemption of a fund's shares by a non-exempt shareholder, the fund or the securities dealer effecting the transaction is required to file an information return with the IRS. TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON. Under existing provisions of the Code, nonresident alien individuals, foreign partnerships and foreign corporations may be subject to federal income tax withholding at a 30% rate on ordinary income dividends and distributions (other than exempt-interest dividends and capital gain dividends) and return of capital distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption. DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL INFORMATION. TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required to include the "exempt-interest" portion of dividends paid by the Tax-Exempt Funds in their gross income for federal income tax purposes. However, shareholders will be required to report the receipt of exempt-interest dividends and other tax-exempt interest on their federal income tax returns. Moreover, exempt-interest dividends from the Tax-Exempt Funds may be subject to state income taxes, may give rise to a federal alternative minimum tax liability, may affect the amount of social security benefits subject to federal income tax, may affect the deductibility of interest on certain indebtedness of the shareholder, and may have other collateral federal income tax consequences. The Tax-Exempt Funds may invest in Municipal Securities the interest on which will constitute an item of tax preference and which therefore could give rise to a federal alternative minimum tax liability for shareholders, and may invest up to 20% of their net assets in such securities and MCF-02/98 A-19 95 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 FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes dividends paid by mutual funds out of interest on U.S. Treasury and certain other U.S. Government obligations, and investors should consult with their own tax advisors concerning the availability of such exemption. AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so, each of these funds may elect to pass through to shareholders credits for foreign taxes paid. If the fund makes such an election, a shareholder who receives a distribution (1) will be required to include in gross income his proportionate share of foreign taxes allocable to the distribution and (2) may claim a credit or deduction for such share for his taxable year in which the distribution is received, subject to the general limitations imposed on the allowance of foreign tax credits and deductions. Shareholders should also note that certain gains or losses attributable to fluctuations in exchange rates or foreign currency forward contracts may increase or decrease the amount of income of the fund available for distribution to shareholders, and should note that if such losses exceed other income during a taxable year, the fund would not be able to pay ordinary income dividends. - -------------------------------------------------------------------------------- GENERAL INFORMATION CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, serves as custodian for the portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds. A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend payment agent. LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon legal matters. SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should be directed to an A I M Fund Services, Inc. Client Services Representative by calling (800) 959-4246. The Transfer Agent may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM Management and its subsidiaries rely on both internal software systems as well as external software systems provided by third parties. Many software systems in use today are unable to distinguish between the year 2000 from the year 1900. This defect if not cured will likely adversely affect the services that AIM Management, its subsidiaries and other service providers provide the AIM Funds and their shareholders. To address this issue, AIM Management and its subsidiaries, together with independent technology consultants, are undertaking a comprehensive Year 2000 Compliance Project (the "Project"). The Project consists of three phases, namely (i) inventorying every software application in use at AIM Management and its subsidiaries, as well as remote, third party software systems on which AIM Management and its subsidiaries rely, (ii) identifying those applications that may not function properly after December 31, 1999, and (iii) correcting and subsequently testing those applications that may not function properly after December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has commenced. The Project is scheduled to be completed during the fourth quarter of 1998. Software applications acquired by AIM Management and its subsidiaries after completion of the Project will be reviewed to confirm Year 2000 compliance upon installation MCF-02/98 A-20 96 OTHER INFORMATION. This Prospectus sets forth basic information that investors should know about the fund(s) named on the cover page prior to investing. Recipients of this Prospectus will be provided with a copy of the annual report of the fund(s) to which this Prospectus relates, upon request and without charge. If several members of a household own shares of the same fund, only one annual or semi-annual report will be mailed to that address. To receive additional copies, please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional Information has been filed with the SEC and is available upon request and without charge, by writing or calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov that contains the Statement of Additional Information, material incorporated by reference, and other information regarding the Fund. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from this Prospectus, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. MCF-02/98 A-21 97 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. Transfers to Minors Other Organization Other Organization 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 for the Requester of Form W-9 (which can be obtained from the IRS) and includes, among others, the following: - - a corporation - - an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7) - - the United States or any of its agencies or instrumentalities - - a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities - - a foreign government or any of its political subdivisions, agencies or instrumentalities - - an international organization or any of its agencies or instrumentalities - - a foreign central bank of issue - - a dealer in securities or commodities required to register in the U.S. or a possession of the U.S. - - a futures commission merchant registered with the Commodity Futures Trading Commission - - a real estate investment trust - - an entity registered at all times during the tax year under the Investment Company Act of 1940 - - a common trust fund operated by a bank under Section 584(a) - - a financial institution - - a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List - - a trust exempt from tax under Section 664 or described in Section 4947 Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding. NOTE: Section references are to sections of the Code. IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment. MCF-AAF-02/98 B-1 98 NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 remains in effect for three calendar years beginning with the calendar year in which it is received by the Fund. Such shareholders may, however, be subject to appropriate withholding as described in the Prospectus under "Dividends, Distributions and Tax Matters." SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone exchange privilege at any time without notice. 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"). SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), present or future, with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor (see the applicable Fund's prospectus under the caption "How to Redeem Shares -- Redemptions by Mail"). MCF-AAF-02/98 B-2 99 [AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark-- Investment Advisor A I M Advisors, Inc. 11 Greenway Plaza, Suite 100 Houston, TX 77046-1173 Transfer Agent A I M Fund Services, Inc. P.O. Box 4739 Houston TX 77210-4739 Custodian 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 Houston, TX 77002 For more complete information about any other Fund in The AIM Family of Funds--Registered Trademark--, including charges and expenses, please call (800) 347-4246 or write to A I M Distributors, Inc. and request a free prospectus. Please read the prospectus carefully before you invest or send money. INT-PRO-1 100 STATEMENT OF ADDITIONAL INFORMATION AIM ASIAN GROWTH FUND AIM EUROPEAN DEVELOPMENT FUND AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND AIM INTERNATIONAL EQUITY FUND (SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.) 11 Greenway Plaza Suite 100 Houston, Texas 77046-1173 (713) 626-1919 ----------------- THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739, OR BY CALLING (800) 347-4246 ----------------- Statement of Additional Information dated: February 20, 1998, Relating to the AIM International Equity Fund Prospectus dated February 20, 1998, the AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund Prospectus dated February 20, 1998, the AIM Asian Growth Fund Prospectus dated November 12, 1997, as revised January 2, 1998, and the AIM European Development Fund Prospectus dated November 12, 1997, as revised January 2, 1998 101 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Privatized Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 15 Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Countries in Which Asian Fund and European Fund May Invest . . . . . . . . . . . . . . . . . . . . . . . . . 17 INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Aggressive Growth Fund, Growth Fund, and Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Asian Fund and European Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 29 Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Investment Advisory, Sub-Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . 31 THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
i 102 THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
ii 103 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 is included in the AIM Asian Growth Fund Prospectus dated November 12, 1997, as revised January 2, 1998; the AIM European Development Fund Prospectus dated November 12, 1997, as revised January 2, 1998; the AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund Prospectus, dated February 20, 1998 and the AIM International Equity Fund Prospectus dated February 20, 1998 (individually, a "Prospectus" and collectively, the "Prospectuses"). Copies of each 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 (800) 347-4246. 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 (hereinafter defined). Some of the information required to be in this Statement of Additional Information is also included in each Fund's current Prospectus, and in order to avoid repetition, reference will be made herein to sections of the applicable Prospectus. Additionally, each 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 each 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 six separate portfolios: AIM Asian Growth Fund (the "Asian Fund"), AIM European Development Fund ( the "European Fund"), AIM Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM Global Growth Fund (the "Growth Fund") and AIM Global Income Fund ( the "Income Fund") and AIM International Equity Fund (the "Equity Fund") (individually, a "Fund" and collectively, the "Funds"). Each portfolio of the Company offers Class A, Class B and Class C shares. This Statement of Additional Information relates solely to the Funds. As used in each 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 1 104 can be expected to fluctuate. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. 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. For Asian Fund and European Fund total returns may be quoted with or without taking the Class A shares' 5.50% maximum sales charge, the Class B shares' 5% maximum contingent deferred sales charge ("CDSC") or the Class C shares' 1% maximum CDSC into account. For Aggressive Growth Fund, Growth 2 105 Fund and Income Fund total returns may be quoted with or without taking the Class A shares' 4.75% maximum sales charge, the Class B shares' 5% maximum CDSC or the Class C shares' 1% maximum CDSC into account. For Equity Fund total returns may be quoted with or without taking the Class A shares' 5.50% maximum sales charge, the Class B shares' 5% maximum CDSC or the Class C shares' 1% maximum CDSC into account. Excluding sales charges from a total return calculation produces a higher total return figure. YIELD QUOTATIONS The standard formula for calculating yield for the Income Fund, as described in the Prospectus, is as follows: 6 YIELD = 2[((a-b)/(c x d) +1) -1] Where a = dividends and interest earned during a stated 30-day period. For purposes of this calculation, dividends are accrued rather than recorded on the ex-dividend date. Interest earned under this formula must generally be calculated based on the yield to maturity of each obligation (or, if more appropriate, based on yield to call date). b = expenses accrued during period (net of reimbursement). c = the average daily number of shares outstanding during the period. d = the maximum offering price per share on the last day of the period. The yields for the Class A, Class B and Class C shares of Income Fund for the 30-day period ended October 31, 1997 were as follows:
With Without Waivers Waivers ------- ------- Class A . . . . . . . . . . . 5.59% 5.06% Class B . . . . . . . . . . . 5.38% 4.82% Class C . . . . . . . . . . . 5.38% 4.82%
HISTORICAL PORTFOLIO RESULTS Total returns for each of the named Funds, with respect to its Class A shares, for the one- and five-year periods (or since inception, if shorter) ended October 31, 1997 (which include the maximum sales charge and reinvestment of all dividends and distributions), were as follows:
Average Annual Total Return Cumulative Return --------------------------- ----------------- Periods ended October 31, 1997 Periods ended October 31, 1997 ------------------------------ ------------------------------ One Five One Five Class A Shares: Year Years Year Years - --------------- -------- ----- -------- ----- Aggressive Growth Fund 4.41% 17.41%* 4.41% 65.16%* Equity Fund 5.33% 14.34% 5.33% 95.45% Growth Fund 11.67% 16.55%* 11.67% 61.39%* Income Fund 3.88% 9.84%* 3.88% 34.11%*
* The inception date for the Class A shares of each of Aggressive Growth Fund, Growth Fund and Income Fund was September 15, 1994. Total returns for each of the named Funds, with respect to its Class B shares, for the one-year period ended October 31, 1997 and the period September 15, 1994 (inception date) through October 31, 1997 (which 3 106 include the maximum contingent deferred sales charge and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return --------------------------- ----------------- Periods ended October 31, 1997 Periods ended October 31, 1997 ------------------------------ ------------------------------ One Since One Since Class B Shares: Year Inception Year Inception - --------------- -------- --------- -------- --------- Aggressive Growth Fund 4.11% 17.97% 4.11% 67.61% Equity Fund 9.03% 8.83% 9.03% 30.30% Growth Fund 11.65% 17.09% 11.65% 63.76% Income Fund 3.48% 10.22% 3.48% 35.55%
Total returns for Class C shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund for the period August 4, 1997 (inception date) through October 31, 1997 (which include the maximum contingent deferred sales charge and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return --------------------------- ----------------- Periods ended October 31, 1997 Periods ended October 31, 1997 ------------------------------ ------------------------------ One Since One Since Class C Shares: Year Inception Year Inception - --------------- -------- --------- -------- --------- Aggressive Growth Fund N/A N/A N/A -8.48% Equity Fund N/A N/A N/A -8.69% Growth Fund N/A N/A N/A -6.69% Income Fund N/A N/A N/A 1.99%
Average annual total return is not available for Class A, B and C shares of Asian Fund or European Fund as the inception date of the Class A, B and C shares of such Funds was November 3, 1997. During the one-year period ended October 31, 1997, a hypothetical $1,000 investment in the Class A shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,044.11, $1,053.32, $1,116.70 and $1,038.76, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. For the period September 15, 1994 (inception date for Aggressive Growth Fund, Growth Fund and Income Fund) through October 31, 1997, and the five-year period ended October 31, 1997, for Equity Fund, a hypothetical $1,000 investment in the Class A shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,651.60, $1,986.22, $1,613.91 and $1,341.11, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. During the one-year period ended October 31, 1997, a hypothetical $1,000 investment in the Class B shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,041.14, $1,056.11, $1,116.55 and $1,039.76, 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, 1997, a hypothetical $1,000 investment in the Class B shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,302.97, $1,355.45, $1,637.62 and $1,676.12, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. 4 107 For the period August 4, 1997 (inception date) through October 31, 1997, a hypothetical $1,000 investment in the Class C shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $915.17, $913.11, $933.07, and $1,091.91, 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, 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. 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. 5 108 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; (3) certain products and/or services provided to the Funds, the cost of which will be included in Fund expenses reported to shareholders; and (4) 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. Subject to the overall objective of obtaining best net price and most favorable execution for the Funds, AIM may also consider sales of shares by broker-dealers 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. In such cases, Fund trades may be executed directly by selling dealers or by other broker-dealers with which selling dealers have clearing arrangements. 6 109 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 certain 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 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. 7 110 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, purchases 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 the spread between the bid and asked prices. Purchases and sales for Aggressive Growth Fund, Asian Fund, European Fund, Growth Fund and Equity Fund generally involve a broker, and consequently involve the payment of commissions. 8 111 As of October 31, 1997, Growth Fund had common stock holdings in Merrill Lynch & Co., Inc. having a market value of $1,210,488. Merrill Lynch & Co., Inc. is a regular broker/dealer of the Company, as defined in Rule 10b-1. BROKERAGE COMMISSIONS PAID For the fiscal years ended October 31, 1997, 1996 and 1995, Aggressive Growth Fund paid brokerage commissions of $6,227,671, $5,169,447 and $1,409,761, respectively. The increase in brokerage commissions from October 31, 1995 through October 31, 1997 was due to the increase in Aggressive Growth Fund's net assets during such period. For the fiscal year ended October 31, 1997, 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 $79,719,730 and the related brokerage commissions were $111,081. For the fiscal years ended October 31, 1997, 1996, and 1995, Equity Fund paid brokerage commissions of $6,002,915, $5,666,504 and $3,169,134, respectively. The increase in brokerage commissions from October 31, 1995 through October 31, 1997 was due to the increase in Equity Fund's net assets during such period. For the fiscal year ended October 31, 1997, AIM allocated certain of Equity Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $5,879,466 and the related brokerage commissions were $2,967. For the fiscal years ended October 31, 1997, 1996 and 1995, Growth Fund paid brokerage commissions of $1,249,946, $826,284 and $161,100, respectively. The increase in brokerage commissions from October 31, 1995 through October 31, 1997 was due to the increase in Growth Fund's net assets during such period. For the fiscal year ended October 31, 1997, 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 $22,934,086 and the related brokerage commissions were $17,539. For the fiscal years ended October 31, 1997, 1996 and 1995, Income Fund paid brokerage commissions of $162, $1,570 and $6,939, respectively. For the fiscal year ended October 31, 1997, 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 POLICIES 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. 9 112 PRIVATIZED ENTERPRISES The governments of certain foreign countries have, to varying degrees, embarked on privatization programs contemplating the sale of all or part of their interests in state enterprises. European Fund's investments in the securities of privatized enterprises include privately negotiated investments in a government- or state-owned or controlled company or enterprise that has not yet conducted an initial equity offering, investments in the initial offering of equity securities of a state enterprise or former state enterprise and investments in the securities of a state enterprise following its initial equity offering. In certain jurisdictions, the ability of foreign entities, such as European Fund, to participate in privatizations may be limited by local law, or the price or terms on which European Fund may be able to participate may be less advantageous than for local investors. Moreover, there can be no assurance that governments that have embarked on privatization programs will continue to divest their ownership of state enterprises, that proposed privatizations will be successful or that governments will not re-nationalize enterprises that have been privatized. In the case of the enterprises in which European Fund may invest, large blocks of the stock of those enterprises may be held by a small group of stockholders, even after the initial equity offerings by those enterprises. The sale of some portion or all of those blocks could have an adverse effect on the price of the stock of any such enterprise. Prior to making an initial equity offering, most state enterprises or former state enterprises go through an internal reorganization or management. Such reorganizations are made in an attempt to better enable these enterprises to compete in the private sector. However, certain reorganizations could result in a management team that does not function as well as the enterprise's prior management and may have a negative effect on such enterprise. In addition, the privatization of an enterprise by its government may occur over a number of years, with the government continuing to hold a controlling position in the enterprise even after the initial equity offering for the enterprise. Prior to privatization, most of the state enterprises in which European Fund may invest enjoy the protection of and receive preferential treatment from the respective sovereigns that own or control them. After making an initial equity offering these enterprises may no longer have such protection or receive such preferential treatment and may become subject to market competition from which they were previously protected. Some of these enterprises may not be able to effectively operate in a competitive market and may suffer losses or experience bankruptcy due to such competition. 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. 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. 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, 10 113 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. 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. 11 114 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 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 12 115 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 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 13 116 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 Aggressive Growth Fund, Growth Fund and Income Fund, and 15% of the net assets of Equity Fund, European Fund and Asian 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 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 14 117 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 liquid assets with its custodian bank in the amount prescribed. The segregated liquid assets will not be sold while the futures or option strategy is outstanding, unless they are replaced with similar liquid assets. As a result, there is a possibility that segregation of a large percentage of a Fund's liquid 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. 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. 15 118 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. During the time a reverse repurchase agreement is outstanding, the applicable Fund will segregate liquid assets 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. 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. 16 119 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. FOREIGN EXCHANGE TRANSACTIONS Purchases and sales of foreign securities are usually made with foreign currencies, and consequently the Funds may from time to time hold cash balances in the form of foreign currencies and multinational currency units. Such foreign currencies and multinational currency units will usually be acquired on a spot (i.e. cash) basis at the spot rate prevailing in foreign exchange markets and will result in currency conversion costs to the Funds. The Funds attempt to purchase and sell foreign currencies on as favorable a basis as practicable; however, some price spread on foreign exchange transactions (to cover service charges) may be incurred, particularly when the Funds change investments from one country to another, or when U.S. dollars are used to purchase foreign securities. Certain countries could adopt policies which would prevent the Funds from transferring cash out of such countries, and the Funds may be affected either favorably or unfavorably by fluctuations in relative exchange rates while the Funds hold foreign currencies. COUNTRIES IN WHICH ASIAN FUND AND EUROPEAN FUND MAY INVEST The Asian Fund considers issuers of securities located in the following countries to be Asian issuers: Bangladesh Indonesia Philippines Thailand China Korea Singapore Vietnam Hong Kong Malaysia Sri Lanka India Pakistan Taiwan In addition to Asian issuers, Asian Fund may invest up to 20% of its total assets in securities of non-Asian issuers. The following is a list of some of the non-Asian countries in which Asian Fund may invest from time to time: Australia New Zealand 17 120 European Fund considers issuers of securities located in the following countries to be European issuers: Austria Germany Netherlands Slovenia Belgium Greece Norway Spain Croatia Hungary Poland Sweden Czech Republic Ireland Portugal Switzerland Denmark Italy Romania Turkey Finland Liechtenstein Russia Ukraine France Luxembourg Slovakia United Kingdom In addition to European issuers, European Fund may invest up to 20% of its total assets in securities of non-European issuers. The following is a list of some of the non-European countries in which European Fund may invest from time to time: Bermuda Israel South Africa United States Egypt The above lists may include foreign countries that have not yet been approved by the Company's board. Asian Fund and European Fund will only invest in foreign countries that have been approved by the board. The word "Development" in European Fund's name is designed to address the general restructuring taking place in Europe as well as a more dramatic political and economic restructuring taking place in regions such as Eastern Europe. Also consistent with the name, the Fund has the ability to invest a significant portion of its total assets in securities issued in emerging markets. INVESTMENT RESTRICTIONS AGGRESSIVE GROWTH FUND, GROWTH FUND, AND INCOME FUND The following fundamental policies and investment restrictions have been adopted by Aggressive Growth Fund, Growth Fund and Income 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 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 18 121 futures or related options transactions shall not be considered the purchase of a security on margin. 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 and except that a Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 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 and except that a Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 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, except that a Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 12. 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 Aggressive Growth Fund and 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 19 122 each 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 Aggressive Growth Fund or Growth Fund, such Fund will not make any additional purchases of securities for investment purposes. 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: 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. 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. EQUITY FUND The following fundamental policies and investment restrictions have been adopted by Equity 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. 20 123 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. 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. 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. 9. 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, and except that the Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 10. Purchase a security if, as a result, more than 10% of the outstanding voting securities of any issuer would be held by the Fund, except that the Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 11. 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: 12. Make investments for the purpose of exercising control or management. 13. 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." 21 124 14. Invest in securities which are illiquid if more than 15% of the Fund's total assets, taken at market value, would be invested in such securities. 15. 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. ASIAN FUND AND EUROPEAN FUND The following fundamental policies and investment restrictions have been adopted by Asian Fund and European 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 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. 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 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. 22 125 8. 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, except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities and except that a Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. 9. Purchase a security if, as a result, more than 10% of the outstanding voting securities of any issuer would be held by a Fund, except that a Fund may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. The following restrictions are non-fundamental and may be changed by the Company's Board of Directors. Pursuant to such restrictions, each of the Funds will not: 10. Make investments for the purpose of exercising control or management. 11. 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." 12. 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. 13. 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. The following non-fundamental policies apply to all Funds. Subject to the investment restriction on lending portfolio securities, number 13 for Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund and number 11 for Asian Fund and European Fund, 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 of Portfolio Securities" above. 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. 23 126 MANAGEMENT DIRECTORS AND OFFICERS The directors and officers of the Company and their principal occupations during at least the last five years are set forth below.
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST ------------------- --------------------------------------------- NAME, ADDRESS AND AGE REGISTRANT 5 YEARS --------------------- ---------- ------- *CHARLES T. BAUER (78) Director and Chairman of the Board of Directors, 11 Greenway Plaza, Suite 100 Chairman A I M Management Group Inc., A I M Advisors, Houston, TX 77046 Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company; and Vice Chairman and Director, AMVESCAP PLC. BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company). 906 Frome Lane Formerly, Director, President and Chief McLean, VA 22102 Executive Officer, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company). OWEN DALY II (73) Director Director, Cortland Trust Inc. (investment Six Blythewood Road company). Formerly, Director, CF & I Steel Baltimore, MD 21210 Corp., Monumental Life Insurance Company and Monumental General Insurance Company; and Chairman of the Board of Equitable Bancorporation. JACK FIELDS (46) Director Chief Executive Officer, Texana Global, Inc. Jetero Plaza, Suite E Formerly, Member of the U. S. House of 8810 Will Clayton Parkway Representatives. Humble, TX 77338
- ---------------- * A director who is an interested person of A I M Advisors, Inc. and the Company as defined in the 1940 Act. 24 127
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST ------------------- --------------------------------------------- NAME, ADDRESS AND AGE REGISTRANT 5 YEARS --------------------- ---------- ------- **CARL FRISCHLING (60) Director Partner, Kramer, Levin, Naftalis & Frankel 919 Third Avenue (law firm). Director, ERD Waste, Inc. (waste New York, NY 10022 management company), Aegis Consumer Finance (auto leasing company) and Lazard Funds, Inc. (investment companies). Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler Carlson Gubar Brodsky & Frischling (law firm). *ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive 11 Greenway Plaza, Suite 100 President Officer, A I M Management Group Inc.; Houston, TX 77046 Director and President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company; and Director, AMVESCAP PLC. JOHN F. KROEGER (73) Director Director, Flag Investors International Fund, 37 Pippins Way Inc., Flag Investors Emerging Growth Fund, Morristown, NJ 07960 Inc., Flag Investors Telephone Income Fund, Inc., Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel Associates, Inc. (consulting firm). LEWIS F. PENNOCK (55) Director Attorney in private practice in Houston, 6363 Woodway, Suite 825 Texas. Houston, TX 77057
- ---------------- ** A director who is an "interested person" of the Company as defined in the 1940 Act. * A director who is an "interested person" of A I M Advisors, Inc. and the Company as defined in the 1940 Act. 25 128
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST ------------------- --------------------------------------------- NAME, ADDRESS AND AGE REGISTRANT 5 YEARS --------------------- ---------- ------- IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief 183 River Drive Financial Officer, Bell Atlantic Management Tequesta, FL 33469 Services, Inc. (provider of centralized management services to telephone companies); Executive Vice President, Bell Atlantic Corporation (parent of seven telephone companies); and Vice President and Chief Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone Company. LOUIS S. SKLAR (58) Director Executive Vice President, Development and Transco Tower, 50th Floor Operations, Hines Interests Limited 2800 Post Oak Blvd. Partnership (real estate development). Houston, TX 77056 ***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and 11 Greenway Plaza, Suite 100 President and Treasurer, A I M Advisors, Inc.; and Vice Houston, TX 77046 Treasurer 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. and Fund Management Company. GARY T. CRUM (50) Senior Vice Director and President, A I M Capital 11 Greenway Plaza, Suite 100 President Management, Inc.; Director and Senior Vice Houston, TX 77046 President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director, A I M Distributors, Inc. and AMVESCAP PLC.
- ----------------- *** Mr. Arthur and Ms. Relihan are married to each other. 26 129
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST ------------------- --------------------------------------------- NAME, ADDRESS AND AGE REGISTRANT 5 YEARS --------------------- ---------- ------- ***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General 11 Greenway Plaza, Suite 100 President and Counsel and Secretary, A I M Advisors, Inc.; Houston, TX 77046 Secretary Vice President, General Counsel and Secretary, A I M Management Group Inc.; Director, Vice President and General Counsel, Fund Management Company; Vice President, A I M Capital Management, Inc. and A I M Distributors, Inc.; and General Counsel and Vice President, A I M Fund Services, Inc. DANA R. SUTTON (39) Vice President and Vice President and Fund Controller, 11 Greenway Plaza, Suite 100 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice Houston, TX 77046 President and Assistant Treasurer, Fund Management Company. ROBERT G. ALLEY (49) Vice President Senior Vice President, A I M Capital 11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President, Houston, TX 77046 A I M Advisors, Inc. MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer, 11 Greenway Plaza, Suite 100 A I M Advisors, Inc., A I M Capital Houston, TX 77046 Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company. JONATHAN C. SCHOOLAR (36) Vice President Senior Vice President, A I M Capital 11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President, Houston, TX 77046 A I M Advisors, Inc.
The standing committees of the Board of Directors are the Audit Committee, the Investments Committee and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Crockett, Daly, Fields, Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. The Audit Committee is responsible for meeting with the 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. 27 130 The members of the Investments Committee are Messrs. Bauer, Crockett, Daly (Chairman), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The Investments Committee is responsible for reviewing portfolio compliance, brokerage allocation, portfolio investment pricing issues, interim dividend and distribution issues, and considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. The members of the Nominating and Compensation Committee are Messrs. Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The Nominating and Compensation Committee is responsible for considering and nominating individuals to stand for election as directors who are not interested persons as long as 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 services according to a fee schedule which recognizes the fact that such director also serves as a director or trustee of other AIM Funds. Each such director receives a fee, allocated among the AIM Funds for which he serves as a director or trustee, which consists of an annual retainer component and a meeting fee component. 28 131 Set forth below is information regarding compensation paid or accrued for each director of the Company:
RETIREMENT BENEFITS TOTAL AGGREGATE ACCRUED COMPENSATION COMPENSATION BY ALL APPLICABLE FROM ALL APPLICABLE DIRECTOR FROM COMPANY(1) AIM FUNDS(2)(3) AIM FUNDS(4) -------- --------------- ----------------- ------------------- Charles T. Bauer $ 0 $ 0 $ 0 Bruce L. Crockett 6,760 67,774 84,000 Owen Daly II 6,760 103,542 84,000 Jack Fields 4,548 0 71,000 Carl Frischling(5) 6,760 96,520 84,000 Robert H. Graham 0 0 0 John F. Kroeger 6,760 94,132 82,500 Lewis F. Pennock 6,760 55,777 84,000 Ian W. Robinson 6,760 85,912 84,000 Louis S. Sklar 6,680 84,370 83,500
- ---------------- (1) The total amount of compensation deferred by all directors of the Company during the fiscal year ended October 31, 1997, including interest earned thereon, was $28,167. (2) During the fiscal year ended October 31, 1997, the total amount of expenses allocated to the Company in respect of such retirement benefits was $27,879. Data reflect compensation earned for the calendar year ended December 31, 1997. (3) As used herein, "Applicable AIM Funds" means the regulated investment companies managed by AIM. (4) Each Director serves as director or trustee of a total of eleven registered investment companies advised by AIM (comprised of over 45 portfolios). Data reflect total compensation earned during the calendar year ended December 31, 1997. (5) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel $27,224 in legal fees for services provided to the Funds during the fiscal year ended October 31, 1997. Mr. Frischling, a Director of the Company, is a partner in such firm. AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each director (who is not 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 Applicable AIM Funds. Each 29 132 eligible director is entitled to receive an annual benefit from the Applicable AIM Funds commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to 75% of the retainer paid or accrued by the Applicable AIM Funds for such director during the twelve-month period immediately preceding the director's retirement (including amounts deferred under a separate agreement between the Applicable AIM Funds and the director) for the number of such director's years of service (not in excess of 10 years of service) completed with respect to any of the Applicable AIM Funds. Such benefit is payable to each eligible director in quarterly installments. If an eligible director dies after attaining the normal retirement date but before receipt of any benefits under the Plan commences, the director's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased director for no more than ten years beginning the first day of the calendar quarter following the date of the director's death. Payments under the Plan are not secured or funded by any AIM Fund. Set forth below is a table that shows the estimated annual benefits payable to an eligible director upon retirement assuming the retainer amount reflected below and various years of service. The estimated credited years of service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock, Robinson and Sklar are 10,10, 0, 20, 19, 16, 10 and 8 years, respectively. ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
Number of Years Annual Retainer of Service with Paid by all Applicable AIM Funds the Applicable AIM Funds $80,000 --------------- -------------------------------- 10 $60,000 9 $54,000 8 $48,000 7 $42,000 6 $36,000 5 $30,000
DEFERRED COMPENSATION AGREEMENTS Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this paragraph only, the "deferring directors") have each executed a Deferred Compensation Agreement (collectively, the "Agreements"). Pursuant to the Agreements, the deferring directors may elect to defer receipt of up to 100% of their compensation payable by the Company, and such amounts are placed into a deferral account. Currently, the deferring directors may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the deferring directors' deferral accounts will be paid in cash, in generally equal quarterly installments over a period of five (5) or ten (10) years (depending on the Agreement) beginning on the date the deferring director's retirement benefits commence under the Plan. The Company's Board of Directors, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the deferring director's termination of service as a director of the Company. If a deferring director dies prior to the distribution of amounts in his deferral account, the balance of the deferral account will be distributed to his designated beneficiary in a single lump sum payment as soon as practicable after 30 133 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. INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM Management"), a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. 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 of Ethics, (b) to file reports or duplicate confirmations regarding such transactions, (c) to refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security, and (iii) transactions involving securities being considered for investment by an AIM Fund and (d) to abide by certain other provisions under the Code of Ethics. The Code of Ethics also prohibits investment personnel and all other AIM employees from purchasing securities in an initial public offering. Personal trading reports are reviewed periodically by AIM, and the Board of Directors reviews quarterly and annual reports (including information on any substantial violations of the Code of Ethics). Sanctions for violations of the Code of Ethics may include censure, monetary penalties, suspension or termination of employment. The Company, on behalf of the Funds, has entered into a Master Investment Advisory Agreement ("Investment Advisory Agreement") and a Master Administrative Services Agreement ("Administrative Services Agreement"), both dated February 28, 1997, as amended, with AIM. In addition, AIM has entered into a Master Sub-Advisory Agreement (the "Sub- Advisory Agreement") with INVESCO Global Asset Management Limited ("IGAM") with respect to Asian Fund and European Fund. In addition, IGAM has entered into a Sub-Sub-Advisory Agreement with INVESCO Asia Limited ("IAL") with respect to Asian Fund and a Sub-Sub-Advisory Agreement with INVESCO Asset Management Limited ("IAML") with respect to European Fund. See "Management" in the Prospectus. The Investment Advisory Agreement and, with respect to Asian Fund and European Fund, the Sub-Advisory Agreement and Sub-Sub-Advisory Agreements provide that each Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM (or IGAM, IAL and IAML), 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 for the Funds and the Sub-Advisory Agreement and Sub-Sub-Advisory Agreements for Asian Fund and European Fund, each provides that such agreement will continue in effect for two years, 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 and the Sub-Advisory Agreement each provides that the Funds or AIM and, with respect to the Sub-Sub-Advisory Agreements each provides that the applicable Fund, Sub-Sub-Advisor or the Sub-Advisor, may terminate such agreement on sixty (60) days' written notice without penalty. The 31 134 Investment Advisory Agreement, Sub-Advisory Agreement and Sub-Sub-Advisory Agreements each terminates automatically in the event of its assignment. Under the Investment Advisory Agreement, AIM is entitled to receive from each Fund a fee calculated at the following annual rates based on the average daily net assets of the Fund: AIM ASIAN GROWTH FUND AIM EUROPEAN DEVELOPMENT FUND
Net Assets Annual Rate ---------- ----------- First $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.95% Over $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.90% 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% AIM INTERNATIONAL EQUITY FUND Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.95% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
AIM has voluntarily agreed to waive advisory fees under the Investment Advisory Agreement in order to achieve the following annual fee structure for Equity Fund: 0.95% of the first $500 million of Equity Fund's average daily net assets; 0.90% of the next $500 million of Equity Fund's average daily net assets; and 0.85% of Equity Fund's average daily net assets exceeding $1 billion. AIM may terminate such fee waiver at any time without notice to Shareholders. 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. Any fee waivers will be shared proportionately 32 135 by the sub-advisor. Fee waivers or reductions other than those contained in the Advisory Agreement, Sub-Advisory Agreement or Sub-Sub-Advisory Agreements, may be modified or terminated at any time and without notice to investors. For the fiscal years ended October 31, 1997, 1996 and 1995, AIM received advisory fees from each Fund as follows:
1997 1996 1995 ---- ---- ---- Aggressive Growth Fund $ 19,996,061 $ 8,571,918 $ 1,106,108 Equity Fund $ 17,546,102 $ 10,384,642 $ 6,225,765 Growth Fund $ 2,895,282 $ 1,163,814 $ 125,323 Income Fund $ 44,375 $ -0- $ -0-
Under the Sub-Advisory Agreement, IGAM is entitled to receive from AIM with respect to each of Asian Fund and European Fund, a fee calculated at the following annual rates based on the average daily net assets of the Fund:
Net Assets Annual Rate ---------- ----------- First $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.20% Over $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.175%
Under the Sub-Sub-Advisory Agreements IAL, with respect to Asian Fund, and IAML, with respect to European Fund, are each entitled to receive from IGAM an annual fee equal to 100% of the fee received by the Sub-Advisor with respect to the applicable Fund. For the fiscal years ended October 31, 1997, 1996 and 1995, AIM waived advisory fees for each Fund as follows:
1997 1996 1995 ---- ---- ---- Aggressive Growth Fund $ -0- $ -0- $ -0- Equity Fund $ 738,005 $ 299,147 $ 77,672 Growth Fund $ -0- $ -0- $ 19,558 Income Fund $ 302,278 $ 182,596 $ 55,087
The Administrative Services Agreement for the Funds provides that AIM may perform, or arrange for the performance of, certain accounting 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 for two years, 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, and by the affirmative note of the Non-Interested Directors by votes cast in person at a meeting called for such purpose. For the fiscal years ended October 31, 1997, 1996 and 1995, AIM received reimbursement of administrative services costs from each Fund as follows: 33 136
1997 1996 1995 ---- ---- ---- Aggressive Growth Fund $ 109,161 $ 86,330 $ 25,218 Equity Fund $ 105,163 $ 94,250 $ 29,858 Growth Fund $ 87,673 $ 78,151 $ 21,984 Income Fund $ 74,031 $ 74,433 $ 29,858
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. For the fiscal years ended October 31, 1997, 1996 and 1995, AFS received transfer agency and shareholder services fees with respect to each Fund as follows:
1997 1996 1995 ---- ---- ---- Aggressive Growth Fund $ 3,429,751 $ 1,474,675 $ 258,683 Equity Fund $ 1,774,819 $ 1,170,699 $ 757,067 Growth Fund $ 479,472 $ 216,804 $ 33,579 Income Fund $ 72,578 $ 40,282 $ 9,321
THE DISTRIBUTION PLANS THE CLASS A AND C PLAN. The Company has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and Class C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan provides that for Aggressive Growth Fund, Growth Fund and Income Fund the Class A shares pay 0.50% per annum of their average daily net assets, for Equity Fund the Class A shares pay 0.30% per annum of their average daily net assets and for Asian Fund and European Fund the Class A shares pay 0.35% 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. Under the Class A and C Plan, Class C shares of each Fund pay compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class C shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class A and Class C shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class A and Class C shares. Activities appropriate for financing under the Class A and C Plan include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class A and C Plan. THE CLASS 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 and C Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to their 34 137 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. 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 35 138 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, 1997, the Funds paid the following amounts under the Class A and C Plan and the Class B Plan:
% of Class Average Daily Net Assets ------------------------------ Class A Class B Class C* Class A Class B Class C ------------------------------------------------------------------------------ Aggressive Growth Fund $ 5,877,002 $ 11,173,566 $ 6,233 0.50% 1.00% 1.00% Equity Fund $ 4,249,575 $ 5,581,303 $ 13,568 0.30% 1.00% 1.00% Growth Fund $ 778,588 $ 1,847,507 $ 1,532 0.50% 1.00% 1.00% Income Fund $ 137,912 $ 219,155 $ 240 0.50% 1.00% 1.00%
An estimate by category of actual fees paid by the Funds with regard to the Class A shares under the Class A and C Plan during the year ended October 31, 1997 follows:
Aggressive Equity Growth Income Growth Fund Fund Fund Fund ----------- ------------- ----------- --------- CLASS A Advertising . . . . . . . . . . . . $ 140,844 $ 439,918 $ 23,330 $ 4,444 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) . . . . . . . . . . . $ 12,986 $ 39,902 $ 2,029 $ -0- Seminars . . . . . . . . . . . . . . $ 38,957 $ 120,702 $ 7,100 $ 1,111 Compensation to Underwriters to partially offset other marketing expenses . . $ -0- $ -0- $ -0- $ -0- Compensation to Dealers including finder's fees . . . . . . . . . . . $ 5,684,215 $ 3,650,053 $ 746,129 $ 132,357 Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0- Annual Report Total . . . . . . . . $ 5,877,002 $ 4,249,575 $ 778,588 $ 137,912
- -------------- * The Class C shares of all Funds commenced sales on August 4, 1997. 36 139 An estimate by category of actual fees paid by the Funds under the Class B Plan during the year ended October 31, 1997 as follows:
Aggressive Equity Growth Income Growth Fund Fund Fund Fund ----------- ------------ ------------ ---------- CLASS B Advertising . . . . . . . . . . . . $ 1,170,558 $ 574,366 $ 191,750 $ 20,522 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) . . . . . . . . . . . $ 108,051 $ 51,943 $ 16,978 $ 1,954 Seminars . . . . . . . . . . . . . . $ 320,152 $ 156,827 $ 51,932 $ 6,840 Compensation to Underwriters to partially offset upfront dealer commissions and other marketing costs . . . . . . . $ 8,380,175 $ 4,185,977 $ 1,385,630 $ 164,366 Compensation to Dealers . . . . . . $ 1,194,630 $ 612,190 $ 201,217 $ 25,473 Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0- Annual Report Total . . . . . . . . $11,173,566 $ 5,581,303 $ 1,847,507 $ 219,155
An estimate by category of actual fees paid by the Funds with regard to the Class C shares under the Class A and C Plan during the period August 4, 1997 (inception date) through October 31, 1997 as follows:
Aggressive Equity Growth Income Growth Fund Fund Fund Fund ----------- ----------- ---------- ------- CLASS C Advertising . . . . . . . . . . . . $ 1,095 $ 2,652 $ 310 $ 10 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) . . . . . . . . . . . $ 70 $ 222 $ 68 $ 1 Seminars . . . . . . . . . . . . . . $ 388 $ 411 $ -0- $ -0- Compensation to Underwriters to partially offset upfront dealer commissions and other marketing costs . . . . . . . $ 4,675 $ 10,176 $ 1,149 $ 180 Compensation to Dealers . . . . . . $ 5 $ 107 $ 5 $ 49 Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0- Annual Report Total . . . . . . . . $ 6,233 $ 13,568 $ 1,532 $ 240
37 140 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 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, 1998 and each year thereafter, as long as such continuance is specifically approved at least annually by the Board of Directors, including a majority of the Qualified Directors. The 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 and C Plan is amended in a manner which the Board of Directors determines would materially increase the charges paid under the Class A and C Plan, the Class B shares of the Funds will no longer convert into Class A shares of the same Funds unless the Class B shares, voting separately, approve such amendment. If the Class B shareholders do not approve such amendment, the Board of 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 and C Plan, on the one hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.50% of average daily net assets of the Class A shares of Aggressive Growth Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net assets of the Class A shares of Asian Fund and European Fund, and of up to 0.30% of average daily net assets of the Class A shares of Equity Fund, as compared to 1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors 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. 38 141 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 and Class C shares of the Funds was approved by the Board of Directors on June 11, 1997. 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 December 11, 1996. 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 and Class C 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 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. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. 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. 39 142 The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors for the fiscal years ended October 31, 1997, 1996 and 1995:
1997 1996 1995 ---- ---- ----- Sales Amount Sales Amount Sales Amount Charges Retained Charges Retained Charges Retained ------------ ---------- ------------- ---------- -------- -------- Aggressive Growth Fund $12,462,271 $2,200,552 $17,453,757 $3,270,278 $4,770,524 $779,090 Equity Fund $ 7,481,513 $1,172,508 $ 8,663,571 $1,489,975 $3,662,531 $565,101 Growth Fund $ 1,621,736 $ 286,414 $ 2,044,262 $ 388,799 $ 473,172 $ 82,337 Income Fund $ 348,033 $ 59,763 $ 325,210 $ 57,096 $ 156,910 $ 27,115
The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C shareholders for the fiscal years ended October 31, 1997, 1996 and 1995 for Class A and Class B shares and for the period August 4, 1997 (inception date) through October 31, 1997 for Class C shares:
1997 1996 1995 ---- ---- ---- Aggressive Growth Fund $133,018 $ 84,130 $ 68,427 Equity Fund $ 91,984 $ 39,753 $106,168 Growth Fund $ 25,870 $ 14,106 $ 25,155 Income Fund $ 3,397 $ 4,924 $ 3,877
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. 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." AIM may redeem all shares of Aggressive Growth Fund, Equity Fund and Growth Fund in cash. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Fund (Telephone: (800) 959-4246) 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., the Funds' transfer agent, of all required documents in good order. If such documents are not received within a reasonable time after the order 40 143 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 ("NYSE ") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable. 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 the close of trading of the NYSE (generally 4:00 p.m. Eastern Time) on each business day of the Fund. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available fifteen (15) minutes after the close of trading of the NYSE 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. Equity 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. 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. 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. 41 144 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"). 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. 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. 42 145 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 (but not below the net capital gain) 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. 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. Hedging Transactions. 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, 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 (taxable at 20%) 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. The Funds may engage in certain hedging transactions (such as short sales "against the box") that may be subject to special tax treatment as "constructive sales" under section 1259 of the Code if a Fund holds certain "appreciated Financial positions" (defined generally as any interest (including a futures or forward contract, short sale or option) with respect to stock, certain debt instruments, or partnership interests if there would be a gain were such interest sold, assigned, or otherwise terminated at its fair market value). Upon entering into a constructive sales transaction with respect to an appreciated financial position, a Fund will be deemed to have constructively sold such appreciated financial position and will recognize gain as if such position were sold, assigned, or otherwise terminated at its fair market value on the date of such constructive sale (and will take into account any gain in the taxable year which includes such date unless the closed transaction exception applies). 43 146 Other 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 any of the foregoing rules governing Section 1256 contracts, constructive sales, straddle and conversion transactions may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected investment or 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 transactions. 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 (the "QEF 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. For Taxable years beginning after December 31, 1997, each Fund will alternatively be able to make an election to mark any shares of PFIC stock that it holds to market (the "Section 1296 Election"). If the Section 1296 election is made with respect to any PFIC stock, a Fund will recognize ordinary income to the extent that the fair market value of such PFIC stock at the close of any taxable year exceeds its adjusted basis and will also recognize ordinary income in the event that it disposes of any shares of such PFIC stock at a gain. In each case, such ordinary income will be treated as dividend income for purposes of the Income Requirement. A Fund making the Section 1296 Election with respect to any PFIC stock will similarly recognize a deductible ordinary loss to the extent that the adjusted basis of such PFIC stock exceeds its fair market value at the close of any taxable year and will also recognize a deductible ordinary loss in the event that it disposes of such PFIC stock at a loss. However, the amount of any ordinary loss recognized by a Fund making a Section 1296 Election with respect to any PFIC stock may not exceed the amount of ordinary income previously recognized by such Fund by reason of marking such PFIC stock to market. If either the QEF Election or the Section 1296 Election is made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. The Funds' intentions to qualify annually as regulated investment companies may limit their elections with respect to PFIC stock. 44 147 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. Except to the extent otherwise provided in future Treasury regulations any long-term capital gain recognized by a non-corporate shareholder will be subject to tax at a maximum rate of 20% if the shares sold or redeemed were held for more than 18 months. 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, Class B shares or Class C 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. 45 148 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 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 1, 1998. 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. 46 149 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, 700 Louisiana, Houston, Texas 77002, currently serves as the auditors of each Fund. LEGAL MATTERS Legal matters for the Company are passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 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 AIM, P.O. Box 4739, Houston, Texas 77210-4739, is a transfer and dividend disbursing agent for the Class A, Class B and Class C 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. Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank National Association), 712 Main, Houston, Texas 77002, 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. 47 150 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 2, 1998, and the amount of outstanding shares held by such holders are set forth below:
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ AIM International Merrill Lynch, Pierce, 33.13%** -0- Equity Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch, Pierce, 36.84%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 47.42%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 AIM Global Aggressive Merrill Lynch, Pierce, 15.62% -0- Growth Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246
- ------------------ * 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. 48 151
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ Class B shares Merrill Lynch, Pierce, 26.14%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 46.94%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 AIM Global Growth Merrill Lynch, Pierce, 12.45% -0- Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch, Pierce, 22.43% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246
- ------------------ * 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. 49 152
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ Class C shares Merrill Lynch, Pierce 36.29%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 AIM Global Income Fund - Merrill Lynch, Pierce 10.86% -0- Class B shares Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Dain Rauscher Incorporated -0- 21.31% FBO Guarantee & Trust Co. Cust. J. Stuart Johnson IRA 3000 Penn Avenue W. Ext. Warren, PA 16365 Merrill Lynch Pierce 12.45% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Karl Walker & -0- 11.14% Peggy Walker C/PROP RT 2, Box 186 Hockley, TX 77447 Joyce N. Wilson -0- 6.19% TRST. Wilson Family Trust 2524 E. Ames Ave. Anaheim, CA 92806-4701
- ----------------- * 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. 50 153
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ Class B Shares PaineWebber -0- 5.97% FBO Robert S. Carpenter & Alma Lee Carpenter TTEES FBO Robert S. Charit. Remnder TR 9 Lowell Road Wellesley, MA 02181-2723 Donaldson Lufkin, Jenrette 5.68% -0- Securities Corporation Inc. P. O. Box 2052 Jersey City, NJ 07303-9998 AIM European Development Fund - Class A shares Jonathan C. Schoolar -0- 26.00%** 3722 Tartan Lane Houston, TX 77025 INVESCO Trust Company 25.04%** -0- Attn: Sheila Wendland 7800 E. Union Avenue Denver, CO 80237-0000 Michael J. Cemo -0- 12.18% 5604 Buffalo Speedway Houston, TX 77005 Obie & Co. -0- 7.68% FBO Charles T. Bauer 02 001 1365200 PO Box 200547 Mutual Fund Unti 16-HCB-09 Houston, TX 77216-0547 Joel Dobberpuhl and -0- 6.77% Holly Dobberpuhl JTWROS 9006 Ensemble Ct Houston, TX 77040-0000
- --------------- * 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. 51 154
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ Class B shares Merrill Lynch Pierce 29.60%* -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 PaineWebber for the Benefit of -0- 10.48% William F. Manus and Maryette Manus JT TEN 11 Meeker Street West Orange, NJ 07052-4328 Fahnestock & Co. Inc. -0- 7.04% FBO A013235138 Jack Sweeney 125 Broad Street New York, NY 10004 Interstate/Johnson Lane -0- 7.04% FBO 238-82128-19 Interstate Tower P. O. Box 1220 Charlotte, NC 28201-1220 Interstate/Johnson Lane -0- 5.26% FBO 238-82073-14 Interstate Tower P. O. Box 1220 Charlotte, NC 28201-1220 Interstate/Johnson Lane -0- 5.06% FBO 238-75290-15 Interstate Tower P. O. Box 1220 Charlotte, NC 28201-1220
- --------------- * 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. 52 155
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ Class C shares Donaldson Lufkin Jenrette 67.08%** -0- Securities Corporation Inc. P. O. Box 2052 Jersey City, NJ 07303-9998 Interstate/Johnson Lane -0- 39.32%** FBO 238-75485-10 Interstate Tower P. O. Box 1220 Charlotte, NC 28201-1220 AIM Asian Growth Fund - Class A shares INVESCO Trust Company 29.65%** -0- Attn: Sheila Wendland 7800 E Union Ave. Denver, CO 80237-0000 Arthur Dale Griffin III -0- 10.73% 36 Windemere Lane Houston, TX 77063 Jonathan C. Schoolar -0- 10.57% 3722 Tartan Lane Houston, TX 77025 Obie & Co -0- 10.36% FBO Charles T. Bauer 02 001 1365200 PO Box 200547 Mutual Fund Unti 16-HCB-09 Houston, TX 77216-0547 Class B shares Merrill Lynch Pierce 23.18% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246
- --------------- * 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. 53 156
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ John Hamilton Mueller TTEE -0- 14.29% John Hamilton Mueller Revocable Living Trust DTD 02-26-88 3110 E. Fernan Hill Rd Coeur D Alene, ID 83814-7564 Thomas F. Weigel and -0- 12.50% Kathleen M. Weigel JTWROS 309 4th Ave NW Mandan, ND 58554-0000 Donaldson Lufkin Jenrette 8.58% -0- Securities Corporation Inc. P. O. Box 2052 Jersey City, NJ 07303-9998 Class C shares Interstate/Johnson Lane -0- 54.87%** FBO 238-75485-10 Interstate Tower P. O. Box 1220 Charlotte, NC 28201-1220 NFSC FEBO # X33-102920 -0- 45.13%** Gregory S. Beck 8217 W 146th Ter Overland Park, KS 66223
As of February 2, 1998, the directors and officers of the Company as a group owned less than 1% of the outstanding shares of Aggressive Growth Fund, Growth Fund, Equity Fund, Income Fund, Class B and Class C shares of Asian Fund and Class B and Class C shares of European Fund. Also as February 2, 1998, the directors and officers of the Company as a group owned 12.62% and 29.43% of the outstanding Class A shares of Asian Fund and European Fund, respectively. 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. ** 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. 54 157 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. 55 158 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. 56 159 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. 57 160 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 RATINGS SERVICES 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. 58 161 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. 59 162 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. 60 163 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. 61 164 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. 62 165 FINANCIAL STATEMENTS FS 166 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, 1997, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for the three-year period 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 and financial highlights. Our procedures included confirmation of securities owned as of October 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Aggressive Growth Fund as of October 31, 1997, 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, the financial highlights for the three-year period 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 5, 1997 FS-1 167 SCHEDULE OF INVESTMENTS October 31, 1997
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-31.90% AEROSPACE/DEFENSE-0.27% BE Aerospace, Inc.(a) 137,500 $ 3,867,188 - --------------------------------------------------------------- Precision Castparts Corp. 50,000 2,940,625 - --------------------------------------------------------------- 6,807,813 - --------------------------------------------------------------- AUTO PARTS & EQUIPMENT-0.02% Borg-Warner Automotive, Inc. 8,000 436,000 - --------------------------------------------------------------- BANKS (REGIONAL)-0.30% Bank United Corp.-Class A 150,000 6,300,000 - --------------------------------------------------------------- First Savings Bank of Washington Bancorp, Inc. 50,000 1,187,500 - --------------------------------------------------------------- 7,487,500 - --------------------------------------------------------------- BIOTECHNOLOGY-0.09% Curative Health Services, Inc.(a) 75,000 2,259,375 - --------------------------------------------------------------- BROADCASTING (TELEVISION, RADIO & CABLE)-0.46% Heftel Broadcasting Corp.(a) 130,000 8,645,000 - --------------------------------------------------------------- Jacor Communications, Inc.(a) 65,500 2,742,812 - --------------------------------------------------------------- 11,387,812 - --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-1.36% ADC Telecommunications, Inc.(a) 130,000 4,306,250 - --------------------------------------------------------------- Brightpoint, Inc.(a) 218,750 7,218,750 - --------------------------------------------------------------- Coherent Communications Systems Corp.(a) 179,500 5,429,875 - --------------------------------------------------------------- MasTec, Inc.(a) 200,000 6,487,500 - --------------------------------------------------------------- P-COM, Inc.(a) 200,000 4,025,000 - --------------------------------------------------------------- REMEC, Inc.(a) 75,000 1,903,125 - --------------------------------------------------------------- Tellabs, Inc.(a) 84,800 4,579,200 - --------------------------------------------------------------- 33,949,700 - --------------------------------------------------------------- COMPUTERS (HARDWARE)-0.53% Concord EFS, Inc.(a) 199,737 5,929,692 - --------------------------------------------------------------- Dell Computer Corp.(a) 50,000 4,006,250 - --------------------------------------------------------------- IDX Systems Corp.(a) 100,000 3,375,000 - --------------------------------------------------------------- 13,310,942 - --------------------------------------------------------------- COMPUTERS (NETWORKING)-0.23% International Network Services(a) 100,000 2,200,000 - --------------------------------------------------------------- Premiere Technologies, Inc.(a) 100,000 3,400,000 - --------------------------------------------------------------- 5,600,000 - --------------------------------------------------------------- COMPUTERS (PERIPHERALS)-0.10% Network Appliance, Inc.(a) 50,000 2,512,500 - --------------------------------------------------------------- COMPUTERS (SOFTWARE & SERVICES)-2.18% Advanced Fibre Communications, Inc.(a) 200,000 5,812,500 - --------------------------------------------------------------- MARKET SHARES VALUE COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED) Analysts International Corp. 81,000 $ 3,655,125 - --------------------------------------------------------------- Computer Task Group, Inc. 107,400 3,034,050 - --------------------------------------------------------------- Electronic Arts, Inc.(a) 77,200 2,615,150 - --------------------------------------------------------------- Engineering Animation, Inc.(a) 126,800 5,595,050 - --------------------------------------------------------------- HBO & Co. 111,800 4,863,300 - --------------------------------------------------------------- JDA Software Group, Inc.(a) 50,000 1,562,500 - --------------------------------------------------------------- NOVA Corp.(a) 150,000 4,031,250 - --------------------------------------------------------------- Security Dynamics Technologies, Inc.(a) 125,000 4,234,375 - --------------------------------------------------------------- Simulation Sciences, Inc.(a) 300,000 5,475,000 - --------------------------------------------------------------- Sterling Commerce, Inc.(a) 104,200 3,458,139 - --------------------------------------------------------------- Veritas Software Corp.(a) 112,500 4,682,813 - --------------------------------------------------------------- Viasoft, Inc.(a) 54,100 2,218,100 - --------------------------------------------------------------- Whittman-Hart, Inc.(a) 21,600 626,400 - --------------------------------------------------------------- Wind River Systems(a) 60,750 2,331,282 - --------------------------------------------------------------- 54,195,034 - --------------------------------------------------------------- CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.33% Action Performance Companies, Inc.(a) 100,000 2,562,500 - --------------------------------------------------------------- Blyth Industries, Inc.(a) 222,800 5,542,150 - --------------------------------------------------------------- 8,104,650 - --------------------------------------------------------------- CONSUMER FINANCE-0.87% AmeriCredit Corp.(a) 100,000 2,906,250 - --------------------------------------------------------------- Delta Financial Corp.(a) 43,300 790,225 - --------------------------------------------------------------- FIRSTPLUS Financial Group, Inc.(a) 150,100 8,255,500 - --------------------------------------------------------------- IMC Mortgage Co.(a) 200,000 3,475,000 - --------------------------------------------------------------- Money Store, Inc. (The) 100,000 2,837,500 - --------------------------------------------------------------- SLM Holding Corp. 25,000 3,509,375 - --------------------------------------------------------------- 21,773,850 - --------------------------------------------------------------- DISTRIBUTORS (FOOD & HEALTH)-0.12% Patterson Dental Co.(a) 76,900 3,076,000 - --------------------------------------------------------------- ELECTRICAL EQUIPMENT-1.25% Berg Electronics Corp.(a) 152,800 3,571,700 - --------------------------------------------------------------- HADCO Corp.(a) 60,000 3,322,500 - --------------------------------------------------------------- Kemet Corp.(a) 100,000 2,175,000 - --------------------------------------------------------------- Sanmina Corp.(a) 111,000 8,297,250 - --------------------------------------------------------------- Sawtek Inc.(a) 150,000 5,100,000 - --------------------------------------------------------------- SCI Systems, Inc.(a) 150,000 6,600,000 - --------------------------------------------------------------- Solectron Corp.(a) 51,000 2,001,750 - --------------------------------------------------------------- 31,068,200 - --------------------------------------------------------------- ELECTRONICS (COMPONENT DISTRIBUTORS)-0.43% Benchmarq Microelectronics, Inc.(a) 250,000 5,187,500 - ---------------------------------------------------------------
FS-2 168
MARKET SHARES VALUE ELECTRONICS (COMPONENT DISTRIBUTORS)-(CONTINUED) Computer Products, Inc.(a) 200,000 $ 5,450,000 - --------------------------------------------------------------- 10,637,500 - --------------------------------------------------------------- ELECTRONICS (INSTRUMENTATION)-0.55% CellStar Corp.(a) 275,000 9,332,812 - --------------------------------------------------------------- Perkin-Elmer Corp. 55,500 3,468,750 - --------------------------------------------------------------- ThermoQuest Corp.(a) 45,000 804,375 - --------------------------------------------------------------- 13,605,937 - --------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-2.17% Alliance Semiconductor Corp.(a) 150,000 1,125,000 - --------------------------------------------------------------- Altera Corp.(a) 75,000 3,328,125 - --------------------------------------------------------------- ANADIGICS, Inc.(a) 100,000 3,700,000 - --------------------------------------------------------------- Burr-Brown Corp.(a) 115,400 3,490,850 - --------------------------------------------------------------- Cypress Semiconductor Corp.(a) 270,000 3,037,500 - --------------------------------------------------------------- Dallas Semiconductor Corp. 100,000 4,887,500 - --------------------------------------------------------------- Integrated Device Technology, Inc.(a) 300,000 3,468,750 - --------------------------------------------------------------- Lattice Semiconductor Corp.(a) 55,100 2,758,444 - --------------------------------------------------------------- Linear Technology Corp. 91,000 5,721,625 - --------------------------------------------------------------- Micrel, Inc.(a) 100,000 3,587,500 - --------------------------------------------------------------- National Semiconductor Corp.(a) 130,000 4,680,000 - --------------------------------------------------------------- PMC-Sierra, Inc.(a) 100,000 2,637,500 - --------------------------------------------------------------- Sipex Corp.(a) 300,000 9,862,500 - --------------------------------------------------------------- Vitesse Semiconductor Corp.(a) 37,500 1,626,562 - --------------------------------------------------------------- 53,911,856 - --------------------------------------------------------------- ENTERTAINMENT-0.09% Regal Cinemas, Inc.(a) 100,000 2,300,000 - --------------------------------------------------------------- EQUIPMENT (SEMICONDUCTORS)-1.15% BMC Industries, Inc. 110,000 3,540,625 - --------------------------------------------------------------- Credence Systems Corp.(a) 100,000 2,950,000 - --------------------------------------------------------------- DuPont Photomasks, Inc.(a) 100,000 4,300,000 - --------------------------------------------------------------- Electroglas, Inc.(a) 200,000 3,800,000 - --------------------------------------------------------------- Photronics, Inc.(a) 125,000 5,359,375 - --------------------------------------------------------------- Silicon Valley Group, Inc.(a) 175,000 5,031,250 - --------------------------------------------------------------- Teradyne, Inc.(a) 100,000 3,743,750 - --------------------------------------------------------------- 28,725,000 - --------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-0.28% Amresco, Inc.(a) 100,000 3,137,500 - --------------------------------------------------------------- SunAmerica, Inc. 105,000 3,773,438 - --------------------------------------------------------------- 6,910,938 - --------------------------------------------------------------- FOOTWEAR-0.05% Wolverine World Wide, Inc. 59,925 1,318,350 - --------------------------------------------------------------- HEALTH CARE (DRUGS-GENERIC & OTHER)-0.40% Dura Pharmaceuticals, Inc.(a) 57,900 2,800,912 - --------------------------------------------------------------- MARKET SHARES VALUE HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED) Medicis Pharmaceutical Corp.(a) 150,000 $ 7,218,750 - --------------------------------------------------------------- 10,019,662 - --------------------------------------------------------------- HEALTH CARE (HOSPITAL MANAGEMENT)-0.58% Health Management Associates, Inc.-Class A(a) 335,700 8,182,688 - --------------------------------------------------------------- Tenet Healthcare Corp.(a) 75,000 2,292,187 - --------------------------------------------------------------- Universal Health Services, Inc.-Class B(a) 89,800 3,956,812 - --------------------------------------------------------------- 14,431,687 - --------------------------------------------------------------- HEALTH CARE (LONG TERM CARE)-0.25% HEALTHSOUTH Corp.(a) 150,000 3,834,375 - --------------------------------------------------------------- Sunrise Assisted Living, Inc.(a) 63,200 2,346,300 - --------------------------------------------------------------- 6,180,675 - --------------------------------------------------------------- HEALTH CARE (MANAGED CARE)-0.45% Concentra Managed Care, Inc.(a) 99,115 3,233,627 - --------------------------------------------------------------- Express Scripts, Inc.-Class A(a) 40,000 2,255,000 - --------------------------------------------------------------- Oxford Health Plans, Inc.(a) 45,100 1,164,144 - --------------------------------------------------------------- PhyCor, Inc.(a) 49,950 1,151,972 - --------------------------------------------------------------- Wellpoint Health Networks, Inc.(a) 75,000 3,431,250 - --------------------------------------------------------------- 11,235,993 - --------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.35% Physician Sales & Service, Inc.(a) 50,000 1,225,000 - --------------------------------------------------------------- Quintiles Transnational Corp.(a) 70,000 5,075,000 - --------------------------------------------------------------- ResMed, Inc.(a) 40,000 1,120,000 - --------------------------------------------------------------- Sybron International Corp.(a) 32,800 1,316,100 - --------------------------------------------------------------- 8,736,100 - --------------------------------------------------------------- HEALTH CARE (SPECIALIZED SERVICES)-1.05% American HomePatient, Inc.(a) 100,000 2,575,000 - --------------------------------------------------------------- First Commonwealth, Inc.(a) 45,000 652,500 - --------------------------------------------------------------- FPA Medical Management, Inc.(a) 200,000 4,825,000 - --------------------------------------------------------------- NCS HealthCare, Inc.-Class A(a) 110,000 2,571,250 - --------------------------------------------------------------- Omnicare, Inc. 173,300 4,819,906 - --------------------------------------------------------------- Orthodontic Centers of America, Inc.(a) 123,000 2,129,438 - --------------------------------------------------------------- Pediatrix Medical Group, Inc.(a) 15,200 642,200 - --------------------------------------------------------------- Renal Care Group, Inc.(a) 92,400 3,095,400 - --------------------------------------------------------------- Renal Treatment Centers, Inc.(a) 50,000 1,659,375 - --------------------------------------------------------------- Superior Consultant Holdings Corp.(a) 32,300 1,001,300 - --------------------------------------------------------------- Total Renal Care Holdings, Inc.(a) 62,667 1,930,916 - --------------------------------------------------------------- Transition Systems, Inc.(a) 14,700 297,675 - --------------------------------------------------------------- 26,199,960 - --------------------------------------------------------------- HOUSEHOLD FURNISHINGS & APPLIANCES-0.23% Ethan Allen Interiors, Inc. 160,000 5,670,000 - ---------------------------------------------------------------
FS-3 169
MARKET SHARES VALUE HOUSEWARES-0.48% Central Garden and Pet Co.(a) 75,000 $ 1,968,750 - --------------------------------------------------------------- Helen of Troy Ltd.(a) 600,000 9,975,000 - --------------------------------------------------------------- 11,943,750 - --------------------------------------------------------------- INSURANCE (PROPERTY-CASUALTY)-0.25% CapMAC Holdings, Inc. 35,000 1,050,000 - --------------------------------------------------------------- CMAC Investment Corp. 24,400 1,334,375 - --------------------------------------------------------------- HCC Insurance Holdings, Inc. 137,550 3,215,231 - --------------------------------------------------------------- Vesta Insurance Group, Inc. 12,000 697,500 - --------------------------------------------------------------- 6,297,106 - --------------------------------------------------------------- LODGING (HOTELS)-0.07% Prime Hospitality Corp.(a) 30,000 611,250 - --------------------------------------------------------------- Suburban Lodges of America, Inc.(a) 20,000 495,000 - --------------------------------------------------------------- Wyndham Hotel Corp.(a) 16,700 750,456 - --------------------------------------------------------------- 1,856,706 - --------------------------------------------------------------- MACHINERY (DIVERSIFIED)-0.13% DT Industries, Inc. 105,000 3,150,000 - --------------------------------------------------------------- MANUFACTURING (SPECIALIZED)-0.59% Halter Marine Group, Inc.(a) 187,700 9,819,056 - --------------------------------------------------------------- US Filter Corp.(a) 120,150 4,821,019 - --------------------------------------------------------------- 14,640,075 - --------------------------------------------------------------- OFFICE EQUIPMENT & SUPPLIES-0.27% Daisytek International Corp.(a) 50,000 1,906,250 - --------------------------------------------------------------- Herman Miller, Inc. 100,000 4,887,500 - --------------------------------------------------------------- 6,793,750 - --------------------------------------------------------------- OIL & GAS (DRILLING & EQUIPMENT)-4.55% Camco International, Inc. 100,000 7,225,000 - --------------------------------------------------------------- Cliffs Drilling Co.(a) 100,000 7,268,750 - --------------------------------------------------------------- Cooper Cameron Corp.(a) 100,000 7,225,000 - --------------------------------------------------------------- Diamond Offshore Drilling, Inc. 100,000 6,225,000 - --------------------------------------------------------------- ENSCO International, Inc. 140,000 5,888,750 - --------------------------------------------------------------- EVI, Inc.(a) 200,000 12,837,500 - --------------------------------------------------------------- Falcon Drilling Company, Inc.(a) 150,000 5,456,250 - --------------------------------------------------------------- Global Industries Ltd.(a) 250,000 5,031,250 - --------------------------------------------------------------- Global Marine, Inc.(a) 125,000 3,890,625 - --------------------------------------------------------------- Marine Drilling Companies, Inc.(a) 140,000 4,147,500 - --------------------------------------------------------------- Maverick Tube Corp.(a) 77,200 2,721,300 - --------------------------------------------------------------- National-Oilwell, Inc.(a) 150,000 11,484,375 - --------------------------------------------------------------- Newpark Resources, Inc.(a) 200,000 8,300,000 - --------------------------------------------------------------- Pride International, Inc.(a) 178,800 5,900,400 - --------------------------------------------------------------- Tuboscope Vetco International Corp. 156,600 4,972,050 - --------------------------------------------------------------- Varco International, Inc.(a) 107,500 6,550,781 - --------------------------------------------------------------- MARKET SHARES VALUE OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED) Veritas DGC, Inc.(a) 200,000 $ 8,187,500 - --------------------------------------------------------------- 113,312,031 - --------------------------------------------------------------- PERSONAL CARE-0.28% Rexall Sundown, Inc.(a) 321,000 7,021,875 - --------------------------------------------------------------- RESTAURANTS-0.60% Apple South, Inc. 150,800 2,808,650 - --------------------------------------------------------------- Foodmaker, Inc.(a) 300,000 4,931,250 - --------------------------------------------------------------- Landry's Seafood Restaurants, Inc.(a) 100,000 2,800,000 - --------------------------------------------------------------- Papa John's International, Inc.(a) 22,500 665,156 - --------------------------------------------------------------- Showbiz Pizza Time, Inc.(a) 96,600 2,052,750 - --------------------------------------------------------------- Starbucks Corp.(a) 50,000 1,650,000 - --------------------------------------------------------------- 14,907,806 - --------------------------------------------------------------- RETAIL (BUILDING SUPPLIES)-0.17% Eagle Hardware & Garden, Inc.(a) 250,000 4,250,000 - --------------------------------------------------------------- RETAIL (COMPUTERS & ELECTRONICS)-0.75% CompUSA, Inc.(a) 172,000 5,633,000 - --------------------------------------------------------------- MicroAge, Inc.(a) 250,000 5,500,000 - --------------------------------------------------------------- Tech Data Corp.(a) 166,600 7,413,700 - --------------------------------------------------------------- 18,546,700 - --------------------------------------------------------------- RETAIL (DISCOUNTERS)-0.14% Men's Wearhouse, Inc. (The)(a) 87,400 3,386,750 - --------------------------------------------------------------- RETAIL (FOOD CHAINS)-0.13% Quality Food Centers, Inc.(a) 67,900 3,233,738 - --------------------------------------------------------------- RETAIL (HOME SHOPPING)-0.29% CDW Computer Centers, Inc.(a) 85,800 5,319,600 - --------------------------------------------------------------- Micro Warehouse, Inc.(a) 134,700 2,020,500 - --------------------------------------------------------------- 7,340,100 - --------------------------------------------------------------- RETAIL (SPECIALTY)-1.65% Garden Ridge Corp.(a) 75,000 1,003,125 - --------------------------------------------------------------- Genesco Inc.(a) 200,000 2,537,500 - --------------------------------------------------------------- Hollywood Entertainment Corp.(a) 200,000 2,450,000 - --------------------------------------------------------------- Inacom Corp.(a) 50,000 1,540,625 - --------------------------------------------------------------- Michaels Stores, Inc.(a) 100,000 3,006,250 - --------------------------------------------------------------- O'Reilly Automotive, Inc.(a) 200,000 4,875,000 - --------------------------------------------------------------- Petco Animal Supplies, Inc.(a) 67,000 2,060,250 - --------------------------------------------------------------- Pier 1 Imports, Inc. 397,500 7,254,375 - --------------------------------------------------------------- Staples, Inc.(a) 235,800 6,189,750 - --------------------------------------------------------------- Tiffany & Co. 50,200 1,982,900 - --------------------------------------------------------------- Viking Office Products, Inc.(a) 106,100 2,539,769 - --------------------------------------------------------------- Williams-Sonoma, Inc.(a) 75,000 3,009,375 - --------------------------------------------------------------- Zale Corp.(a) 100,000 2,525,000 - --------------------------------------------------------------- 40,973,919 - ---------------------------------------------------------------
FS-4 170
MARKET SHARES VALUE RETAIL (SPECIALTY-APPAREL)-0.42% Gap, Inc. 58,400 $ 3,106,150 - --------------------------------------------------------------- Pacific Sunwear of California(a) 112,500 3,107,813 - --------------------------------------------------------------- TJX Companies, Inc. 140,500 4,162,312 - --------------------------------------------------------------- 10,376,275 - --------------------------------------------------------------- SAVINGS & LOAN COMPANIES-0.10% Dime Bancorp, Inc. 100,000 2,400,000 - --------------------------------------------------------------- SERVICES (ADVERTISING/MARKETING)-0.28% CKS Group, Inc.(a) 190,000 6,887,500 - --------------------------------------------------------------- SERVICES (COMMERCIAL & CONSUMER)-1.27% ABR Information Services, Inc.(a) 75,000 1,762,500 - --------------------------------------------------------------- Caribiner International, Inc.(a) 100,000 4,456,250 - --------------------------------------------------------------- Cerner Corp.(a) 202,000 4,898,500 - --------------------------------------------------------------- Children's Comprehensive Services, Inc.(a) 186,200 3,360,328 - --------------------------------------------------------------- Equity Corp. International(a) 255,000 5,195,625 - --------------------------------------------------------------- IntelliQuest Information Group, Inc.(a) 245,000 4,165,000 - --------------------------------------------------------------- MSC Industrial Direct Co., Inc.-Class A(a) 40,000 1,665,000 - --------------------------------------------------------------- Rental Service Corp.(a) 92,900 2,485,075 - --------------------------------------------------------------- Strayer Education, Inc. 75,000 3,581,250 - --------------------------------------------------------------- 31,569,528 - --------------------------------------------------------------- SERVICES (COMPUTER SYSTEMS)-0.31% Insight Enterprises, Inc.(a) 150,000 5,868,750 - --------------------------------------------------------------- SunGard Data Systems Inc.(a) 80,200 1,894,725 - --------------------------------------------------------------- 7,763,475 - --------------------------------------------------------------- SERVICES (DATA PROCESSING)-0.89% Affiliated Computer Services, Inc.(a) 128,400 3,226,050 - --------------------------------------------------------------- BDM International Inc.(a) 126,500 2,798,813 - --------------------------------------------------------------- BISYS Group, Inc. (The)(a) 81,900 2,549,137 - --------------------------------------------------------------- Computer Data Systems, Inc. 75,100 3,107,262 - --------------------------------------------------------------- CSG Systems International, Inc.(a) 85,000 3,330,938 - --------------------------------------------------------------- Envoy Corp.(a) 100,000 2,800,000 - --------------------------------------------------------------- National Data Corp. 75,000 2,770,312 - --------------------------------------------------------------- PMT Services, Inc.(a) 100,000 1,612,500 - --------------------------------------------------------------- 22,195,012 - --------------------------------------------------------------- SERVICES (EMPLOYMENT)-0.36% RemedyTemp, Inc.- Class A(a) 38,000 874,000 - --------------------------------------------------------------- Robert Half International, Inc.(a) 111,000 4,544,063 - --------------------------------------------------------------- Romac International, Inc.(a) 100,000 2,000,000 - --------------------------------------------------------------- Vincam Group, Inc. (The)(a) 49,500 1,553,062 - --------------------------------------------------------------- 8,971,125 - --------------------------------------------------------------- TELECOMMUNICATIONS (LONG DISTANCE)-0.18% Billing Information Concepts(a) 79,600 3,124,300 - --------------------------------------------------------------- MARKET SHARES VALUE TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED) USLD Communications Corp.(a) 64,200 $ 1,271,963 - --------------------------------------------------------------- 4,396,263 - --------------------------------------------------------------- TEXTILES (APPAREL)-0.85% Jones Apparel Group, Inc.(a) 100,000 5,087,500 - --------------------------------------------------------------- Liz Claiborne, Inc. 69,000 3,497,437 - --------------------------------------------------------------- Nautica Enterprises, Inc.(a) 125,000 3,328,125 - --------------------------------------------------------------- Quicksilver, Inc.(a) 100,000 3,075,000 - --------------------------------------------------------------- St. John Knits, Inc. 75,000 3,014,062 - --------------------------------------------------------------- Tommy Hilfiger Corp.(a) 87,900 3,477,544 - --------------------------------------------------------------- 21,479,668 - --------------------------------------------------------------- TEXTILES (HOME FURNISHINGS)-0.18% Mohawk Industries, Inc.(a) 75,000 2,306,250 - --------------------------------------------------------------- WestPoint Stevens, Inc.(a) 50,000 2,050,000 - --------------------------------------------------------------- 4,356,250 - --------------------------------------------------------------- TRUCKING-0.24% Caliber System, Inc. 25,000 1,303,125 - --------------------------------------------------------------- Hub Group, Inc.(a) 100,000 3,050,000 - --------------------------------------------------------------- Swift Transportation Co., Inc.(a) 50,000 1,600,000 - --------------------------------------------------------------- 5,953,125 - --------------------------------------------------------------- WASTE MANAGEMENT-0.33% Thermo Instrument Systems Inc.(a) 20,000 721,250 - --------------------------------------------------------------- USA Waste Services, Inc.(a) 200,000 7,400,000 - --------------------------------------------------------------- 8,121,250 - --------------------------------------------------------------- Total Domestic Common Stocks 793,976,811 - --------------------------------------------------------------- FOREIGN STOCKS & OTHER EQUITY INTERESTS-61.07% ARGENTINA-2.22% Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 500,439 12,127,826 - --------------------------------------------------------------- Banco Rio de La Plata S.A.-ADR (Banks-Money Center)(a) 461,000 4,840,500 - --------------------------------------------------------------- Disco S.A.-ADR (Retail-Food Chains)(a) 69,500 2,814,750 - --------------------------------------------------------------- Perez Companc S.A.-Class B (Oil & Gas-Refining & Marketing) 2,004,489 12,555,697 - --------------------------------------------------------------- Telefonica de Argentina S.A.-ADR (Telephone) 268,500 7,551,562 - --------------------------------------------------------------- YPF S.A.-ADR (Oil-International Integrated) 479,600 15,347,200 - --------------------------------------------------------------- 55,237,535 - --------------------------------------------------------------- AUSTRALIA-0.48% QBE Insurance Group Ltd. (Insurance-Property-Casualty) 2,055,929 9,614,782 - --------------------------------------------------------------- QBE Insurance Group Ltd.-Bonus shares (Insurance-Property-Casualty)(a) 513,982 2,342,248 - --------------------------------------------------------------- 11,957,030 - ---------------------------------------------------------------
FS-5 171
MARKET SHARES VALUE AUSTRIA-0.38% VA Technologie A.G. (Engineering & Construction) 53,200 $ 9,439,946 - --------------------------------------------------------------- BELGIUM-0.74% Barco Industries (Manufacturing-Diversified) 41,000 7,909,040 - --------------------------------------------------------------- COLRUYT S.A. (Retail-Food Chains) 8,800 4,720,923 - --------------------------------------------------------------- UCB S.A. (Manufacturing-Diversified) 1,650 5,701,352 - --------------------------------------------------------------- 18,331,315 - --------------------------------------------------------------- BRAZIL-3.94% Banco Bradesco S.A. (Banks-Major Regional) 1,316,000 9,788,380 - --------------------------------------------------------------- CESP-Companhia Energetica de Sao Paulo (Electric Companies)(a) 65,000 4,068,212 - --------------------------------------------------------------- Cia. Riograndense de Telecomunicacoes-Pfd. (Telephone) (Acquired 08/06/97; Cost $181,844)(a)(b) 1,425 109,847 - --------------------------------------------------------------- Cia. Riograndense de Telecomunicacoes-Pfd. (Telephone) 65,000 5,011,565 - --------------------------------------------------------------- Companhia Brasileira de Distribuicao Grupo Pao de Acucar (Retail-Food Chains) 326,500 6,219,330 - --------------------------------------------------------------- Companhia Brasileira de Distribuicao Grupo Pao de Acucar-ADR (Retail-Food Chains) 120,519 2,229,602 - --------------------------------------------------------------- Companhia Energetica de Minas Gerais (Electric Companies) 196,000 7,822,577 - --------------------------------------------------------------- Companhia Paranaense de Energia-Copel (Electric Companies) 240,000 2,897,546 - --------------------------------------------------------------- Companhia Paranaense de Energia-Copel-ADR (Electric Companies) 400,000 4,775,000 - --------------------------------------------------------------- Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 39,041 7,224,263 - --------------------------------------------------------------- Eletricidade de Sao Paulo S.A. (Electric Companies)(a) 13,600 2,319,198 - --------------------------------------------------------------- Eletricidade de Sao Paulo S.A. Rts. (Electric Companies)(a) 3,265 11,848 - --------------------------------------------------------------- Multicanal Participacoes S.A.-ADR (Broadcasting-Television, Radio & Cable)(a) 315,000 1,949,063 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras (Oil & Gas-Exploration & Production) 46,200 8,590,866 - --------------------------------------------------------------- Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 44,700 11,677,264 - --------------------------------------------------------------- Telecomunicacoes Brasileiras S.A.-Telebras-ADR (Telephone) 94,700 9,612,050 - --------------------------------------------------------------- Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional)(a) 278,200 7,580,950 - --------------------------------------------------------------- Votorantim Celulose e Papel S.A. (Paper & Forest Products) 259,500 6,192,975 - --------------------------------------------------------------- 98,080,536 - --------------------------------------------------------------- CANADA-6.45% ATI Technologies, Inc. (Computers-Hardware)(a) 160,000 3,303,651 - --------------------------------------------------------------- MARKET SHARES VALUE CANADA-(CONTINUED) ATS Automation Tooling Systems, Inc. (Manufacturing-Diversified) (Acquired 09/22/97; Cost $2,432,112)(a)(b) 70,000 $ 2,446,163 - --------------------------------------------------------------- ATS Automation Tooling Systems, Inc. (Manufacturing-Diversified)(a) 110,000 3,843,971 - --------------------------------------------------------------- Biovail Corporation International (Health Care-Drugs-Generic & Other)(a) 160,000 4,620,000 - --------------------------------------------------------------- Canadian Fracmaster Ltd. (Oil & Gas-Exploration & Production) 155,000 2,557,030 - --------------------------------------------------------------- Canadian Natural Resources Ltd. (Oil & Gas-Exploration & Production)(a) 345,000 10,036,542 - --------------------------------------------------------------- CanWest Global Communications Corp. (Broadcasting-Television, Radio & Cable) 355,998 6,820,127 - --------------------------------------------------------------- CGI Group, Inc. (Services-Computer Systems)(a) 135,000 3,836,343 - --------------------------------------------------------------- C-MAC Industries Inc. (Electronics-Component Distributors)(a) 200,000 2,909,143 - --------------------------------------------------------------- Discreet Logic, Inc. (Communications Equipment)(a) 175,000 3,423,438 - --------------------------------------------------------------- Enerflex Systems Ltd. (Manufacturing- Specialized) 96,000 2,724,660 - --------------------------------------------------------------- Ensign Resource Service Group, Inc. (Oil & Gas-Drilling & Equipment) 200,000 7,287,047 - --------------------------------------------------------------- Extendicare, Inc.-Class A (Health Care-Long Term Care)(a) 350,000 5,389,009 - --------------------------------------------------------------- Four Seasons Hotels, Inc. (Lodging-Hotels) 85,000 2,816,547 - --------------------------------------------------------------- Geac Computer Corporation Ltd. (Services-Computer Systems)(a) 581,400 17,367,537 - --------------------------------------------------------------- Gulf Canada Resources Ltd. (Oil-International Integrated)(a) 250,000 2,093,750 - --------------------------------------------------------------- Hummingbird Communications Ltd. (Computers-Software & Services)(a) 72,000 2,567,141 - --------------------------------------------------------------- Imax Corp. (Communications Equipment)(a) 150,000 3,806,250 - --------------------------------------------------------------- IPSCO, Inc. (Iron & Steel) 60,000 2,596,942 - --------------------------------------------------------------- JDS Fitel Inc. (Manufacturing Specialized)(a) 200,000 11,459,183 - --------------------------------------------------------------- Leitch Technology Corp. (Electronics-Instrumentation) (Acquired 06/25/97; Cost $376,739)(a)(b) 16,500 504,594 - --------------------------------------------------------------- Leitch Technology Corp. (Electronics-Instrumentation)(a) 147,000 4,495,477 - --------------------------------------------------------------- Linamar Corp. (Machinery Diversified) 58,000 3,656,508 - --------------------------------------------------------------- MDS, Inc.-Class B (Health Care-Specialized Services) 218,000 5,034,874 - --------------------------------------------------------------- Mitel Corp. (Communications Equipment)(a) 370,200 3,244,027 - --------------------------------------------------------------- Newcourt Credit Group, Inc. (Savings & Loan Companies) 120,000 4,150,850 - --------------------------------------------------------------- Northern Telecom Ltd. (Communications Equipment) 25,000 2,242,188 - --------------------------------------------------------------- Philip Services Corp. (Waste Management)(a) 200,000 3,500,000 - ---------------------------------------------------------------
FS-6 172
MARKET SHARES VALUE CANADA-(CONTINUED) Precision Drilling Corp. (Oil & Gas-Drilling & Equipment)(a) 250,000 $ 7,687,500 - --------------------------------------------------------------- Prudential Steel Ltd. (Oil & Gas-Drilling & Equipment) 200,000 8,372,654 - --------------------------------------------------------------- Royal Group Technologies Ltd. (Manufacturing-Specialized)(a) 105,000 2,674,637 - --------------------------------------------------------------- Sears Canada, Inc. (Retail-Department Stores) 300,000 4,959,733 - --------------------------------------------------------------- Shaw Industries Ltd. (Oil & Gas-Exploration & Production) 14,200 574,307 - --------------------------------------------------------------- Suncor, Inc. (Oil-International Integrated) 210,000 7,561,997 - --------------------------------------------------------------- 160,563,820 - --------------------------------------------------------------- CHILE-1.12% Cia. de Telecomunicaciones de Chile S.A.-ADR (Telephone) 287,300 7,972,575 - --------------------------------------------------------------- Distribucion y Servicio D&S S.A.-ADR (Retail-Food Chains)(a) 650,000 11,415,625 - --------------------------------------------------------------- Quinenco S.A.-ADR (Financial-Diversified)(a) 580,900 8,495,663 - --------------------------------------------------------------- 27,883,863 - --------------------------------------------------------------- DENMARK-0.56% Bang & Olufsen Holding A/S-Class B (Electronics-Component Distributors) 90,000 5,487,721 - --------------------------------------------------------------- Kobenhavns Lufthavne A/S (Shipping) 35,000 4,188,199 - --------------------------------------------------------------- Olicom A/S (Computers-Networking)(a) 150,000 4,312,500 - --------------------------------------------------------------- 13,988,420 - --------------------------------------------------------------- FINLAND-0.71% KCI Konecranes (Machinery-Diversified) 76,750 2,893,007 - --------------------------------------------------------------- Hartwall OY A.B. (Beverages-Alcoholic) 80,000 6,572,272 - --------------------------------------------------------------- TT Tieto OY -Class B (Computers-Software & Services) 74,000 8,296,525 - --------------------------------------------------------------- 17,761,804 - --------------------------------------------------------------- FRANCE-1.91% BERTRAND FAURE (Auto Parts & Equipment) 110,000 6,636,328 - --------------------------------------------------------------- Christian Dalloz (Manufacturing-Diversified) 11,400 1,353,790 - --------------------------------------------------------------- Compagnie Generale de Geophysique S.A. (Services-Commercial & Consumer)(a) 26,000 3,605,946 - --------------------------------------------------------------- Coflexip S.A. (Metal Fabricators) 48,161 5,310,171 - --------------------------------------------------------------- Coflexip S.A.-ADR (Metal Fabricators) 15,900 874,500 - --------------------------------------------------------------- Dassault Systemes S.A.-ADR (Computers-Software & Services) 200,000 6,000,000 - --------------------------------------------------------------- Grand Optical Photoservice (Services- Commercial & Consumer) 26,400 4,251,828 - --------------------------------------------------------------- ISIS (Oil-International Integrated) (Acquired 10/23/97; Cost $2,222,817)(a)(b) 19,400 2,270,186 - --------------------------------------------------------------- Labinal S.A. (Aerospace/Defense) 8,300 2,151,172 - --------------------------------------------------------------- LDC S.A. (Foods) 7,500 1,209,206 - --------------------------------------------------------------- MARKET SHARES VALUE FRANCE-(CONTINUED) Le Carbone-Lorraine (Housewares) 9,100 $ 2,413,730 - --------------------------------------------------------------- Moulinex (Household Furnishings & Appliances)(a) 250,000 5,634,291 - --------------------------------------------------------------- Penauille Polyservices (Services-Facilities & Environmental) 5,300 1,068,591 - --------------------------------------------------------------- Vallourec S.A. (Manufacturing-Diversified) 73,000 4,796,429 - --------------------------------------------------------------- 47,576,168 - --------------------------------------------------------------- GERMANY-1.79% BETA Systems Software A.G. (Computers-Software & Services)(Acquired 06/26/97; Cost $289,738)(a)(b) 5,000 478,996 - --------------------------------------------------------------- Boewe Systec A.G. (Office Equipment & Supplies) 75,000 2,220,803 - --------------------------------------------------------------- Continental A.G. (Auto Parts & Equipment) 185,000 4,414,607 - --------------------------------------------------------------- Fresenius A.G.-Pfd. (Health Care-Medical Products & Supplies) 26,000 4,392,835 - --------------------------------------------------------------- Hugo Boss A.G.-Pfd. (Textile-Apparel) 1,750 2,214,997 - --------------------------------------------------------------- IWKA A.G. (Machinery-Diversified) 8,100 2,017,534 - --------------------------------------------------------------- Plettac A.G. (Manufacturing-Diversified) 10,000 1,817,285 - --------------------------------------------------------------- Plettac A.G.-Rts. (Manufacturing-Diversified)(a) 10,000 581 - --------------------------------------------------------------- Porsche A.G. (Automobiles) 6,300 9,272,506 - --------------------------------------------------------------- ProSieben Media A.G.-Pfd. (Broadcasting-Television, Radio, & Cable)(a) 54,000 2,649,287 - --------------------------------------------------------------- SCHMALBACH LUBECA A.G. (Containers-Metal & Glass) 20,000 3,715,853 - --------------------------------------------------------------- Schwarz Pharma A.G. (Health Care-Drugs-Generic & Other) 85,000 6,020,844 - --------------------------------------------------------------- SKW Trostberg A.G. (Chemicals-Diversified) 77,600 2,667,240 - --------------------------------------------------------------- Vossloh A.G. (Manufacturing-Specialized) 50,200 2,541,551 - --------------------------------------------------------------- 44,424,919 - --------------------------------------------------------------- GREECE-0.12% Titan Cement Co. S.A. (Construction-Cement & Aggregates) 60,000 2,932,041 - --------------------------------------------------------------- HONG KONG-4.94% Asia Satellite Telecommunications Holdings Ltd. (Telecommunications-Cellular/Wireless) 1,530,000 3,680,786 - --------------------------------------------------------------- Asia Satellite Telecommunications Holdings Ltd.-ADR (Telecommunications-Cellular/Wireless) 177,300 4,144,389 - --------------------------------------------------------------- China Resources Enterprise Ltd. (Manufacturing-Diversified) 5,414,000 14,845,347 - --------------------------------------------------------------- China Telecom (Hong Kong) Ltd. ADR (Telecommunications-Cellular & Wireless)(a) 202,000 6,539,750 - --------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 9,100,000 10,593,029 - --------------------------------------------------------------- Esprit Asia Holdings Ltd. (Retail-Specialty- Apparel) 10,520,000 3,741,835 - ---------------------------------------------------------------
FS-7 173
MARKET SHARES VALUE HONG KONG-(CONTINUED) First Pacific Company Ltd. (Distributors-Food & Health) 13,326,033 $ 8,402,562 - --------------------------------------------------------------- Hong Kong & China Gas Co. Ltd. (Natural Gas) 6,723,840 12,697,156 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 2,255,000 15,604,023 - --------------------------------------------------------------- Johnson Electric Holdings Ltd. (Electrical Equipment) 4,968,000 13,558,145 - --------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer)(a) 3,080,000 6,095,066 - --------------------------------------------------------------- Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified) 2,532,000 11,265,705 - --------------------------------------------------------------- South China Morning Post Ltd. (Publishing-Newspapers) 8,168,000 7,078,264 - --------------------------------------------------------------- Sun Hung Kai Properties Ltd. (Land Development) 625,000 4,607,773 - --------------------------------------------------------------- 122,853,830 - --------------------------------------------------------------- HUNGARY-0.19% Richter Gedeon Rt.-GDR (Health Care-Drugs-Major Pharmaceuticals) 50,000 4,650,000 - --------------------------------------------------------------- INDONESIA-0.58% Gulf Indonesia Resources Ltd. (Oil-International Integrated)(a) 310,000 6,510,000 - --------------------------------------------------------------- PT Indosat (Telephone) 808,000 1,821,082 - --------------------------------------------------------------- PT Indosat-ADR (Telephone) 87,500 2,072,656 - --------------------------------------------------------------- PT Ramayana Lestari Sentosa (Retail- Department Stores) 2,324,000 3,932,427 - --------------------------------------------------------------- 14,336,165 - --------------------------------------------------------------- ITALY-0.26% Autogrill S.p.A (Restaurants)(a) 775,000 3,556,852 - --------------------------------------------------------------- Gewiss S.p.A. (Electrical Equipment) 150,000 2,923,804 - --------------------------------------------------------------- 6,480,656 - --------------------------------------------------------------- IRELAND-0.72% CBT Group PLC-ADR (Computers-Software & Services)(a) 7,600 583,300 - --------------------------------------------------------------- Elan Corp. PLC-ADR (Health Care-Drugs-Generic & Other)(a) 200,000 9,975,000 - --------------------------------------------------------------- Saville Systems Ireland PLC-ADR(a)(Services- Data Processing) 125,000 7,468,750 - --------------------------------------------------------------- 18,027,050 - --------------------------------------------------------------- ISRAEL-2.60% Blue Square-Israel Ltd.-ADR (Retail-Food Chains)(a) 550,000 6,393,750 - --------------------------------------------------------------- Crystal Systems Solutions (Computers- Software & Services)(a) 110,000 2,310,000 - --------------------------------------------------------------- ESC Medical Systems Ltd. (Health Care- Medical Products & Supplies)(a) 300,000 11,775,000 - --------------------------------------------------------------- MARKET SHARES VALUE ISRAEL-(CONTINUED) NICE-Systems Ltd. ADR (Communications Equipment)(a) 113,000 $ 5,268,625 - --------------------------------------------------------------- Orbotech, Ltd. (Computers-Software & Services) 138,000 5,899,500 - --------------------------------------------------------------- Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 574,400 17,806,400 - --------------------------------------------------------------- Tecnomatix Technologies Ltd. (Computers-Software & Services)(a) 87,500 2,701,563 - --------------------------------------------------------------- Teledata Communication Ltd. (Communications Equipment)(a) 70,100 2,173,100 - --------------------------------------------------------------- Teva Pharmaceutical Industries Ltd.-ADR (Health Care-Drugs-Generic & Other) 198,500 9,279,875 - --------------------------------------------------------------- Tower Semiconductor Ltd. (Electronics-Semiconductors) 100,000 1,175,000 - --------------------------------------------------------------- 64,782,812 - --------------------------------------------------------------- JAPAN-2.78% Aderans Co. Ltd. (Personal Care) 394,000 10,607,063 - --------------------------------------------------------------- Bellsystem 24, Inc. (Services-Commercial & Consumer) 48,000 6,620,690 - --------------------------------------------------------------- Capcom Co., Ltd. (Computers-Software & Services) 201,000 3,340,257 - --------------------------------------------------------------- Circle K Japan Co. Ltd. (Retail-Food Chains) 222,000 11,399,751 - --------------------------------------------------------------- FCC Co. Ltd. (Auto Parts & Equipment) 143,110 2,259,319 - --------------------------------------------------------------- Fujitsu Denso Ltd. (Electrical Equipment) 340,000 5,311,175 - --------------------------------------------------------------- Hokuto Corp. (Agricultural Products) 185,250 5,248,878 - --------------------------------------------------------------- Noritsu Koki Co. Ltd. (Photography/Imaging) 315,600 10,489,406 - --------------------------------------------------------------- 77 Bank (Banks-Major Regional) 770,000 7,293,727 - --------------------------------------------------------------- Shohkoh Fund & Co. (Financial-Diversified) 20,600 6,675,529 - --------------------------------------------------------------- 69,245,795 - --------------------------------------------------------------- MEXICO-4.62% Cifra S.A. de C.V. (Retail-General Merchandise)(a) 6,454,900 11,162,320 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 363,700 15,707,294 - --------------------------------------------------------------- Corporacion Interamericana de Entretenimiento S.A. (Entertainment)(a) 683,000 3,958,712 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-Class B (Beverages-Alcoholic) 2,852,700 20,072,665 - --------------------------------------------------------------- Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified)(a) 5,850,000 11,581,395 - --------------------------------------------------------------- Grupo Industrial Maseca S.A. de C.V.-Class B (Foods) 5,844,600 5,645,945 - --------------------------------------------------------------- Grupo Modelo S.A. de C.V. (Beverages- Alcoholic) 1,056,000 7,820,823 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 424,700 13,165,700 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 2,460,500 10,783,945 - ---------------------------------------------------------------
FS-8 174
MARKET SHARES VALUE MEXICO-(CONTINUED) Organizacion Soriana S.A. de C.V. (Retail-Department Stores) 2,900,000 $ 9,649,374 - --------------------------------------------------------------- Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment)(a) 125,000 2,523,438 - --------------------------------------------------------------- TV Azteca, S.A. de C.V.-ADR (Broadcasting-Television, Radio & Cable)(a) 156,100 2,985,413 - --------------------------------------------------------------- 115,057,024 - --------------------------------------------------------------- NETHERLANDS-4.43% Aalberts Industries N.V. (Manufacturing-Diversified) 115,000 3,014,937 - --------------------------------------------------------------- Beter Bed Holding N.V. (Household Furnishings & Appliances) 115,000 2,505,537 - --------------------------------------------------------------- Brunel International N.V. (Services- Employment) (Acquired 06/19/97; Cost $1,997,948)(a)(b) 95,000 2,006,181 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 517,200 12,174,113 - --------------------------------------------------------------- Draka Holding N.V. (Metal Fabricators) 60,000 2,898,790 - --------------------------------------------------------------- Fugro N.V. (Services-Commercial & Consumer) 180,000 6,350,760 - --------------------------------------------------------------- Gamma Holding N.V. (Textiles-Apparel) 53,000 2,839,042 - --------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 300,000 9,904,713 - --------------------------------------------------------------- IHC Caland N.V. (Manufacturing-Specialized) 114,000 7,010,868 - --------------------------------------------------------------- Internatio-Muller N.V. (Manufacturing-Diversified) 288,000 9,152,511 - --------------------------------------------------------------- Koninklijke Ahrend Groep N.V. (Household Furnishings & Appliances) 210,000 6,998,197 - --------------------------------------------------------------- Koninklijke Van Ommeren N.V. (Shipping) 122,000 4,367,242 - --------------------------------------------------------------- NORIT N.V. (Chemicals Specialty) 200,000 3,224,311 - --------------------------------------------------------------- Nutreco Holding N.V. (Agricultural Products)(a) 235,000 5,277,363 - --------------------------------------------------------------- Oce-Van Der Grinten N.V. (Office Equipment & Supplies) 67,000 7,643,832 - --------------------------------------------------------------- Ordina Beheer N.V.-W.I. (Services-Commercial & Consumer)(a) 400,000 6,469,225 - --------------------------------------------------------------- Randstad Holdings N.V. (Services-Commercial & Consumer) 292,500 11,675,895 - --------------------------------------------------------------- Simac Techniek N.V. (Electronics-Instrumentation) 25,000 3,197,270 - --------------------------------------------------------------- Vedior N.V. (Services-Commercial & Consumer) (Acquired 06/05/97; Cost $1,500,539)(a)(b) 75,000 1,541,333 - --------------------------------------------------------------- Vedior N.V. (Services-Commercial & Consumer) 100,000 2,055,112 - --------------------------------------------------------------- 110,307,232 - --------------------------------------------------------------- NORWAY-2.56% ASK A.S.A. (Computer Peripherals)(a) 405,000 3,627,785 - --------------------------------------------------------------- Blom A.S.A. (Services-Facilities & Environmental)(a) 244,000 2,412,933 - --------------------------------------------------------------- MARKET SHARES VALUE NORWAY-(CONTINUED) Blom A.S.A.-Rts. (Services-Facilities & Environmental)(a) 34,268 $ 4,911 - --------------------------------------------------------------- Det Sondenfjelds-Norske Dampskibsselskab (Oil & Gas-Refining & Marketing)(a) 250,000 5,625,305 - --------------------------------------------------------------- Ekornes A.S.A. (Household Furnishings & Appliances) 300,000 2,751,741 - --------------------------------------------------------------- Farstad Shipping A.S.A. (Shipping) 406,000 2,612,635 - --------------------------------------------------------------- Fred. Olsen Energy A.S.A. (Oil & Gas-Drilling & Equipment) (Acquired 10/07/97; Cost $3,100,584)(a)(b) 152,900 3,856,795 - --------------------------------------------------------------- Merkantildata A.S.A. (Services-Commercial & Consumer) 150,000 5,052,025 - --------------------------------------------------------------- NetCom A.S.A. (Cellular/Wireless Telecommunications) (a) 150,000 3,633,158 - --------------------------------------------------------------- Saevik Supply A.S.A. (Oil-International Integrated)(a) 160,000 3,668,988 - --------------------------------------------------------------- Seateam Technology A.S.A. (Oil & Gas-Exploration & Production)(a) 150,000 3,009,717 - --------------------------------------------------------------- Smedvig A.S.A.-Class A (Oil & Gas-Drilling & Equipment) 160,000 4,838,479 - --------------------------------------------------------------- Smedvig A.S.A.-Class B (Oil & Gas-Drilling & Equipment) 140,000 4,133,345 - --------------------------------------------------------------- Tandberg A.S.A. (Communications Equipment)(a) 110,000 1,734,170 - --------------------------------------------------------------- Tandberg Television A.S.A. (Communications Equipment)(a) 440,000 4,225,070 - --------------------------------------------------------------- Tomra Systems A.S.A. (Manufacturing Specialized) 486,000 12,537,621 - --------------------------------------------------------------- 63,724,678 - --------------------------------------------------------------- PERU-0.47% Telefonica del Peru S.A.-ADR (Telephone) 486,500 9,608,375 - --------------------------------------------------------------- Telefonica del Peru S.A.-Class B (Telephone) 1,026,000 2,044,442 - --------------------------------------------------------------- 11,652,817 - --------------------------------------------------------------- PHILIPPINES-0.98% DMCI Holdings Inc. (Homebuilding)(a) 23,400,000 1,848,236 - --------------------------------------------------------------- International Container Terminal Services, Inc. (Air Freight)(a) 12,225,000 2,413,963 - --------------------------------------------------------------- Ionics Circuit Inc. (Electronics-Component Distributors) 6,040,000 3,535,402 - --------------------------------------------------------------- Metro Pacific Corp. (Manufacturing-Diversified) 36,247,820 2,413,113 - --------------------------------------------------------------- Philippine Long Distance Telephone Co. (Telephone) 194,920 4,811,142 - --------------------------------------------------------------- Philippine Long Distance Telephone Co.-ADR (Telephone) 159,400 3,865,450 - --------------------------------------------------------------- SM Prime Holdings Inc. (Land Development) 32,000,000 5,596,615 - --------------------------------------------------------------- 24,483,923 - ---------------------------------------------------------------
FS-9 175
MARKET SHARES VALUE PORTUGAL-1.51% Cimpor-Cimentos de Portugal S.A. (Construction-Cement & Aggregates) 250,000 $ 6,326,415 - --------------------------------------------------------------- Electricidade de Portugal, S.A.-ADR (Electric Companies)(a) 158,500 5,537,594 - --------------------------------------------------------------- Jeronimo Martins & Filho, S.A. (Retail General Merchandise) 56,000 3,662,212 - --------------------------------------------------------------- Portugal Telecom S.A. (Telephone) 265,000 10,872,761 - --------------------------------------------------------------- Semapa (Building Materials) 110,000 2,539,664 - --------------------------------------------------------------- Telecel-Comunicacaoes Pessoais, S.A. (Cellular/Wireless Telecommunications) (a) 34,900 3,149,725 - --------------------------------------------------------------- Telecel-Comunicacaoes Pessoais, S.A.-ADR (Cellular/Wireless Telecommunications) (a) 60,000 5,425,078 - --------------------------------------------------------------- 37,513,449 - --------------------------------------------------------------- SINGAPORE-0.80% City Developments Ltd. (Land Development) 789,000 3,306,286 - --------------------------------------------------------------- Creative Technology Limited (Computers-Peripherals)(a) 100,000 2,543,750 - --------------------------------------------------------------- DBS Land Ltd. (Land Development) 3,205,000 5,453,587 - --------------------------------------------------------------- Overseas Union Bank Ltd. (Banks-Major Regional) 1,236,000 4,120,000 - --------------------------------------------------------------- Wing Tai Holdings Ltd. (Land Development) 3,600,000 4,571,429 - --------------------------------------------------------------- 19,995,052 - --------------------------------------------------------------- SOUTH AFRICA-0.54% Dimension Data Holdings Ltd. (Computers-Software & Services)(a) 1,500,000 6,233,766 - --------------------------------------------------------------- Persetel Holdings Ltd. (Computers-Software & Services) 760,000 4,777,143 - --------------------------------------------------------------- Protea Furnishers Ltd. (Household Furnishings & Appliances) 4,700,000 2,441,559 - --------------------------------------------------------------- 13,452,468 - --------------------------------------------------------------- SPAIN-1.12% Azkoyen S.A. (Manufacturing-Specialized) 17,000 1,870,970 - --------------------------------------------------------------- Corp. Financiera Reunida, S.A. (Investment Management)(a) 1,475,000 7,908,847 - --------------------------------------------------------------- Mapfre Vida (Insurance-Life & Health) 54,000 3,303,774 - --------------------------------------------------------------- Prosegur, CIA de Seguridad S.A. (Services- Commercial & Consumer) 400,000 4,482,024 - --------------------------------------------------------------- Tele Pizza, S.A. (Restaurants)(a) 100,000 6,867,395 - --------------------------------------------------------------- Vidrala S.A. (Manufacturing-Specialized) 80,000 3,514,127 - --------------------------------------------------------------- 27,947,137 - --------------------------------------------------------------- SWEDEN-1.27% AB Lindex (Retail-Specialty-Apparel) 130,000 3,662,265 - --------------------------------------------------------------- Allgon A.B.-Class B (Electronic Components/Miscellaneous) 57,000 913,230 - --------------------------------------------------------------- MARKET SHARES VALUE SWEDEN-(CONTINUED) Assa Abloy A.B.-Class B (Metal Fabricators) 230,000 $ 5,251,071 - --------------------------------------------------------------- B.T. Industries A.B. (Machinery-Diversified) 130,000 2,777,073 - --------------------------------------------------------------- Europolitan Holdings A.B. (Telecommunications-Cellular & Wireless)(a) 94,400 3,377,775 - --------------------------------------------------------------- Hemkopskedjan A.B. (Retail-Food Chains)(a)(b) 100,000 1,034,727 - --------------------------------------------------------------- Hoganas A.B. (Metals Mining) 170,000 6,309,831 - --------------------------------------------------------------- Munters A.B.(Services-Facilities & Environmental)(a) (b) 185,000 1,877,195 - --------------------------------------------------------------- Scandic Hotels A.B. (Lodging-Hotels)(a) 39,500 896,541 - --------------------------------------------------------------- Telefonaktiebolaget LM Ericsson-ADR (Communications Equipment) 122,360 5,414,430 - --------------------------------------------------------------- 31,514,138 - --------------------------------------------------------------- SWITZERLAND-2.33% Ares-Serono Group-Class B (Health Care-Drugs-Generic & Other) 4,000 7,570,077 - --------------------------------------------------------------- Georg Fischer A.G. (Auto Parts & Equipment) 1,800 2,398,715 - --------------------------------------------------------------- Gurit-Heberlein A.G. (Chemicals Diversified) 1,400 4,424,210 - --------------------------------------------------------------- Kuoni Reisen A.G. (Services-Commercial & Consumer) 1,600 6,056,061 - --------------------------------------------------------------- Mikron Holding A.G. (Machinery-Diversified)(a) 17,000 2,828,781 - --------------------------------------------------------------- Mikron Holding A.G. Wts., expiring 12/10/97 (Machinery-Diversified)(a) 17,000 29,138 - --------------------------------------------------------------- Rieter Holdings Ltd. (Machinery-Diversified) 24,500 10,585,610 - --------------------------------------------------------------- Saurer A.G. (Machinery-Diversified) 18,500 12,234,244 - --------------------------------------------------------------- Selecta Group (The) (Retail-Speciality) (Acquired 05/12/97; Cost $2,339,099)(a)(b) 16,150 2,260,596 - --------------------------------------------------------------- Sika Finanz A.G. (Engineering & Construction) 16,500 4,854,847 - --------------------------------------------------------------- Sulzer Medica (Health Care-Medical Products & Supplies)(a) 120,600 3,226,050 - --------------------------------------------------------------- TAG Heuer International S.A. (Consumer Jewelry, Novelties & Gift)(a) 13,900 1,588,287 - --------------------------------------------------------------- 58,056,616 - --------------------------------------------------------------- TAIWAN-0.11% ASE Test Ltd. (Electronics-Semiconductors)(a) 49,100 2,688,225 - --------------------------------------------------------------- UNITED KINGDOM-7.55% Aegis Group PLC (Services-Advertising/Marketing) 6,000,000 6,090,233 - --------------------------------------------------------------- Airtours PLC (Services-Commercial & Consumer) 815,000 16,134,922 - --------------------------------------------------------------- Alexon Group PLC (Textiles-Apparel)(a) 555,000 2,206,828 - ---------------------------------------------------------------
FS-10 176
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Amersham International PLC (Health Care-Drugs-Generic & Other) 245,000 $ 9,423,293 - --------------------------------------------------------------- Avis Europe PLC (Services-Commercial & Consumer) (Acquired 03/26/97; Cost $2,977,263)(b) 1,484,550 3,711,149 - --------------------------------------------------------------- Blacks Leisure Group PLC (Retail General Merchandise) 200,000 1,469,709 - --------------------------------------------------------------- British-Borneo Petroleum Syndicate PLC (Oil & Gas/Exploration & Production) 1,080,000 8,624,977 - --------------------------------------------------------------- Capita Group PLC (Services Commercial & Consumer) 570,000 2,945,458 - --------------------------------------------------------------- Compass Group PLC (Services Commercial & Consumer) 335,000 3,571,804 - --------------------------------------------------------------- Danka Business Systems PLC-ADR (Office Equipment & Supplies) 114,700 4,243,900 - --------------------------------------------------------------- Dewhirst Group PLC (Textiles-Apparel) 404,000 1,721,640 - --------------------------------------------------------------- Dr. Solomon's Group PLC-ADR (Computers-Software & Services)(a) 109,600 3,356,500 - --------------------------------------------------------------- FirstBus PLC (Shipping) 1,350,000 4,552,575 - --------------------------------------------------------------- Games Workshop Group PLC (Leisure Time- Products) 165,000 1,896,277 - --------------------------------------------------------------- Goode Durrant PLC (Manufacturing Diversified) 214,000 1,784,421 - --------------------------------------------------------------- Graseby PLC (Electronics Instrumentation) 425,000 1,493,827 - --------------------------------------------------------------- Holliday Chemical Holdings PLC (Chemicals Specialty) 675,000 2,151,714 - --------------------------------------------------------------- Independent Insurance Group PLC (Insurance-Property-Casualty) 185,000 3,569,413 - --------------------------------------------------------------- Jarvis Hotels PLC (Lodging-Hotels) 675,000 1,653,423 - --------------------------------------------------------------- JBA Holdings PLC (Computer Software & Services) 150,000 2,378,211 - --------------------------------------------------------------- J.D. Wetherspoon PLC (Leisure Time- Products) 105,000 2,853,853 - --------------------------------------------------------------- JJB Sports PLC (Retail-General Merchandise) 430,000 4,112,165 - --------------------------------------------------------------- Kwik-Fit Holdings PLC (Retail-General Merchandise) 880,500 4,778,932 - --------------------------------------------------------------- Manchester United PLC (Leisure Time-Products) 500,000 5,360,411 - --------------------------------------------------------------- Mayflower Corp. PLC (The) (Auto Parts & Equipment) 890,000 2,971,463 - --------------------------------------------------------------- Micro Focus Group PLC ADR (Computer Software/Services)(a) 80,000 2,685,000 - --------------------------------------------------------------- Millennium & Copthorne Hotels PLC (Lodging-Hotels) 350,000 2,266,640 - --------------------------------------------------------------- Misys PLC (Services-Commercial & Consumer) 500,000 12,604,097 - --------------------------------------------------------------- Parity PLC (Services Commercial & Consumer) 350,000 3,388,216 - --------------------------------------------------------------- PizzaExpress PLC (Restaurants) 387,000 4,876,162 - --------------------------------------------------------------- MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Powerscreen International PLC (Machinery-Diversified) 515,000 $ 6,035,328 - --------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 1,000,000 11,576,475 - --------------------------------------------------------------- Sage Group PLC (The) (Computers-Software & Services) 300,000 3,623,940 - --------------------------------------------------------------- Scholl PLC (Health Care-Diversified) 200,000 934,507 - --------------------------------------------------------------- Select Appointments Holdings PLC (Services-Commercial & Consumer) 300,000 2,753,187 - --------------------------------------------------------------- SEMA Group PLC (Manufacturing Diversified) 500,000 11,232,536 - --------------------------------------------------------------- Senior Engineering Group PLC (Metal Fabricators) 1,100,000 3,063,572 - --------------------------------------------------------------- Stagecoach Holdings PLC (Shipping) 790,000 9,662,330 - --------------------------------------------------------------- Stanley Leisure PLC (Leisure Time-Products) 425,000 2,185,478 - --------------------------------------------------------------- Taylor Woodrow PLC (Engineering & Construction) 1,450,000 4,451,910 - --------------------------------------------------------------- TBI PLC (Land Development) 500,000 721,433 - --------------------------------------------------------------- Weir Group PLC (The) (Machinery-Diversified) 600,000 2,793,454 - --------------------------------------------------------------- 187,911,363 - --------------------------------------------------------------- VENEZUELA-0.29% Cia. Anonima Nacional Telefonos de Venezuela (Telecommunications-Long Distance) 165,000 7,218,750 - --------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests 1,520,076,577 - --------------------------------------------------------------- DOMESTIC PREFERRED STOCK-0.23% LODGING (HOTELS)-0.23% Royal Caribbean Cruises Ltd.-$3.63 Conv. Pfd. 76,000 5,776,000 - --------------------------------------------------------------- DOMESTIC CONVERTIBLE CORPORATE NOTES-0.15% ADVERTISING/BROADCASTING-0.06% Jacor Communications Inc., Conv. Sr. LYON, 5.50%, 06/12/11(c) $ 2,350,000 1,439,210 - --------------------------------------------------------------- INSURANCE (MULTI-LINE)-0.09% Loews Corp., Conv. Sub. Notes, 3.125%, 09/15/07 2,100,000 2,396,415 - --------------------------------------------------------------- Total Domestic Convertible Corporate Notes 3,835,625 - --------------------------------------------------------------- FOREIGN CONVERTIBLE CORPORATE BONDS-0.12% HONG KONG-0.12% New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds, 5.00%, 07/15/01 (Acquired 04/10/97-04/11/97; Cost $2,172,563)(b) 1,850,000 1,748,250 - ---------------------------------------------------------------
FS-11 177
PRINCIPAL MARKET FOREIGN CONVERTIBLE CORPORATE AMOUNT VALUE BONDS-(CONTINUED) New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds, 5.00%, 07/15/01 $ 1,170,000 $ 1,105,650 - --------------------------------------------------------------- Total Foreign Convertible Corporate Bonds 2,853,900 - ---------------------------------------------------------------
REPURCHASE AGREEMENT(D)-5.40% SBC Warburg Inc., 5.40%, 11/03/97(e) $134,491,340 $ 134,491,340 - --------------------------------------------------------------- TOTAL INVESTMENTS-98.87% 2,461,010,253 - --------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-1.13% 28,169,726 - --------------------------------------------------------------- NET ASSETS-100.00% 2,489,179,979 ===============================================================
Investment Abbreviations: ADR - American Depository Receipt Conv. - Convertible GDR - Global Depository Receipt LYON - Liquid Yield Option Notes Pfd. - Preferred Rts. - Rights Sr. - Senior Sub. - Subordinated Wts. - Warrants Notes to Schedule of Investments: (a) Non-income producing security. (b) Restricted security. May be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. The 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 10/31/97 was $20,934,090, which represented 0.84% of the Fund's net assets. (c) Zero coupon bond. The interest rate shown represents the rate of the original issue discount. (d) 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, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (e) Joint repurchase agreement entered into 10/31/97 with a maturing value of $300,135,000. Collateralized by $295,632,000 U.S. Government obligations, 5.25% to 8.875% due 12/31/97 to 08/15/02 with an aggregate market value at 10/31/97 of $306,259,515. See Notes to Financial Statements. FS-12 178 STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1997 ASSETS: Investments, at market value (cost $1,987,194,427) $2,461,010,253 - ------------------------------------------------------------ Foreign currencies, at market value (cost $19,159,068) 19,307,806 - ------------------------------------------------------------ Receivables for: Investments sold 11,150,791 - ------------------------------------------------------------ Capital stock sold 18,652,156 - ------------------------------------------------------------ Dividends and interest 1,503,948 - ------------------------------------------------------------ Investment for deferred compensation plan 17,360 - ------------------------------------------------------------ Other assets 69,112 - ------------------------------------------------------------ Total assets 2,511,711,426 - ------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 11,143,700 - ------------------------------------------------------------ Capital stock reacquired 6,695,997 - ------------------------------------------------------------ Deferred compensation 17,360 - ------------------------------------------------------------ Accrued advisory fees 1,984,585 - ------------------------------------------------------------ Accrued administrative services fees 8,156 - ------------------------------------------------------------ Accrued directors' fees 6,600 - ------------------------------------------------------------ Accrued distribution fees 1,704,146 - ------------------------------------------------------------ Accrued transfer agent fees 542,373 - ------------------------------------------------------------ Accrued operating expenses 428,530 - ------------------------------------------------------------ Total liabilities 22,531,447 - ------------------------------------------------------------ Net assets applicable to shares outstanding $2,489,179,979 ============================================================ NET ASSETS: Class A $1,242,504,885 ============================================================ Class B $1,241,999,324 ============================================================ Class C $ 4,675,770 ============================================================ CAPITAL STOCK, $.001 PAR VALUE PER SHARE: CLASS A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 71,884,207 ============================================================ CLASS B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 73,069,124 ============================================================ CLASS C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 275,023 ============================================================ CLASS A: Net asset value and redemption price per share $ 17.28 ============================================================ Offering price per share: (Net asset value $17.28 divided by 95.25%)$ 18.14 ============================================================ CLASS B: Net asset value and offering price per share $ 17.00 ============================================================ CLASS C: Net asset value and offering price per share $ 17.00 ============================================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1997 INVESTMENT INCOME: Dividends (net of $1,998,577 foreign withholding tax) $ 17,106,552 - ------------------------------------------------------------- Interest 2,731,848 - ------------------------------------------------------------- Total investment income 19,838,400 - ------------------------------------------------------------- EXPENSES: Advisory fees 19,996,061 - ------------------------------------------------------------- Administrative services fees 109,161 - ------------------------------------------------------------- Directors' fees 20,096 - ------------------------------------------------------------- Distribution fees-Class A 5,877,002 - ------------------------------------------------------------- Distribution fees-Class B 11,173,566 - ------------------------------------------------------------- Distribution fees-Class C 6,233 - ------------------------------------------------------------- Custodian fees 1,728,899 - ------------------------------------------------------------- Transfer agent fees-Class A 2,809,254 - ------------------------------------------------------------- Transfer agent fees-Class B 3,311,554 - ------------------------------------------------------------- Transfer agent fees-Class C 1,951 - ------------------------------------------------------------- Other 1,293,733 - ------------------------------------------------------------- Total expenses 46,327,510 - ------------------------------------------------------------- Less: Expenses paid indirectly (61,449) - ------------------------------------------------------------- Net expenses 46,266,061 - ------------------------------------------------------------- Net investment income (loss) (26,427,661) - ------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on sales of: Investment securities (60,146,645) - ------------------------------------------------------------- Foreign currencies (1,044,469) - ------------------------------------------------------------- (61,191,114) - ------------------------------------------------------------- Net unrealized appreciation of: Investment securities 272,184,029 - ------------------------------------------------------------- Foreign currencies 217,562 - ------------------------------------------------------------- 272,401,591 - ------------------------------------------------------------- Net gain (loss) on investment securities and foreign currencies 211,210,477 - ------------------------------------------------------------- Net increase in net assets resulting from operations $184,782,816 =============================================================
See Notes to Financial Statements. FS-13 179 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1997 and 1996
1997 1996 OPERATIONS: Net investment income (loss) $ (26,427,661) $ (8,221,031) - ----------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies (61,191,114) (32,408,407) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and foreign currencies 272,401,591 171,434,202 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 184,782,816 130,804,764 - ----------------------------------------------------------------------------------------------- Distributions to shareholders from net realized capital gains: Class A -- (766,625) - ----------------------------------------------------------------------------------------------- Class B -- (520,242) - ----------------------------------------------------------------------------------------------- Share transactions-net: Class A 221,978,537 657,118,189 - ----------------------------------------------------------------------------------------------- Class B 350,877,196 635,669,948 - ----------------------------------------------------------------------------------------------- Class C 5,007,454 -- - ----------------------------------------------------------------------------------------------- Net increase in net assets 762,646,003 1,422,306,034 - ----------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 1,726,533,976 304,227,942 - ----------------------------------------------------------------------------------------------- End of period $2,489,179,979 $1,726,533,976 =============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $2,116,538,293 $1,557,038,579 - ----------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (36,158) (14,054) - ----------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities and foreign currencies (101,414,669) (32,181,471) - ----------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 474,092,513 201,690,922 - ----------------------------------------------------------------------------------------------- $2,489,179,979 $1,726,533,976 ===============================================================================================
NOTES TO FINANCIAL STATEMENTS October 31, 1997 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Aggressive Growth 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 operating series portfolios: AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund and AIM International Equity Fund. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is to 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 following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) 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. 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. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined FS-14 180 without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market quotations are either not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in 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 would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of 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 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 forward 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. 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, 1997, capital was decreased by $18,363,473, undistributed net investment income was increased by $26,405,557 and undistributed net realized gains decreased by $8,042,084 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. The Fund has a capital loss carryforward of $91,801,587 (which may be carried forward to offset future taxable capital gains, if any) which expires, if not previously utilized, through the year 2005. F. Expenses -- Distribution and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES 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. 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, 1997, AIM was reimbursed $109,161 for such services. The Fund, pursuant to a transfer agency and services 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, 1997, AFS was paid $3,429,751 for such services. The Company has entered into a master distribution agreement with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class A, Class B and Class C shares of the Fund. The Company has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares and Class C shares (the "Class A and Class C Plan"), and the Fund's Class B shares (the "Class B Plan"), (collectively, the "Plans"). The Fund, pursuant to the Class A and Class C Plan, pays AIM Distributors compensation at the annual rate of 0.50% of the average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Class A and Class C Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of the Fund. The Fund, pursuant to the Class B Plan, will pay AIM Distributors 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- FS-15 181 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, 1997, Class A shares and Class B shares and the period August 4, 1997 through October 31, 1997 Class C shares paid AIM Distributors $5,877,002, $11,173,566 and $6,233, respectively, as compensation under the Plans. AIM Distributors received commissions of $2,200,552 from the sales of the Class A shares of the Fund during the year ended October 31, 1997. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1997, AIM Distributors received commissions of $133,018 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, 1997, the Fund paid legal fees of $8,986 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES AIM has directed certain portfolio trades to brokers who paid a portion of the Fund's expenses related to pricing services used by the Fund which reduced the Fund's expenses by $8,359 for the year ended October 31, 1997. The Fund also received reductions in transfer agency fees from AFS (an affiliate of AIM) and custodian fees of $29,827 and $23,263, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $61,449 during the year ended October 31, 1997. NOTE 4-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 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. Interest on borrowings under the line of credit is payable on maturity or prepayment date. Prior to an amendment of the line of credit on July 15, 1997, the Fund was limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by its prospectus for borrowings. During the year ended October 31, 1997, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.05% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1997 was $1,686,305,972 and $1,247,124,354, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of October 31, 1997, on a tax basis, is as follows. Aggregate unrealized appreciation of investment securities $ 600,581,618 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (136,378,875) - --------------------------------------------------------- Net unrealized appreciation of investment securities $ 464,202,743 =========================================================
Cost of investments for tax purposes is $1,996,807,510. NOTE 7-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the years ended October 31, 1997 and 1996 were as follows:
1997 1996 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ----------- ------------- ---------- -------------- Sold: Class A 41,562,019 $ 712,389,030 50,205,954 $ 748,519,743 - --------------------- ----------- ------------- ---------- -------------- Class B 31,043,322 516,329,374 45,280,451 673,914,740 - --------------------- ----------- ------------- ---------- -------------- Class C* 281,009 5,113,170 -- -- - --------------------- ----------- ------------- ---------- -------------- Issued as reinvestment of dividends: Class A -- -- 56,549 727,221 - --------------------- ----------- ------------- ---------- -------------- Class B -- -- 38,442 491,285 - --------------------- ----------- ------------- ---------- -------------- Reacquired: Class A (28,025,133) (490,410,493) (6,124,044) (92,128,775) - --------------------- ----------- ------------- ---------- -------------- Class B (9,784,297) (165,452,178) (2,588,161) (38,736,077) - --------------------- ----------- ------------- ---------- -------------- Class C* (5,986) (105,716) -- -- - --------------------- ----------- ------------- ---------- -------------- 35,070,934 $ 577,863,187 86,869,191 $1,292,788,137 ===================== =========== ============= ========== ==============
* Class C commenced sales on August 4, 1997. FS-16 182 NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A and Class B capital stock outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (date sales commenced) through October 31, 1994, and for a share of Class C capital stock outstanding for the period August 4, 1997 (date sales commenced) through October 31, 1997.
1997 1996 1995 1994 ---------- ------------ ------------ ------------ CLASS A: Net asset value, beginning of period $ 15.76 $ 13.09 $ 10.22 $ 10.00 - ------------------------------------------------------------ ---------- -------- -------- -------- Income from investment operations: Net investment income (loss) (0.15)(a) (0.09)(a) (0.09)(a) -- - ------------------------------------------------------------ ---------- -------- -------- -------- Net gains on securities (both realized and unrealized) 1.67 2.81 2.96 0.22 - ------------------------------------------------------------ ---------- -------- -------- -------- Total from investment operations 1.52 2.72 2.87 0.22 - ------------------------------------------------------------ ---------- -------- -------- -------- Less distributions: Distributions from net realized gains -- (0.05) -- -- - ------------------------------------------------------------ ---------- -------- -------- -------- Net asset value, end of period $ 17.28 $ 15.76 $ 13.09 $ 10.22 ============================================================ ========== ======== ======== ======== Total return(b) 9.65% 20.83% 28.08% 2.20% ============================================================ ========== ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,242,505 $919,319 $186,029 $ 18,410 ============================================================ ========== ======== ======== ======== Ratio of expenses to average net assets 1.75%(c)(d) 1.83% 2.11% 2.02%(e)(f) ============================================================ ========== ======== ======== ======== Ratio of net investment income (loss) to average net assets (0.88)%(c) (0.62)% (0.68)% 0.27%(f)(g) ============================================================ ========== ======== ======== ======== Portfolio turnover rate 57% 44% 64% 2% ============================================================ ========== ======== ======== ======== Average brokerage commission rate paid(h) $ 0.0131 $ 0.0155 N/A N/A ============================================================ ========== ======== ======== ========
(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 $1,175,400,376. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 4.03% (annualized) for 1994. (f) Annualized. (g) After fee waivers and/or expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (1.74)% (annualized) for 1994. (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter.
1997 1996 1995 1994 ---------- ------------ ------------ ------------ CLASS B: Net asset value, beginning of period $ 15.58 $ 13.02 $ 10.21 $ 10.00 - ------------------------------------------------------------ ---------- -------- -------- -------- Income from investment operations: Net investment income (loss) (0.24)(a) (0.17)(a) (0.14)(a) -- - ------------------------------------------------------------ ---------- -------- -------- -------- Net gains (losses) on securities (both realized and unrealized) 1.66 2.78 2.95 0.21 - ------------------------------------------------------------ ---------- -------- -------- -------- Total from investment operations 1.42 2.61 2.81 0.21 - ------------------------------------------------------------ ---------- -------- -------- -------- Less distributions: Distributions from net realized gains -- (0.05) -- -- - ------------------------------------------------------------ ---------- -------- -------- -------- Net asset value, end of period $ 17.00 $ 15.58 $ 13.02 $ 10.21 ============================================================ ========== ======== ======== ======== Total return(b) 9.11% 20.09% 27.52% 2.10% ============================================================ ========== ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,241,999 $807,215 $118,199 $ 6,201 ============================================================ ========== ======== ======== ======== Ratio of expenses to average net assets 2.30%(c)(d) 2.37% 2.62% 2.54%(e)(f) ============================================================ ========== ======== ======== ======== Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.16)% (1.19)% (0.25)%(f)(g) ============================================================ ========== ======== ======== ======== Portfolio turnover rate 57% 44% 64% 2% ============================================================ ========== ======== ======== ======== Average brokerage commission rate paid(h) $ 0.0131 $ 0.0155 N/A N/A ============================================================ ========== ======== ======== ========
(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 $1,117,630,574. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average assets would have been the same. (e) After fee waivers and expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 4.43% (annualized) for 1994. (f) Annualized. (g) After fee waivers and expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (2.14)% (annualized) for 1994. (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. FS-17 183
1997 ---------- CLASS C: Net asset value, beginning of period $ 18.39 - ------------------------------------------------------------ ---------- Income from investment operations: Net investment income (loss) (0.04)(a) - ------------------------------------------------------------ ---------- Net gains (losses) on securities (both realized and unrealized) (1.35) - ------------------------------------------------------------ ---------- Total from investment operations (1.39) - ------------------------------------------------------------ ---------- Less distributions: Distributions from net realized gains -- - ------------------------------------------------------------ ---------- Net asset value, end of period $ 17.00 ============================================================ ========== Total return(b) (7.56)% ============================================================ ========== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 4,676 ============================================================ ========== Ratio of expenses to average net assets 2.36%(c)(d) ============================================================ ========== Ratio of net investment income (loss) to average net assets (1.50)%(c) ============================================================ ========== Portfolio turnover rate 57% ============================================================ ========== Average brokerage commission rate paid(e) $ 0.0131 ============================================================ ==========
(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 annualized and based on average net assets of $2,556,355. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average assets would have been the same. (e) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. FS-18 184 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 Global Growth Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1997, and the related statement of operations for the year then ended, the statement of changes in net assets for the two-year period then ended and the financial highlights for the three-year period 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, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Growth Fund as of October 31, 1997, the results of its operations for the year then ended, and changes in its net assets for the two-year period then ended and the financial highlights for the three-year period 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 5, 1997 FS-19 185 SCHEDULE OF INVESTMENTS October 31, 1997
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-29.98% AGRICULTURAL PRODUCTS-0.41% DIMON, Inc. 25,000 $ 648,437 - --------------------------------------------------------------- Universal Corp. 26,000 999,375 - --------------------------------------------------------------- 1,647,812 - --------------------------------------------------------------- BANKS (MAJOR REGIONAL)-0.13% NationsBank Corp. 9,000 538,875 - --------------------------------------------------------------- BANKS (MONEY CENTER)-0.94% BankAmerica Corp. 17,000 1,215,500 - --------------------------------------------------------------- Chase Manhattan Corp. 11,500 1,326,812 - --------------------------------------------------------------- Citicorp 10,000 1,250,625 - --------------------------------------------------------------- 3,792,937 - --------------------------------------------------------------- CHEMICALS (SPECIALTY)-0.21% Crompton & Knowles Corp. 34,600 873,650 - --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-0.49% Lucent Technologies, Inc. 15,500 1,277,781 - --------------------------------------------------------------- Tellabs, Inc.(a) 13,000 702,000 - --------------------------------------------------------------- 1,979,781 - --------------------------------------------------------------- COMPUTERS (HARDWARE)-1.52% Compaq Computer Corp. 29,000 1,848,750 - --------------------------------------------------------------- Dell Computer Corp.(a) 21,000 1,682,625 - --------------------------------------------------------------- Digital Equipment Corp.(a) 30,000 1,501,875 - --------------------------------------------------------------- International Business Machines Corp. 11,500 1,127,719 - --------------------------------------------------------------- 6,160,969 - --------------------------------------------------------------- COMPUTERS (NETWORKING)-0.67% Bay Networks, Inc.(a) 45,000 1,423,125 - --------------------------------------------------------------- Cisco Systems, Inc.(a) 16,000 1,312,500 - --------------------------------------------------------------- 2,735,625 - --------------------------------------------------------------- COMPUTERS (PERIPHERALS)-0.21% EMC Corp.(a) 15,000 840,000 - --------------------------------------------------------------- COMPUTERS (SOFTWARE & SERVICES)-1.15% BMC Software, Inc.(a) 11,400 688,275 - --------------------------------------------------------------- Computer Associates International, Inc. 19,000 1,416,687 - --------------------------------------------------------------- Compuware Corp.(a) 21,000 1,388,625 - --------------------------------------------------------------- Microsoft Corp.(a) 9,000 1,170,000 - --------------------------------------------------------------- 4,663,587 - --------------------------------------------------------------- CONSUMER FINANCE-1.12% FIRSTPLUS Financial Group, Inc.(a) 11,500 632,500 - --------------------------------------------------------------- Green Tree Financial Corp. 32,000 1,348,000 - --------------------------------------------------------------- Household International, Inc. 10,000 1,132,500 - --------------------------------------------------------------- MARKET SHARES VALUE CONSUMER FINANCE-(CONTINUED) SLM Holding Corp. 10,000 $ 1,403,750 - --------------------------------------------------------------- 4,516,750 - --------------------------------------------------------------- DISTRIBUTORS (FOOD & HEALTH)-0.56% AmeriSource Health Corp.-Class A(a) 25,000 1,484,375 - --------------------------------------------------------------- Cardinal Health, Inc. 10,650 790,762 - --------------------------------------------------------------- 2,275,137 - --------------------------------------------------------------- ELECTRICAL EQUIPMENT-0.76% General Electric Co. 23,000 1,484,937 - --------------------------------------------------------------- Solectron Corp.(a) 25,400 996,950 - --------------------------------------------------------------- Symbol Technologies, Inc. 15,000 596,250 - --------------------------------------------------------------- 3,078,137 - --------------------------------------------------------------- ELECTRONICS (INSTRUMENTATION)-0.27% Waters Corp.(a) 25,000 1,100,000 - --------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-0.65% Intel Corp. 18,000 1,386,000 - --------------------------------------------------------------- Texas Instruments, Inc. 11,500 1,226,906 - --------------------------------------------------------------- 2,612,906 - --------------------------------------------------------------- EQUIPMENT (SEMICONDUCTORS)-0.55% Applied Materials, Inc.(a) 25,700 857,737 - --------------------------------------------------------------- KLA-Tencor Corp.(a) 15,000 659,062 - --------------------------------------------------------------- Teradyne, Inc.(a) 18,400 688,850 - --------------------------------------------------------------- 2,205,649 - --------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-1.27% American Express Co. 15,000 1,170,000 - --------------------------------------------------------------- Federal Home Loan Mortgage Corp. 31,800 1,204,425 - --------------------------------------------------------------- Federal National Mortgage Association 27,200 1,317,500 - --------------------------------------------------------------- MBIA, Inc. 2,400 143,400 - --------------------------------------------------------------- Morgan Stanley, Dean Witter, Discover & Co. 25,900 1,269,100 - --------------------------------------------------------------- SunAmerica, Inc. 450 16,172 - --------------------------------------------------------------- 5,120,597 - --------------------------------------------------------------- HEALTH CARE (DIVERSIFIED)-1.06% Abbott Laboratories 12,300 754,144 - --------------------------------------------------------------- Bristol-Myers Squibb Co. 11,500 1,009,125 - --------------------------------------------------------------- Johnson & Johnson 19,500 1,118,812 - --------------------------------------------------------------- Warner-Lambert Co. 9,900 1,417,556 - --------------------------------------------------------------- 4,299,637 - --------------------------------------------------------------- HEALTH CARE (DRUGS-GENERIC & OTHER)-0.28% Watson Pharmaceuticals, Inc.(a) 35,800 1,136,650 - ---------------------------------------------------------------
FS-20 186
MARKET SHARES VALUE HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.53% Merck & Co., Inc. 8,000 $ 714,000 - --------------------------------------------------------------- Pfizer, Inc. 4,200 297,150 - --------------------------------------------------------------- Schering-Plough Corp. 20,000 1,121,250 - --------------------------------------------------------------- 2,132,400 - --------------------------------------------------------------- HEALTH CARE (HOSPITAL MANAGEMENT)-0.35% Quorum Health Group, Inc.(a) 41,250 1,000,312 - --------------------------------------------------------------- Tenet Healthcare Corp.(a) 13,900 424,819 - --------------------------------------------------------------- 1,425,131 - --------------------------------------------------------------- HEALTH CARE (LONG TERM CARE)-0.26% HEALTHSOUTH Corp.(a) 41,000 1,048,063 - --------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.22% Baxter International Inc. 21,000 971,250 - --------------------------------------------------------------- Becton, Dickinson & Co. 30,000 1,381,875 - --------------------------------------------------------------- Boston Scientific Corp.(a) 22,500 1,023,750 - --------------------------------------------------------------- Guidant Corp. 4,400 253,000 - --------------------------------------------------------------- Stryker Corp. 23,000 855,313 - --------------------------------------------------------------- Sybron International Corp.(a) 10,700 429,337 - --------------------------------------------------------------- 4,914,525 - --------------------------------------------------------------- HOUSEHOLD FURNITURE & APPLIANCES-0.18% Maytag Corp. 22,200 740,925 - --------------------------------------------------------------- HOUSEHOLD PRODUCTS (NON-DURABLES)-0.36% Dial Corp. 51,000 860,625 - --------------------------------------------------------------- Procter & Gamble Co. (The) 9,000 612,000 - --------------------------------------------------------------- 1,472,625 - --------------------------------------------------------------- INSURANCE (LIFE/HEALTH)-0.38% AFLAC Inc. 10,400 529,100 - --------------------------------------------------------------- Conseco Inc. 18,000 785,250 - --------------------------------------------------------------- Torchmark Corp. 6,000 239,250 - --------------------------------------------------------------- 1,553,600 - --------------------------------------------------------------- INSURANCE (MULTI-LINE)-0.73% Ace, Ltd. 13,900 1,291,831 - --------------------------------------------------------------- Allmerica Financial Corp. 4,200 196,875 - --------------------------------------------------------------- American International Group, Inc. 5,250 535,828 - --------------------------------------------------------------- Travelers Group, Inc. 13,000 910,000 - --------------------------------------------------------------- 2,934,534 - --------------------------------------------------------------- INSURANCE (PROPERTY-CASUALTY)-0.32% Everest Reinsurance Holdings, Inc. 34,000 1,279,250 - --------------------------------------------------------------- INVESTMENT BANKING/BROKERAGE-0.30% Merrill Lynch & Co., Inc. 17,900 1,210,488 - --------------------------------------------------------------- MARKET SHARES VALUE INVESTMENT MANAGEMENT-0.47% Franklin Resources, Inc. 5,900 $ 530,263 - --------------------------------------------------------------- T. Rowe Price Associates, Inc. 20,500 1,358,125 - --------------------------------------------------------------- 1,888,388 - --------------------------------------------------------------- LODGING-HOTELS-0.51% Doubletree Corp.(a) 8,700 362,137 - --------------------------------------------------------------- ITT Corp. 22,500 1,680,469 - --------------------------------------------------------------- 2,042,606 - --------------------------------------------------------------- MACHINERY (DIVERSIFIED)-0.76% Caterpillar Inc. 16,000 820,000 - --------------------------------------------------------------- Deere & Co. 21,000 1,105,125 - --------------------------------------------------------------- Dover Corp. 17,000 1,147,500 - --------------------------------------------------------------- 3,072,625 - --------------------------------------------------------------- MANUFACTURING (DIVERSIFIED)-0.96% Carlisle Companies, Inc. 7,500 324,375 - --------------------------------------------------------------- Eaton Corp. 16,000 1,546,000 - --------------------------------------------------------------- Thermo Electron Corp.(a) 26,000 970,125 - --------------------------------------------------------------- Tyco International Ltd. 16,000 604,000 - --------------------------------------------------------------- U.S. Industries, Inc. 16,050 431,344 - --------------------------------------------------------------- 3,875,844 - --------------------------------------------------------------- MANUFACTURING (SPECIALIZED)-0.21% U.S. Filter Corp.(a) 21,000 842,625 - --------------------------------------------------------------- OIL & GAS (DRILLING & EQUIPMENT)-0.70% Halliburton Co. 23,000 1,371,375 - --------------------------------------------------------------- Nabors Industries, Inc.(a) 21,000 863,625 - --------------------------------------------------------------- Schlumberger Ltd. 6,600 577,500 - --------------------------------------------------------------- 2,812,500 - --------------------------------------------------------------- OIL (INTERNATIONAL INTEGRATED)-0.27% Exxon Corp. 18,000 1,105,875 - --------------------------------------------------------------- PAPER & FOREST PRODUCTS-0.24% Bowater, Inc. 23,000 961,688 - --------------------------------------------------------------- PERSONAL CARE-0.66% Avon Products, Inc. 19,400 1,270,700 - --------------------------------------------------------------- Gillette Co.(The) 15,500 1,380,469 - --------------------------------------------------------------- 2,651,169 - --------------------------------------------------------------- PHOTOGRAPHY/IMAGING-0.29% Xerox Corp. 14,900 1,181,756 - --------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST-0.21% Starwood Lodging Trust 14,000 837,375 - --------------------------------------------------------------- RETAIL (COMPUTERS & ELECTRONICS)-0.68% CompUSA, Inc.(a) 39,500 1,293,625 - ---------------------------------------------------------------
FS-21 187
MARKET SHARES VALUE RETAIL (COMPUTERS & ELECTRONICS)-(CONTINUED) Tech Data Corp.(a) 33,000 $ 1,468,500 - --------------------------------------------------------------- 2,762,125 - --------------------------------------------------------------- RETAIL (DEPARTMENT STORES)-0.90% Fred Meyer, Inc.(a) 37,400 1,068,238 - --------------------------------------------------------------- Federated Department Stores, Inc.(a) 26,000 1,144,000 - --------------------------------------------------------------- Proffitt's, Inc.(a) 50,000 1,434,375 - --------------------------------------------------------------- 3,646,613 - --------------------------------------------------------------- RETAIL (DRUG STORES)-0.55% CVS Corp. 21,000 1,287,563 - --------------------------------------------------------------- Rite Aid Corp. 16,000 950,000 - --------------------------------------------------------------- 2,237,563 - --------------------------------------------------------------- RETAIL (FOOD CHAINS)-0.73% Kroger Co.(a) 50,000 1,631,250 - --------------------------------------------------------------- Safeway, Inc.(a) 23,000 1,336,875 - --------------------------------------------------------------- 2,968,125 - --------------------------------------------------------------- RETAIL (GENERAL MERCHANDISE)-0.18% Wal-Mart Stores, Inc. 20,900 734,113 - --------------------------------------------------------------- RETAIL (SPECIALTY)-0.77% Bed Bath & Beyond, Inc.(a) 25,000 793,750 - --------------------------------------------------------------- Office Depot, Inc.(a) 64,000 1,320,000 - --------------------------------------------------------------- Payless ShoeSource, Inc.(a) 17,700 986,775 - --------------------------------------------------------------- 3,100,525 - --------------------------------------------------------------- RETAIL (SPECIALTY-APPAREL)-0.26% TJX Companies, Inc. (The) 35,000 1,036,875 - --------------------------------------------------------------- SAVINGS & LOAN COMPANIES-0.58% Ahmanson (H.F.) & Co. 25,000 1,475,000 - --------------------------------------------------------------- Washington Mutual, Inc. 12,500 855,469 - --------------------------------------------------------------- 2,330,469 - --------------------------------------------------------------- SERVICES (COMMERCIAL & CONSUMER)-0.85% HFS, Inc.(a) 21,000 1,480,500 - --------------------------------------------------------------- Service Corp. International 64,800 1,972,350 - --------------------------------------------------------------- 3,452,850 - --------------------------------------------------------------- SERVICES (DATA PROCESSING)-0.88% Equifax, Inc. 36,000 1,118,250 - --------------------------------------------------------------- First Data Corp. 26,000 755,625 - --------------------------------------------------------------- Fiserv, Inc.(a) 14,100 630,975 - --------------------------------------------------------------- National Data Corp. 29,000 1,071,188 - --------------------------------------------------------------- 3,576,038 - --------------------------------------------------------------- SERVICES (EMPLOYMENT)-0.11% AccuStaff, Inc.(a) 16,000 457,000 - --------------------------------------------------------------- MARKET SHARES VALUE TELECOMMUNICATIONS (LONG DISTANCE)-0.69% MCI Communications Corp. 45,000 $ 1,597,500 - --------------------------------------------------------------- WorldCom, Inc.(a) 34,930 1,174,521 - --------------------------------------------------------------- 2,772,021 - --------------------------------------------------------------- TELEPHONE-0.22% Bell Atlantic Corp. 10,900 870,638 - --------------------------------------------------------------- TOBACCO-0.25% Philip Morris Companies, Inc. 25,000 990,625 - --------------------------------------------------------------- WASTE MANAGEMENT-0.17% USA Waste Services, Inc.(a) 19,000 703,000 - --------------------------------------------------------------- Total Domestic Common Stocks 121,201,271 - --------------------------------------------------------------- FOREIGN STOCKS & OTHER EQUITY INTERESTS-60.34% ARGENTINA-1.77% Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 45,609 1,105,305 - --------------------------------------------------------------- Banco Rio de La Plata S.A.-ADR (Banks-Money Center)(a) 75,000 787,500 - --------------------------------------------------------------- Perez Companc S.A.-Class B (Oil & Gas-Refining & Marketing) 311,717 1,952,530 - --------------------------------------------------------------- Telefonica de Argentina S.A.-ADR (Telephone) 43,300 1,217,812 - --------------------------------------------------------------- YPF Sociedad Anonima-ADR (Oil-International Integrated) 65,600 2,099,200 - --------------------------------------------------------------- 7,162,347 - --------------------------------------------------------------- AUSTRALIA-0.72% Boral Ltd. (Engineering & Construction) 369,000 970,527 - --------------------------------------------------------------- Coca-Cola Amatil Ltd. (Beverages-Non-Alcoholic) 115,510 869,187 - --------------------------------------------------------------- QBE Insurance Group Ltd.- Bonus Shares (Insurance-Property-Casualty)(a) 45,281 206,349 - --------------------------------------------------------------- QBE Insurance Group Ltd. (Insurance-Property-Casualty) 181,125 847,052 - --------------------------------------------------------------- 2,893,115 - --------------------------------------------------------------- AUSTRIA-0.66% OMV A.G. (Oil & Gas-Refining & Marketing) 9,400 1,336,383 - --------------------------------------------------------------- VA Technologie A.G. (Engineering & Construction) 7,400 1,313,075 - --------------------------------------------------------------- 2,649,458 - --------------------------------------------------------------- BELGIUM-0.86% Barco Industries (Manufacturing-Diversified) 5,700 1,099,549 - --------------------------------------------------------------- COLRUYT S.A. (Retail-Food Chains) 1,100 590,116 - --------------------------------------------------------------- UCB S.A. (Manufacturing-Diversified) 520 1,796,790 - --------------------------------------------------------------- 3,486,455 - ---------------------------------------------------------------
FS-22 188
MARKET SHARES VALUE BRAZIL-0.88% Companhia Energetica de Minas Gerais (Electric Companies) 31,000 $ 1,237,244 - --------------------------------------------------------------- Telecomunicacoes Brasileiras S.A.-Telebras-ADR (Telephone) 7,100 720,650 - --------------------------------------------------------------- Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional)(a) 58,800 1,602,300 - --------------------------------------------------------------- 3,560,194 - --------------------------------------------------------------- CANADA-1.65% Bank of Montreal (Banks-Money Center) 20,500 885,107 - --------------------------------------------------------------- Canadian National Railway Co. (Railroads) 8,800 474,650 - --------------------------------------------------------------- Canadian Natural Resources Ltd. (Oil & Gas-Exploration & Production)(a) 48,000 1,396,388 - --------------------------------------------------------------- Magna International, Inc.-Class A (Machinery-Diversified) 8,750 576,773 - --------------------------------------------------------------- Northern Telecom Ltd. (Communications Equipment) 4,200 376,688 - --------------------------------------------------------------- Philip Services Corp. (Waste Management)(a) 54,000 945,000 - --------------------------------------------------------------- Suncor Energy, Inc. (Oil-International Integrated) 56,000 2,016,532 - --------------------------------------------------------------- 6,671,138 - --------------------------------------------------------------- CHILE-0.54% Cia. de Telecomunicaciones de Chile S.A.-ADR (Telephone) 30,600 849,150 - --------------------------------------------------------------- Quinenco S.A.-ADR (Financial Diversified)(a) 89,600 1,310,400 - --------------------------------------------------------------- 2,159,550 - --------------------------------------------------------------- DENMARK-0.36% Novo Nordisk A/S -Class B (Health Care/Drugs-Generic & Other) 13,500 1,461,106 - --------------------------------------------------------------- FINLAND-0.52% Enso Oy-R Shares(Paper & Forest Products) 96,000 911,149 - --------------------------------------------------------------- Nokia Oy A.B.-Class A (Telecommunications-Cellular/Wireless) 13,800 1,205,741 - --------------------------------------------------------------- 2,116,890 - --------------------------------------------------------------- FRANCE-7.26% Accor S.A. (Lodging-Hotels) 11,200 2,085,346 - --------------------------------------------------------------- Alcatel Alsthom (Manufacturing-Diversified) 17,000 2,051,229 - --------------------------------------------------------------- AXA-UAP (Insurance-Multi-Line) 11,250 770,381 - --------------------------------------------------------------- Banque Nationale de Paris (Banks-Major Regional) 21,500 950,461 - --------------------------------------------------------------- Cap Gemini Sogeti S.A. (Computers- Software & Services) 27,000 2,143,804 - --------------------------------------------------------------- Carrefour Supermarche S.A. (Retail-Food Chains) 1,250 652,278 - --------------------------------------------------------------- MARKET SHARES VALUE FRANCE-(CONTINUED) Compagnie Francaise d'Etudes et de Construction Technip (Oil & Gas-Refining & Marketing 13,000 $ 1,377,021 - --------------------------------------------------------------- Elf Aquitaine S.A. (Oil & Gas-Refining & Marketing) 13,500 1,671,044 - --------------------------------------------------------------- Essilor International (Manufacturing-Specialized) 2,200 587,353 - --------------------------------------------------------------- Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) 33,000 1,830,711 - --------------------------------------------------------------- Lafarge S.A. (Engineering & Construction) 23,800 1,487,023 - --------------------------------------------------------------- Legrand S.A. (Housewares) 5,300 986,816 - --------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 2,900 1,326,260 - --------------------------------------------------------------- Promodes (Retail-Food Chains) 4,800 1,562,762 - --------------------------------------------------------------- Renault S.A. (Automobiles)(a) 40,000 1,112,989 - --------------------------------------------------------------- Rexel S.A. (Distributors-Food & Health) 2,600 689,637 - --------------------------------------------------------------- Rhone-Poulenc-Class A (Chemicals-Diversified) 46,500 2,027,435 - --------------------------------------------------------------- Schneider S.A. (Housewares) 5,500 293,677 - --------------------------------------------------------------- Societe BIC S.A. (Office Equipment & Supplies) 20,000 1,368,179 - --------------------------------------------------------------- Societe Generale (Banks-Major Regional) 8,000 1,095,653 - --------------------------------------------------------------- Sodexho S.A. (Services-Commercial & Consumer) 1,100 548,641 - --------------------------------------------------------------- Total S.A.-Class B (Oil & Gas-Refining & Marketing) 13,100 1,453,474 - --------------------------------------------------------------- Valeo S.A. (Automobile Parts & Equipment) 19,400 1,293,838 - --------------------------------------------------------------- 29,366,012 - --------------------------------------------------------------- GERMANY-3.76% Adidas A.G. (Footwear) 7,200 1,042,993 - --------------------------------------------------------------- Adidas A.G. (Footwear)(b) (Acquired 04/11/97; Cost $963,943) 9,150 1,325,471 - --------------------------------------------------------------- Allianz A.G. (Insurance-Multi-Line) 4,000 891,805 - --------------------------------------------------------------- Bayerische Vereinsbank A.G. (Banks-Major Regional) 17,000 987,024 - --------------------------------------------------------------- Commerzbank A.G. (Banks-Major Regional) 44,000 1,494,470 - --------------------------------------------------------------- Continental A.G. (Automobile Parts & Equipment) 29,600 706,337 - --------------------------------------------------------------- Deutsche Bank A.G. (Banks-Major Regional) 29,000 1,899,266 - --------------------------------------------------------------- Dresdner Bank A.G. (Banks-Major Regional) 36,000 1,473,568 - --------------------------------------------------------------- Henkel KGaA (Chemicals-Diversified) 7,500 389,729 - --------------------------------------------------------------- Mannesmann A.G. (Machinery-Diversified) 2,150 908,758 - --------------------------------------------------------------- Merck KGaA (Health Care/Drugs-Generic & Other) 26,000 964,612 - --------------------------------------------------------------- SAP A.G. (Computers-Software & Services) 4,600 1,320,696 - ---------------------------------------------------------------
FS-23 189
MARKET SHARES VALUE GERMANY-(CONTINUED) Schering A.G. (Health Care/Drugs-Generic & Other) 8,000 $ 776,149 - --------------------------------------------------------------- VEBA A.G. (Manufacturing-Diversified) 18,000 1,004,325 - --------------------------------------------------------------- 15,185,203 - --------------------------------------------------------------- HONG KONG-2.94% Asia Satellite Telecommunications Holdings Ltd.-ADR(a) (Telecommunication-Cellular/Wireless) 24,500 572,688 - --------------------------------------------------------------- Asia Satellite Telecommunications Holding Ltd. (Telecommunications-Cellular/ Wireless) 232,000 558,132 - --------------------------------------------------------------- Cheung Kong (Holdings) Ltd. (Land Development) 86,000 597,879 - --------------------------------------------------------------- China Telecom (Hong Kong) Ltd.-ADR (Telecommunications-Cellular & Wireless)(a) 31,900 1,032,763 - --------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 1,294,000 1,506,305 - --------------------------------------------------------------- First Pacific Company Ltd. (Distributors-Food & Health) 1,323,000 834,201 - --------------------------------------------------------------- Hong Kong & China Gas Co. Ltd. (Natural Gas) 1,075,640 2,031,216 - --------------------------------------------------------------- HSBC Holdings PLC (Banks-Major Regional) 63,400 1,435,038 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 338,000 2,338,874 - --------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer)(a) 303,600 600,799 - --------------------------------------------------------------- Sun Hung Kai Properties Ltd. (Land Development) 53,600 395,163 - --------------------------------------------------------------- 11,903,058 - --------------------------------------------------------------- INDONESIA-0.35% Gulf Indonesia Resources Ltd. (Oil-International Integrated)(a) 48,000 1,008,000 - --------------------------------------------------------------- PT Indosat-ADR (Telephone) 9,050 214,372 - --------------------------------------------------------------- PT Indosat (Telephone) 84,500 190,447 - --------------------------------------------------------------- 1,412,819 - --------------------------------------------------------------- IRELAND-0.11% Elan Corp. PLC-ADR (Health Care/Drugs-Generic & Other)(a) 9,000 448,875 - --------------------------------------------------------------- ISRAEL-0.17% Teva Pharmaceutical Industries Ltd.-ADR (Health Care/Drugs-Generic & Other) 14,500 677,875 - --------------------------------------------------------------- ITALY-3.38% Assicurazioni Generali (Insurance/Multi-Line) 92,200 2,058,571 - --------------------------------------------------------------- Credito Italiano S.p.A. (Banks-Major Regional)(a) 1,040,000 2,783,981 - --------------------------------------------------------------- Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing) 290,000 1,639,108 - --------------------------------------------------------------- MARKET SHARES VALUE ITALY-(CONTINUED) Fiat S.p.A. (Automobiles) 566,500 $ 1,797,207 - --------------------------------------------------------------- Istituto Mobiliare Italiano S.p.A. (Banks-Major Regional) 138,000 1,249,091 - --------------------------------------------------------------- Telecom Italia Mobile S.p.A. (Telecommunications-Cellular/Wireless) 460,000 1,698,169 - --------------------------------------------------------------- Telecom Italia S.p.A. (Telephone) 388,888 2,432,560 - --------------------------------------------------------------- 13,658,687 - --------------------------------------------------------------- JAPAN-9.78% Advantest Corp. (Electronics-Instrumentation) 20,930 1,730,399 - --------------------------------------------------------------- Bridgestone Corp. (Automobile Parts & Equipment) 101,000 2,181,969 - --------------------------------------------------------------- Canon, Inc. (Office Equipment & Supplies) 97,000 2,353,469 - --------------------------------------------------------------- Denso Corp. (Automobile Parts & Equipment) 48,000 1,036,975 - --------------------------------------------------------------- Fuji Photo Film Co.(Leisure Time-Products) 61,000 2,209,888 - --------------------------------------------------------------- Hitachi Cable, Ltd. (Metal Fabricators) 224,000 1,488,990 - --------------------------------------------------------------- Honda Motor Co., Ltd. (Automobiles) 73,000 2,456,585 - --------------------------------------------------------------- Hoya Corp.(Manufacturing-Specialized) 39,000 1,354,549 - --------------------------------------------------------------- Ibiden Co., Ltd. (Electronics-Component Distributors) 144,000 2,393,020 - --------------------------------------------------------------- Kyocera Corp. (Electronics-Component Distributors) 13,000 744,246 - --------------------------------------------------------------- Matsushita Electric Industrial Co. Ltd. (Electric Equipment) 61,000 1,023,847 - --------------------------------------------------------------- Minebea Company Ltd. (Electronics-Component Distributors) 193,000 1,924,387 - --------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics-Components Distributors) 46,000 1,865,227 - --------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telephone) 2,500 2,118,820 - --------------------------------------------------------------- Nippon Television Network (Broadcasting-Television, Radio & Cable) 2,050 729,040 - --------------------------------------------------------------- NTT Data Communications Systems Co. (Computers-Software & Services) 470 2,245,534 - --------------------------------------------------------------- Ricoh Corp. Ltd. (Office Equipment & Supplies) 124,000 1,597,009 - --------------------------------------------------------------- Rohm Co. Ltd. (Electronics-Component Distributors) 29,000 2,867,470 - --------------------------------------------------------------- SMC Corp.(Machinery-Diversified) 6,800 587,620 - --------------------------------------------------------------- Sony Corp. (Electronics-Component Distributors) 30,000 2,490,237 - --------------------------------------------------------------- TDK Corp. (Electronic Equipment) 31,000 2,570,669 - --------------------------------------------------------------- Tokyo Electron Ltd. (Electronic Semiconductors) 31,600 1,575,405 - --------------------------------------------------------------- 39,545,355 - ---------------------------------------------------------------
FS-24 190
MARKET SHARES VALUE MEXICO-3.67% Cifra S.A. de C.V. (Retail-General Merchandise) 1,009,000 $ 1,744,842 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages- Non-Alcoholic) 52,400 2,263,025 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-Class B (Beverages-Alcoholic) 384,050 2,702,320 - --------------------------------------------------------------- Grupo Industrial Maseca S.A. de CV-Class B (Foods) 807,600 780,150 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 67,700 2,098,700 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.- Class A (Paper & Forest Products) 483,400 2,118,658 - --------------------------------------------------------------- Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 86,300 2,675,300 - --------------------------------------------------------------- TV Azteca, S.A. de C.V.-ADR (Broadcasting-Television, Radio & Cable)(a) 24,200 462,825 - --------------------------------------------------------------- 14,845,820 - --------------------------------------------------------------- NETHERLANDS-4.32% Akzo Nobel N.V. (Chemicals-Diversified) 6,500 1,145,326 - --------------------------------------------------------------- ASM Lithography Holding N.V. (Machinery- Diversified)(a) 5,700 413,958 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 61,700 1,452,326 - --------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 41,000 1,353,644 - --------------------------------------------------------------- Koninklijke Ahold N.V. (Retail-Food Chains) 30,600 783,322 - --------------------------------------------------------------- Koninklijke Nutricia Verenigde Bedrijven N.V. (Foods) 26,000 743,240 - --------------------------------------------------------------- Koninklijke Pakhoed N.V. (Shipping) 27,500 900,850 - --------------------------------------------------------------- Oce-Van Der Grinten N.V. (Office Equipment & Supplies) 7,000 798,609 - --------------------------------------------------------------- Philips Electronics N.V. (Household Furniture & Appliances)(a) 32,000 2,505,279 - --------------------------------------------------------------- Randstad Holdings N.V. (Services-Commercial & Consumer) 44,500 1,776,333 - --------------------------------------------------------------- Royal Dutch Petroleum Co. (Oil-International Integrated) 26,400 1,396,487 - --------------------------------------------------------------- Stork N.V. (Manufacturing-Diversified) 24,000 1,038,372 - --------------------------------------------------------------- Vendex International N.V. (Retail-General Merchandise) 38,000 2,074,685 - --------------------------------------------------------------- Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 15,500 367,242 - --------------------------------------------------------------- Wolters Kluwer N.V. (Specialty Printing) 5,700 699,912 - --------------------------------------------------------------- 17,449,585 - --------------------------------------------------------------- NORWAY-0.32% Petroleum Geo-Services A.S.A. (Oil-International Integrated)(a) 18,800 1,296,013 - --------------------------------------------------------------- MARKET SHARES VALUE PHILIPPINES-0.26% Metro Pacific Corp. (Manufacturing-Diversified)(a) 3,070,970 $ 204,443 - --------------------------------------------------------------- Philippine Long Distance Telephone Co. (Telephone) 16,460 406,276 - --------------------------------------------------------------- Philippine Long Distance Telephone Co.-ADR (Telephone) 17,800 431,650 - --------------------------------------------------------------- 1,042,369 - --------------------------------------------------------------- PORTUGAL-0.64% Electricidade de Portugal, S.A.-ADR (Electric Companies)(a) 24,200 845,488 - --------------------------------------------------------------- Portugal Telecom S.A. (Telephone) 42,000 1,723,230 - --------------------------------------------------------------- 2,568,718 - --------------------------------------------------------------- SINGAPORE-0.47% City Developments Ltd. (Land Development) 129,000 540,571 - --------------------------------------------------------------- DBS Land Ltd. (Land Development) 507,000 862,705 - --------------------------------------------------------------- Overseas Union Bank Ltd. (Banks-Major Regional) 150,000 500,000 - --------------------------------------------------------------- 1,903,276 - --------------------------------------------------------------- SPAIN-1.42% Banco Bilbao Vizcaya, S.A. (Banks-Major Regional) 73,500 1,965,457 - --------------------------------------------------------------- Endesa S.A. (Electric Companies) 73,200 1,378,758 - --------------------------------------------------------------- Iberdrola S.A. (Electric Companies) 60,000 717,674 - --------------------------------------------------------------- Telefonica de Espana (Telephone) 62,000 1,692,033 - --------------------------------------------------------------- 5,753,922 - --------------------------------------------------------------- SWEDEN-1.44% Electrolux A.B. (Household Furniture & Appliances)(a) 27,000 2,235,010 - --------------------------------------------------------------- Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel) 51,500 2,107,471 - --------------------------------------------------------------- Sparbanken Sverige A.B.-Class A (Banks-Major Regional) 46,000 1,044,073 - --------------------------------------------------------------- Telefonaktiebolaget LM Ericsson-ADR (Communications Equipment) 10,000 442,500 - --------------------------------------------------------------- 5,829,054 - --------------------------------------------------------------- SWITZERLAND-2.59% Adecco S.A. (Services-Commercial & Consumer) 5,000 1,589,002 - --------------------------------------------------------------- Ciba Specialty Chemicals A.G. (Chemicals-Specialty)(a) 11,000 1,080,164 - --------------------------------------------------------------- Clariant A.G. (Chemicals-Specialty) 1,650 1,269,095 - --------------------------------------------------------------- Credit Suisse Group (Banks-Major Regional) 14,500 2,042,582 - --------------------------------------------------------------- Holderbank Financiere Glarus A.G.-Class B (Construction-Cement & Aggregates) 1,050 845,099 - --------------------------------------------------------------- Nestle S.A. (Foods) 680 958,143 - --------------------------------------------------------------- Novartis A.G. (Health Care-Diversified) 1,060 1,660,118 - ---------------------------------------------------------------
FS-25 191
MARKET SHARES VALUE SWITZERLAND-(CONTINUED) Zurich Versicherungs-Gesellschaft (Insurance-Multi-Line) 2,500 $ 1,031,958 - --------------------------------------------------------------- 10,476,161 - --------------------------------------------------------------- UNITED KINGDOM-9.50% Airtours PLC (Services-Commercial & Consumer) 71,900 1,423,437 - --------------------------------------------------------------- Barclays PLC (Banks-Major Regional) 18,500 463,403 - --------------------------------------------------------------- Blue Circle Industries PLC (Construction-Cement & Aggregates) 55,000 322,967 - --------------------------------------------------------------- Bodycote International PLC (Chemicals-Specialty) 71,000 1,230,512 - --------------------------------------------------------------- British Aerospace PLC (Aerospace/Defense) 64,000 1,698,688 - --------------------------------------------------------------- British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 62,000 911,220 - --------------------------------------------------------------- Compass Group PLC (Services Commercial & Consumer) 59,200 631,196 - --------------------------------------------------------------- Dixons Group PLC (Retail-Specialty) 200,000 2,338,784 - --------------------------------------------------------------- EMAP PLC (Publishing) 51,000 732,011 - --------------------------------------------------------------- General Electric Co. PLC (Manufacturing-Diversified) 316,500 2,021,812 - --------------------------------------------------------------- GKN PLC (Manufacturing-Diversified) 39,000 874,829 - --------------------------------------------------------------- Granada Group PLC (Leisure Time- Products) 61,400 846,774 - --------------------------------------------------------------- Hays PLC (Services Commercial & Consumer) 178,000 2,090,477 - --------------------------------------------------------------- Kingfisher PLC (Retail-Department Stores) 140,000 2,015,313 - --------------------------------------------------------------- Ladbroke Group PLC (Leisure Time-Products) 382,000 1,711,204 - --------------------------------------------------------------- Lloyds TSB Group PLC (Banks-Major Regional) 96,000 1,199,927 - --------------------------------------------------------------- Misys PLC (Services-Commercial & Consumer) 45,000 1,134,369 - --------------------------------------------------------------- Next PLC (Retail-General Merchandise) 77,000 917,226 - --------------------------------------------------------------- Nycomed Amersham PLC (Health Care/Drugs-Generic & Other) 37,000 1,423,109 - --------------------------------------------------------------- Pearson PLC (Specialty Printing) 70,000 916,051 - --------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 137,400 1,590,608 - --------------------------------------------------------------- Railtrack Group PLC (Shipping) 100,000 1,598,896 - --------------------------------------------------------------- Rentokil Initial PLC (Services-Commercial & Consumer) 240,000 966,384 - --------------------------------------------------------------- Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 50,000 479,417 - --------------------------------------------------------------- Siebe PLC (Electronics-Component Distributors) 75,000 1,440,768 - --------------------------------------------------------------- SmithKline Beecham PLC-ADR (Health Care/Drugs-Major Pharmaceuticals) 13,000 619,125 - --------------------------------------------------------------- Smiths Industries PLC (Machinery- Diversified) 30,000 435,376 - --------------------------------------------------------------- Tarmac PLC (Engineering & Construction) 1,244,000 2,421,060 - --------------------------------------------------------------- MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Unilever PLC (Foods) 224,000 $ 1,668,623 - --------------------------------------------------------------- Vodafone Group PLC (Telecommunications-Cellular/Wireless) 150,000 817,903 - --------------------------------------------------------------- WPP Group PLC (Services-Advertising/Marketing) 316,000 1,444,711 - --------------------------------------------------------------- 38,386,180 - --------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests 243,909,235 - ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-0.27% FINANCIAL (DIVERSIFIED)-0.27% MGIC Investment Corp.-$3.12 Conv. Pfd. 7,000 714,000 - --------------------------------------------------------------- SunAmerica, Inc.-Series E, $3.10 Conv. Pfd. 3,300 384,450 - --------------------------------------------------------------- Total Domestic Convertible Preferred Stocks 1,098,450 - --------------------------------------------------------------- NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE PREFERRED STOCKS-1.03% BRAZIL-0.69% Petroleo Brasileiro S.A.-Petrobras (Oil & Gas-Exploration & Production) 5,416 1,007,009 - --------------------------------------------------------------- Telecomunicacoes de Sao Paulo S.A.-TELESP (Telephone) 6,900 1,802,531 - --------------------------------------------------------------- 2,809,540 - --------------------------------------------------------------- GERMANY-0.34% SAP A.G. (Computers-Software & Services) 4,600 1,371,440 - --------------------------------------------------------------- Total Non-U.S. Dollar Denominated Non-Convertible Preferred Stocks 4,180,980 - ---------------------------------------------------------------
PRINCIPAL AMOUNT(c) U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES-0.46% GERMANY-0.39% Volkswagen International Finance N.V., (Automobiles) Conv. Gtd. Notes, 3.00%, 01/24/02 $ 1,330,000 1,566,075 - --------------------------------------------------------------- HONG KONG-0.07% New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds 5.00%, 07/15/01 100,000 94,500 - --------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds 5.00%, 07/15/01(b) (Acquired 4/10/97-4/11/97; Cost $234,938) 200,000 189,000 - --------------------------------------------------------------- 283,500 - --------------------------------------------------------------- Total U.S. Dollar Denominated Foreign Bonds & Notes 1,849,575 - ---------------------------------------------------------------
FS-26 192
PRINCIPAL MARKET AMOUNT(c) VALUE NON-U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES-0.74% FRANCE-0.18% AXA-UAP (Insurance-Multi-Line), Conv. Sr. Deb., 4.50%, 01/01/99 FRF $ 2,835,000 $ 750,741 - --------------------------------------------------------------- ITALY-0.38% Pirelli S.p.A., (Electrical Equipment), Conv. Bonds, 4.375%, 12/31/98 ITL 1,591,686,200 1,527,756 - --------------------------------------------------------------- JAPAN-0.18% Ricoh Co., Ltd. (Office Equipment & Supplies), Conv. Bonds, 0.35%, 03/31/03 JPY 65,000,000 715,621 - --------------------------------------------------------------- Total Non-U.S. Dollar Denominated Foreign Bonds & Notes 2,994,118 - ---------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(c) VALUE U.S. TREASURY BILLS-2.95%(d) 5.093%, 01/02/1998 $ 12,000,000(e)$ 11,904,240 - --------------------------------------------------------------- REPURCHASE AGREEMENT-0.10%(f) Sanua Securities (USA) L.P., 5.73%, 11/03/97(g) 398,411 398,411 - --------------------------------------------------------------- TOTAL INVESTMENTS-95.87% 387,536,280 - --------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-4.13% 16,704,462 - --------------------------------------------------------------- NET ASSETS-100.00% $404,240,742 ===============================================================
Abbreviations: ADR -- American Depository Receipt Conv. -- Convertible Deb. -- Debentures FRF -- French Franc GDR -- Global Depository Receipt Gtd. -- Guaranteed ITL -- Italian Lire JPY -- Japanese Yen Pfd. -- Preferred Sr. -- Senior Notes to Schedule of Investments: (a) Non-income producing security. (b) Restricted security. May be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. The valuation of these securities has been determined in accordance with procedures established by the Board of Directors. The aggregate market value of the securities at 10/31/97 was $1,514,471 which represented 0.37% of the Fund's net assets. (c) Principal in U. S. Dollars unless otherwise indicated. (d) U.S. Treasury Bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Fund. (e) A portion of the principal balance was pledged as collateral to cover margin requirements for open futures contracts. See Note 7. (f) 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 investment in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or it affiliates. (g) Joint repurchase agreement entered into 10/31/97 with a maturing value of $200,095,500. Collateralized by $201,314,000 U.S. Government obligations, 0% to 8.875% due 11/03/97 to 08/15/27 with an aggregate market value at 10/31/97 of $204,000,545. See Notes to Financial Statements. FS-27 193 STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1997 ASSETS: Investments, at market value (cost $327,440,754) $ 387,536,280 - -------------------------------------------------------- Foreign currencies, at market value (cost $7,633,284) 7,667,754 - -------------------------------------------------------- Receivables for: Investments sold 12,950,025 - -------------------------------------------------------- Capital stock sold 4,700,631 - -------------------------------------------------------- Dividends and interest 668,936 - -------------------------------------------------------- Variation margin 271,700 - -------------------------------------------------------- Investment for deferred compensation plan 11,215 - -------------------------------------------------------- Other assets 23,824 - -------------------------------------------------------- Total assets 413,830,365 - -------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 6,828,079 - -------------------------------------------------------- Capital stock reacquired 1,962,826 - -------------------------------------------------------- Deferred compensation 11,215 - -------------------------------------------------------- Accrued advisory fees 308,513 - -------------------------------------------------------- Accrued administrative services fees 9,966 - -------------------------------------------------------- Accrued distribution fees 281,782 - -------------------------------------------------------- Accrued transfer agent fees 70,776 - -------------------------------------------------------- Accrued operating expenses 116,466 - -------------------------------------------------------- Total liabilities 9,589,623 - -------------------------------------------------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 404,240,742 ======================================================== NET ASSETS: Class A $ 178,916,560 ======================================================== Class B $ 224,224,631 ======================================================== Class C $ 1,099,551 ======================================================== CAPITAL STOCK, $.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - -------------------------------------------------------- Outstanding 10,747,564 ======================================================== Class B: Authorized 200,000,000 - -------------------------------------------------------- Outstanding 13,684,612 ======================================================== Class C: Authorized 200,000,000 - -------------------------------------------------------- Outstanding 67,094 ======================================================== Class A: Net asset value and redemption price per share $ 16.65 ======================================================== Offering price per share: (Net asset value $16.65 divided by 95.25%) $ 17.48 ======================================================== Class B: Net asset value and offering price per share $ 16.39 ======================================================== Class C: Net asset value and offering price per share $ 16.39 ========================================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1997 INVESTMENT INCOME: Dividends (net of $505,201 foreign withholding tax) $ 4,455,134 - -------------------------------------------------------- Interest 506,016 - -------------------------------------------------------- Total investment income 4,961,150 - -------------------------------------------------------- EXPENSES: Advisory fees 2,895,282 - -------------------------------------------------------- Administrative services fees 87,673 - -------------------------------------------------------- Custodian fees 284,017 - -------------------------------------------------------- Directors' fees 10,557 - -------------------------------------------------------- Distribution fees -- Class A 778,588 - -------------------------------------------------------- Distribution fees -- Class B 1,847,507 - -------------------------------------------------------- Distribution fees -- Class C 1,532 - -------------------------------------------------------- Transfer agent fees -- Class A 334,050 - -------------------------------------------------------- Transfer agent fees -- Class B 480,075 - -------------------------------------------------------- Transfer agent fees -- Class C 343 - -------------------------------------------------------- Other 263,588 - -------------------------------------------------------- Total expenses 6,983,212 - -------------------------------------------------------- Less: Expenses paid indirectly (8,327) - -------------------------------------------------------- Net expenses 6,974,885 - -------------------------------------------------------- Net investment income (loss) (2,013,735) - -------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS: Net realized gain (loss) on sales of: Investment securities 12,314,226 - -------------------------------------------------------- Foreign currencies (418,972) - -------------------------------------------------------- 11,895,254 - -------------------------------------------------------- Net unrealized appreciation of: Investment securities 37,009,027 - -------------------------------------------------------- Foreign currencies 12,676 - -------------------------------------------------------- Futures contracts 51,000 - -------------------------------------------------------- 37,072,703 - -------------------------------------------------------- Net gain on investment securities, foreign currencies and futures contracts 48,967,957 - -------------------------------------------------------- Net increase in net assets resulting from operations $46,954,222 ========================================================
See Notes to Financial Statements. FS-28 194 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEARS ENDED OCTOBER 31, 1997 AND 1996
1997 1996 OPERATIONS: Net investment income (loss) $ (2,013,735) $ (548,400) - ------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies 11,895,254 (604,088) - ------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities, foreign currencies and futures contracts 37,072,703 20,032,132 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 46,954,222 18,879,644 - ------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A - (516,173) - ------------------------------------------------------------------------------------------- Class B - (413,018) - ------------------------------------------------------------------------------------------- Share transactions-net: Class A 41,376,928 81,693,730 - ------------------------------------------------------------------------------------------- Class B 77,933,131 96,263,897 - ------------------------------------------------------------------------------------------- Class C 1,157,289 - - ------------------------------------------------------------------------------------------- Net increase in net assets 167,421,570 195,908,080 - ------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 236,819,172 40,911,092 - ------------------------------------------------------------------------------------------- End of period $404,240,742 $ 236,819,172 =========================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $334,919,809 $ 214,452,461 - ------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (14,582) 7,538 - ------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities, foreign currencies and futures contracts 9,241,432 (662,207) - ------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities, foreign currencies and futures contracts 60,094,083 23,021,380 - ------------------------------------------------------------------------------------------- $404,240,742 $ 236,819,172 ===========================================================================================
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997 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 operating series portfolios: AIM Global Growth Fund, AIM Global Aggressive Growth Fund, AIM Global Income Fund and AIM International Equity Fund. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Class C shares commenced sales on August 4, 1997. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is to provide long-term growth of capital. The Fund seeks to achieve its objectives by investing in a portfolio of global equity securities of selected companies which are considered by AIM to have strong earnings momentum. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations--A security listed or traded on an exchange (except convertible bonds) 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. 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. FS-29 195 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. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by an independent pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market quotations are either not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in 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 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 forward 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. D. Securities Transactions, Investment Income and Distribu- tions--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, 1997, undistributed net investment income was increased by $1,991,615 and undistributed net realized gains was decreased by $1,991,615 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. Stock Index Futures Contracts--The Fund may purchase or sell stock index futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in the value of contracts may not correlate with changes in the value of the securities being hedged. G. Expenses - Distribution and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated between the classes. 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. 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, 1997, AIM was reimbursed $87,673 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, 1997, AFS was paid $479,472 for such services. The Company has entered into a master distribution agreement with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class A, Class B and Class C shares of the Fund. The Company has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan"), and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans"). The Fund, pursuant to the Plan, pays AIM Distribu- FS-30 196 tors compensation at the annual rate of 0.50% of the average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of the Fund. 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, 1997 for the Class A shares and Class B shares and the period August 4, 1997 (date sales commenced) through October 31, 1997, the respective classes paid AIM Distributors $778,588, $1,847,507 and $1,532, as compensation under the Plans. AIM Distributors received commissions of $286,414 from the sales of the Class A shares of the Fund during the year ended October 31, 1997. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1997, AIM Distributors received commissions of $25,870 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, 1997, the Fund incurred legal fees of $4,793 for services rendered by the law firm of Kramer, Levin, Naftalis & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES AIM has directed certain portfolio trades to brokers who paid a portion of the Fund's expenses related to pricing services used by the Fund which reduced the Fund's expenses by $1,382 during the year ended October 31, 1997. The Fund also received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $4,390 and $2,555, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $8,327 during the year ended October 31, 1997. NOTE 4-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 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. Interest on borrowings under the line of credit is payable on maturity or prepayment date. Prior to an amendment of the line of credit on July 15, 1997, the Fund was limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set by its prospectus for borrowings. During the year ended October 31, 1997, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.05% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1997 was $410,474,400 and $315,085,765, respectively. The amount of unrealized appreciation (depreciation) of investment securities, on a tax basis, as of October 31, 1997 is as follows: Aggregate unrealized appreciation of investment securities $ 72,845,545 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (13,799,402) - --------------------------------------------------------- Net unrealized appreciation of investment securities $ 59,046,143 - ---------------------------------------------------------
Cost of investments for tax purposes is $328,490,137. NOTE 7-FUTURES CONTRACTS On October 31, 1997, $506,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts were as follows:
NO. OF MONTH/ UNREALIZED CONTRACT CONTRACTS COMMITMENT APPRECIATION -------- --------- ---------- ------------ S&P 500 Index 26 Dec. '97 $ 51,000
FS-31 197 NOTE 8-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the years ended October 31, 1997 and 1996 were as follows:
1997 1996 -------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ----------- ------------ Sold: Class A 6,399,974 $103,567,757 7,117,057 $ 94,636,553 - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Class B 6,303,261 98,414,198 7,683,810 101,786,913 - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Class C* 67,094 1,157,289 - - - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Issued as reinvestment of distributions: Class A - - 36,930 453,130 - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Class B - - 31,124 379,711 - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Reacquired: Class A (3,750,438) (62,190,829) (983,830) (13,395,953) - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Class B (1,291,769) (20,481,067) (441,521) (5,902,727) - ------------------------------------------------------------ ---------- ------------ ----------- ------------ Class C* - - - - - ------------------------------------------------------------ ---------- ------------ ----------- ------------ 7,728,122 $120,467,348 13,443,570 $177,957,627 ============================================================ ========== ============ =========== ============
* Class C shares commenced sales on August 4, 1997. NOTE 9-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A capital stock and a share of Class B capital stock outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (date operations commenced) through October 31, 1994 and for a share of Class C capital stock outstanding during the period August 4, 1997 (date sales commenced) through October 31, 1997.
1997 1996 1995 1994 -------- --------- -------- -------- CLASS A: Net asset value, beginning of period $ 14.20 $ 12.32 $ 10.23 $ 10.00 - ------------------------------------------------------------ -------- --------- -------- -------- Income from investment operations: Net investment income (loss) (0.04) (0.01) (0.02) - - ------------------------------------------------------------ -------- --------- -------- -------- Net gains on securities (both realized and unrealized) 2.49 2.11 2.11 0.23 - ------------------------------------------------------------ -------- --------- -------- -------- Total from investment operations 2.45 2.10 2.09 0.23 - ------------------------------------------------------------ -------- --------- -------- -------- Less distributions: Dividends from net investment income - - (0.004) - - ------------------------------------------------------------ -------- --------- -------- -------- Distributions from net realized gains - (0.22) - - - ------------------------------------------------------------ -------- --------- -------- -------- Total distributions - (0.22) (0.004) - - ------------------------------------------------------------ -------- --------- -------- -------- Net asset value, end of period $ 16.65 $ 14.20 $ 12.32 $ 10.23 ============================================================ ======== ========= ======== ======== Total return(a) 17.25% 17.26% 20.48% 2.30% ============================================================ ======== ========= ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $178,917 $ 114,971 $ 23,754 $ 3,093 ============================================================ ======== ========= ======== ======== Ratio of expenses to average net assets(b) 1.76%(c)(d) 1.93% 2.12% 1.95%(e) ============================================================ ======== ========= ======== ======== Ratio of net investment income (loss) to average net assets(f) (0.30)%(c) (0.13)% (0.28)% 0.10%(e) ============================================================ ======== ========= ======== ======== Portfolio turnover rate 96% 82% 79% 6% ============================================================ ======== ========= ======== ======== Average brokerage commission rate paid(g) $ 0.0239 $ 0.0234 N/A N/A ============================================================ ======== ========= ======== ========
(a) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.94%, 2.98% and 5.67% (annualized) for the periods 1996-1994, respectively. (c) Ratios are based on average net assets of $155,717,515. (d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been the same. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for the periods 1996-1994, respectively. (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. FS-32 198
1997 1996 1995 1994 --------- -------- -------- -------- CLASS B: Net asset value, beginning of period $ 14.05 $ 12.26 $ 10.22 $ 10.00 - ------------------------------------------------------------ --------- -------- -------- -------- Income from investment operations: Net investment income (loss) (0.11) (0.05) (0.04) - - ------------------------------------------------------------ --------- -------- -------- -------- Net gains on securities (both realized and unrealized) 2.45 2.06 2.08 0.22 - ------------------------------------------------------------ --------- -------- -------- -------- Total from investment operations 2.34 2.01 2.04 0.22 - ------------------------------------------------------------ --------- -------- -------- -------- Less distributions: Distributions from net realized gains - (0.22) - - - ------------------------------------------------------------ --------- -------- -------- -------- Total distributions - (0.22) - - - ------------------------------------------------------------ --------- -------- -------- -------- Net asset value, end of period $ 16.39 $ 14.05 $ 12.26 $ 10.22 =========================================================== ========= ======== ======== ======== Total return(a) 16.65% 16.60% 19.96% 2.20% =========================================================== ========= ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 224,225 $121,848 $ 17,157 $ 1,277 =========================================================== ========= ======== ======== ======== Ratio of expenses to average net assets(b) 2.29%(c)(d) 2.48% 2.64% 2.51%(e) =========================================================== ========= ======== ======== ======== Ratio of net investment income (loss) to average net assets(f) (0.83)%(c) (0.69)% (0.79)% (0.47)%(e) =========================================================== ========= ======== ======== ======== Portfolio turnover rate 96% 82% 79% 6% =========================================================== ========= ======== ======== ======== Average brokerage commission rate paid(g) $ 0.0239 $ 0.0234 N/A N/A =========================================================== ========= ======== ======== ========
(a) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.49%, 3.38% and 6.20% (annualized) for the periods 1996-1994, respectively. (c) Ratios are based on average net assets of $184,750,715. (d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for the periods 1996-1994, respectively. (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter.
1997 CLASS C: ------- Net asset value, beginning of period $ 17.39 - ------------------------------------------------------------ ------- Income from investment operations: Net investment income (loss) (0.03) - ------------------------------------------------------------ ------- Net gains (losses) on securities (both realized and unrealized) (0.97) - ------------------------------------------------------------ ------- Total from investment operations (1.00) - ------------------------------------------------------------ ------- Net asset value, end of period $ 16.39 ============================================================ ======= Total return(a) (5.75)% ============================================================ ======= Ratios/supplement data: Net assets, end of period (000s omitted) $ 1,100 ============================================================ ======= Ratio of expenses to average net assets(b) 2.29%(c) ============================================================ ======= Ratio of net investment income (loss) to average net assets(b) (0.83)% ============================================================ ======= Portfolio turnover rate 96% ============================================================ ======= Average brokerage commission rate paid(d) $0.0239 ============================================================ =======
(a) Does not deduct sales charges and periods for less than one year, total returns are not annualized. (b) Ratios are annualized and based on average net assets of $628,292. (c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been the same. (d) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. FS-33 199 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders 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, 1997, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years or periods in the three-year period 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 disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Income Fund as of October 31, 1997, 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 or periods in the three-year period 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 5, 1997 FS-34 200 SCHEDULE OF INVESTMENTS OCTOBER 31, 1997
PRINCIPAL MARKET AMOUNT(a) VALUE U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES-50.55% AGRICULTURAL PRODUCTS-0.20% Hines Horticulture, Inc., Series B Sr. Gtd. Sub. Notes, 11.75%, 10/15/05 $ 100,000 $ 110,750 - -------------------------------------------------------------- AIRLINES-3.32% Airplanes Pass Through Trust, Sub. Bonds, 10.875%, 03/15/19 230,000 263,495 - -------------------------------------------------------------- America West Airlines, Inc., Pass Thru Certificates, 6.86%, 07/02/04 587,999 591,675 - -------------------------------------------------------------- Delta Air Lines, Inc., Deb., 9.00%, 05/15/16 550,000 652,636 - -------------------------------------------------------------- United Air Lines, Inc., Pass Thru Certificates, 9.56%, 10/19/18 300,000 362,391 - -------------------------------------------------------------- 1,870,197 - -------------------------------------------------------------- BANKS (MAJOR REGIONAL)-1.25% First Union Bancorp, Sub. Deb., 7.50%, 04/15/35 200,000 220,060 - -------------------------------------------------------------- Royal Bank of Scotland PLC (United Kingdom), Yankee Sub. Notes, 6.375%, 02/01/11 500,000 481,780 - -------------------------------------------------------------- 701,840 - -------------------------------------------------------------- BANKS (MONEY CENTER)-2.08% Bankers Trust New York Corp., Gtd. Notes, 7.875%, 02/25/27 400,000 409,974 - -------------------------------------------------------------- Deutsche Bank Financial, Gtd. Unsec. Sub. Deb., 6.70%, 12/13/06 750,000 760,808 - -------------------------------------------------------------- 1,170,782 - -------------------------------------------------------------- BANKS (REGIONAL)-1.86% Mercantile Bancorp Inc., Unsec. Sub. Notes, 7.30%, 06/15/07 1,000,000 1,046,320 - -------------------------------------------------------------- BEVERAGES (NON-ALCOHOLIC)-1.13% Coca-Cola Enterprises, Inc., Putable Notes, 7.15%, 06/20/20(b) 3,113,000 635,301 - -------------------------------------------------------------- BROADCASTING (TELEVISION, RADIO & CABLE)-4.44% Capstar Broadcasting Partners, Sr. Disc. Notes, 12.75%, 02/01/09(c) 390,000 278,850 - -------------------------------------------------------------- Comcast Cable Communications, Notes, 8.50%, 05/01/27 (acquired 04/24/97; cost $499,145)(d) 500,000 572,980 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE BROADCASTING (TELEVISION, RADIO & CABLE)-(CONTINUED) Diamond Cable Communications PLC (United Kingdom), Sr. Yankee Disc. Notes, 10.75%, 02/15/07(c) $ 870,000 $ 567,675 - -------------------------------------------------------------- Echostar DBS Corp., Sr. Sec. Gtd. Notes, 12.50%, 07/01/02 (acquired 06/20/97; cost $320,000)(d) 320,000 340,800 - -------------------------------------------------------------- Kabelmedia Holdings GmbH (Germany), Sr. Yankee Unsec. Disc. Notes, 13.625%, 08/01/06(c) 200,000 146,000 - -------------------------------------------------------------- Rifkin Acquisition Partners L.L.P., Sr. Sub. Notes, 11.125%, 01/15/06 40,000 43,500 - -------------------------------------------------------------- TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05 150,000 157,845 - -------------------------------------------------------------- TeleWest Communications PLC (United Kingdom), Sr. Yankee Disc. Deb., 11.00%, 10/01/07(c) 300,000 226,500 - -------------------------------------------------------------- United International Holdings, Inc., Sr. Sec. Disc. Notes, 10.28%, 11/15/99(b) 200,000 163,000 - -------------------------------------------------------------- 2,497,150 - -------------------------------------------------------------- CHEMICALS-1.40% Nova Chemicals Ltd. (Canada), Yankee Deb., 7.00%, 08/15/26 600,000 620,898 - -------------------------------------------------------------- Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes, 11.75%, 08/15/06 150,000 167,250 - -------------------------------------------------------------- 788,148 - -------------------------------------------------------------- CHEMICALS (SPECIALTY)-0.08% Crain Industries, Inc., Sr. Sub. Notes, 13.50%, 08/15/05 40,000 45,800 - -------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-0.48% ProNet, Inc., Sr. Sub. Notes, 11.875%, 06/15/05 250,000 271,250 - -------------------------------------------------------------- CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.15% Commemorative Brands, Sr. Sub. Notes, 11.00%, 01/15/07 85,000 86,488 - -------------------------------------------------------------- CONSUMER FINANCE-1.28% Household Finance Corp., Notes, 7.125%, 09/01/05 700,000 720,076 - -------------------------------------------------------------- CONTAINERS & PACKAGING (PAPER)-0.77% BPC Holding Corp., Series B Sr. Notes, 12.50%, 06/15/06 100,000 110,500 - --------------------------------------------------------------
FS-35 201
PRINCIPAL MARKET AMOUNT(a) VALUE CONTAINERS & PACKAGING (PAPER)-(CONTINUED) MVE Inc., Sr. Sec. Notes, 12.50%, 02/15/02 $ 100,000 $ 101,500 - -------------------------------------------------------------- Tekni-Plex Inc., Sr. Sub. Notes, 11.25%, 04/01/07 200,000 219,500 - -------------------------------------------------------------- 431,500 - -------------------------------------------------------------- DISTRIBUTORS (FOOD & HEALTH)-0.45% AmeriServ Food Co., Sr. Sub. Notes, 10.125%, 07/15/07 (acquired 07/09/97; cost $240,000)(d) 240,000 250,800 - -------------------------------------------------------------- ELECTRIC COMPANIES-0.99% El Paso Electric Co., Series D Sec. 1st Mortgage Bonds, 8.90%, 02/01/06 250,000 272,545 - -------------------------------------------------------------- Series E Sec. 1st Mortgage Bonds, 9.40%, 05/01/11 250,000 283,700 - -------------------------------------------------------------- 556,245 - -------------------------------------------------------------- ELECTRICAL EQUIPMENT-0.54% Electronic Retailing Systems International, Inc., Sr. Disc. Notes, 13.25%, 02/01/04(c) 440,000 305,800 - -------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-0.58% Advanced Micro Devices, Inc., Sr. Sec. Notes, 11.00%, 08/01/03 110,000 119,213 - -------------------------------------------------------------- Panda Funding Corp., Series A-1 Pooled Project Bonds, 11.625%, 08/20/12 199,591 208,573 - -------------------------------------------------------------- 327,786 - -------------------------------------------------------------- ENTERTAINMENT-1.83% Time Warner, Inc. Deb., 9.125%, 01/15/13 500,000 582,845 - -------------------------------------------------------------- Notes, 8.18%, 08/15/07 200,000 218,086 - -------------------------------------------------------------- Unsec. Deb., 6.85%, 01/15/26 125,000 126,673 - -------------------------------------------------------------- Viacom, Inc., Sr. Notes, 7.75%, 06/01/05 100,000 101,629 - -------------------------------------------------------------- 1,029,233 - -------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-1.13% Associates Corp. of North America, Series B Sr. Deb., 7.95%, 02/15/10 100,000 111,814 - -------------------------------------------------------------- Finova Capital Corp., Unsec. Notes, 7.40%, 05/06/06 500,000 524,850 - -------------------------------------------------------------- 636,664 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE FOODS-2.34% ConAgra Inc., Sr. Unsec. Notes, 7.125%, 10/01/26 $ 900,000 $ 952,389 - -------------------------------------------------------------- Del Monte Corp./Foods Co., Sr. Unsec. Sub. Notes, 12.25%, 04/15/07 260,000 288,600 - -------------------------------------------------------------- Pilgrim's Pride Corp., Sr. Sub. Notes, 10.875%, 08/01/03 70,000 73,850 - -------------------------------------------------------------- 1,314,839 - -------------------------------------------------------------- GAMING, LOTTERY & PARI-MUTUEL COMPANIES-0.21% Showboat Marina Casino Partnership & Showboat Marina Financial Corp., Series B Sec. 1st Mortgage Notes, 13.50%, 03/15/03 100,000 115,500 - -------------------------------------------------------------- HEALTH CARE (HOSPITAL MANAGEMENT)-0.90% Tenet Healthcare Corp., Sr. Notes, 8.00%, 01/15/05 500,000 507,500 - -------------------------------------------------------------- HEALTH CARE (LONG TERM CARE)-0.81% Sun Healthcare Group, Inc., Sr. Sub. Notes, 9.50%, 07/01/07 (acquired 07/01/97; cost $448,200)(d) 450,000 455,625 - -------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.56% Alaris Medical Systems, Sr. Unsec. Gtd. Sub. Deb., 9.75%, 12/01/06 200,000 205,000 - -------------------------------------------------------------- Dade International Inc., Series B Sr. Sub. Notes, 11.125%, 05/01/06 100,000 111,500 - -------------------------------------------------------------- 316,500 - -------------------------------------------------------------- HEALTH CARE (SPECIALIZED SERVICES)-0.15% Dynacare Inc. (Canada), Sr. Yankee Notes, 10.75%, 01/15/06 80,000 84,200 - -------------------------------------------------------------- HOMEBUILDING-0.10% Continental Homes Holdings Corp., Sr. Unsec. Gtd. Notes, 10.00%, 04/15/06 55,000 58,025 - -------------------------------------------------------------- INSURANCE (LIFE/HEALTH)-1.40% Torchmark Corp., Notes, 7.875%, 05/15/23 750,000 790,035 - -------------------------------------------------------------- INVESTMENT BANKING/BROKERAGE-0.54% Travelcenters of America Inc., Sr. Gtd. Unsec. Sub. Deb., 10.25%, 04/01/07 290,000 303,050 - -------------------------------------------------------------- IRON & STEEL-0.15% GS Industries, Inc., Sr. Gtd. Notes, 12.00%, 09/01/04 75,000 81,937 - --------------------------------------------------------------
FS-36 202
PRINCIPAL MARKET AMOUNT(a) VALUE LODGING-HOTELS-0.59% Coast Hotels & Casinos Inc., Series B Sec. 1st Mortgage Gtd. Notes, 13.00%, 12/15/02 $ 70,000 $ 78,750 - -------------------------------------------------------------- ITT Corp., Unsec. Gtd. Deb., 7.375%, 11/15/15 150,000 151,119 - -------------------------------------------------------------- John Q. Hammons Hotels Inc., Sec. 1st Mortgage Notes, 9.75%, 10/01/05 100,000 104,750 - -------------------------------------------------------------- 334,619 - -------------------------------------------------------------- MACHINERY (DIVERSIFIED)-0.10% Fairfield Manufacturing Co., Inc., Sr. Sub. Notes, 11.375%, 07/01/01 50,000 53,500 - -------------------------------------------------------------- MANUFACTURING (SPECIALIZED)-0.51% MMI Products Inc., Sr. Unsec. Sub. Notes, 11.25%, 04/15/07 260,000 284,700 - -------------------------------------------------------------- METAL FABRICATORS-0.11% Gulf States Steel Corp., 1st Mortgage Notes, 13.50%, 04/15/03 60,000 61,950 - -------------------------------------------------------------- METALS MINING-0.23% Rio Algom Ltd. (Canada), Yankee Unsec. Deb., 7.05%, 11/01/05 130,000 131,940 - -------------------------------------------------------------- NATURAL GAS-0.56% Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes, 9.375%, 06/15/06 300,000 316,500 - -------------------------------------------------------------- OFFICE EQUIPMENT & SUPPLIES-0.24% United Stationer Supply, Sr. Sub. Notes, 12.75%, 05/01/05 120,000 135,900 - -------------------------------------------------------------- OIL (INTERNATIONAL INTEGRATED)-1.08% Gulf Canada Resources, Ltd. (Canada), Sr. Yankee Unsec. Notes, 8.35%, 08/01/06 550,000 607,189 - -------------------------------------------------------------- OIL & GAS (DRILLING & EQUIPMENT)-0.04% Falcon Drilling Co., Inc., Series B Sr. Notes, 9.75%, 01/15/01 20,000 21,050 - -------------------------------------------------------------- OIL & GAS (EXPLORATION & PRODUCTION)-0.64% Abraxas Petroleum Corp., Series B Sr. Notes, 11.50%, 11/01/04 95,000 104,500 - -------------------------------------------------------------- Talisman Energy, Inc. (Canada), Yankee Deb., 7.125%, 06/01/07 250,000 256,875 - -------------------------------------------------------------- 361,375 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE PAPER & FOREST PRODUCTS-1.15% Indah Kiat Fin Mauritius, Sr. Gtd. Unsec. Notes, 10.00%, 07/01/07 (acquired 06/26/97; cost $466,931)(d) $ 470,000 $ 434,750 - -------------------------------------------------------------- National Fiberstock Corp., Series B Sr. Notes, 11.625%, 06/15/02 200,000 210,500 - -------------------------------------------------------------- 645,250 - -------------------------------------------------------------- PUBLISHING (NEWSPAPERS)-0.52% News America Holdings, Inc., Sr. Gtd. Deb., 9.25%, 02/01/13 250,000 291,293 - -------------------------------------------------------------- RAILROADS-0.84% Norfolk Southern Corp., Bonds, 7.05%, 05/01/37 450,000 474,638 - -------------------------------------------------------------- RETAIL (DISCOUNTERS)-0.18% Loehmann's Holdings, Inc., Sr. Unsec. Notes, 11.875%, 05/15/03 100,000 102,500 - -------------------------------------------------------------- RETAIL (FOOD CHAINS)-0.78% Carr-Gottstein Foods Co., Sr. Sub. Notes, 12.00%, 11/15/05 100,000 110,500 - -------------------------------------------------------------- Great Atlantic & Pacific Tea Co., Inc. (Canada), Yankee Gtd. Notes, 7.78%, 11/01/00 (acquired 10/18/95; cost $100,000)(d) 100,000 103,642 - -------------------------------------------------------------- Jitney-Jungle Stores of America Inc., Sr. Gtd. Notes, 12.00%, 03/01/06 200,000 225,500 - -------------------------------------------------------------- 439,642 - -------------------------------------------------------------- RETAIL (SPECIALTY)-0.80% CSK Auto Inc., Sr. Gtd. Sub. Deb., 11.00%, 11/01/06 60,000 64,500 - -------------------------------------------------------------- Icon Health & Fitness, Series B Sr. Sub. Notes, 13.00%, 07/15/02 70,000 78,750 - -------------------------------------------------------------- United Auto Group, Inc., Sr. Sub. Notes, 11.00%, 07/15/07 (acquired 07/22/97; cost $197,500)(d) 200,000 206,000 - -------------------------------------------------------------- Wilsons The Leather Experts Inc., Sr. Notes, 11.25%, 08/15/04 (acquired 08/14/97; cost $100,000)(d) 100,000 99,250 - -------------------------------------------------------------- 448,500 - -------------------------------------------------------------- SAVINGS & LOAN COMPANIES-0.47% Sovereign Bancorp, Inc., Sub. Notes, 8.00%, 03/15/03 250,000 263,523 - -------------------------------------------------------------- SERVICES (ADVERTISING/MARKETING)-0.38% MDC Communications Corp.(Canada), Sr. Yankee Unsec. Sub. Notes, 10.50%, 12/01/06 200,000 215,500 - --------------------------------------------------------------
FS-37 203
PRINCIPAL MARKET AMOUNT(a) VALUE SHIPPING-0.99% Hutchison Whampoa Ltd. (Cayman Islands), Series D Sr. Yankee Gtd. Unsec. Unsub. Deb., 6.988%, 08/01/37 (acquired 10/02/97; cost $502,005)(d) $ 500,000 $ 467,595 - -------------------------------------------------------------- Stena A.B. (Sweden), Sr. Yankee Unsec. Notes, 10.50%, 12/15/05 80,000 87,400 - -------------------------------------------------------------- 554,995 - -------------------------------------------------------------- SOVEREIGN DEBT-0.59% Province of Manitoba (Canada), Yankee Bonds, 7.75%, 07/17/16 300,000 334,791 - -------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)-3.96% Celcaribe S.A., Sr. Secured Notes, 13.50%, 03/15/04(c) 500,000 502,500 - -------------------------------------------------------------- GST Equipment Funding, Sr. Sec. Notes, 13.25%, 05/01/07 (acquired 05/08/97; cost $200,000)(d) 200,000 225,500 - -------------------------------------------------------------- ICG Holdings Inc., Gtd. Unsec. Sr. Disc. Notes, 11.625%, 03/15/07(c) 290,000 194,300 - -------------------------------------------------------------- Orion Network Systems, Inc., Sr. Notes, 11.25%, 01/15/07(e) 420,000 476,700 - -------------------------------------------------------------- Pricellular Wireless Corp., Sr. Notes, 10.75%, 11/01/04 130,000 141,050 - -------------------------------------------------------------- Sygnet Wireless Inc., Sr. Unsec. Notes, 11.50%, 10/01/06 160,000 173,600 - -------------------------------------------------------------- 360 Communications Co., Sr. Unsec. Notes, 7.50%, 03/01/06 500,000 516,700 - -------------------------------------------------------------- 2,230,350 - -------------------------------------------------------------- TELECOMMUNICATIONS (LONG DISTANCE)-1.00% MCI Communications Corp., Putable Deb., 7.125%, 06/15/27 450,000 480,402 - -------------------------------------------------------------- PhoneTel Technologies, Inc., Sr. Gtd. Unsec. Notes, 12.00%, 12/15/06 80,000 82,600 - -------------------------------------------------------------- 563,002 - -------------------------------------------------------------- TELEPHONE-0.70% Esat Holdings Ltd. (Ireland), Sr. Yankee Notes, 12.50%, 02/01/07(c) 350,000 243,250 - -------------------------------------------------------------- Hermes Europe Railtel BV, Sr. Notes, 11.50%, 08/15/07 (acquired 08/14/97; cost $142,413)(d) 140,000 153,300 - -------------------------------------------------------------- 396,550 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE TRUCKERS-0.56% AmeriTruck Distribution Corp., Series B Sr. Sub. Notes, 12.25%, 11/15/05 $ 300,000 $ 318,000 - -------------------------------------------------------------- TRUCKS & PARTS-0.15% Blue Bird Body Co., Series B Sr. Sub. Notes, 10.75%, 11/15/06 80,000 84,500 - -------------------------------------------------------------- WASTE MANAGEMENT-2.26% Allied Waste Industries, Inc., Sr. Disc. Notes, 11.30%, 06/01/07 (acquired 05/01/97; cost $356,103)(c)(d) 620,000 424,700 - -------------------------------------------------------------- Norcal Waste Systems Inc., Series B Sr. Gtd. Notes, 13.00%, 11/15/05 150,000 172,875 - -------------------------------------------------------------- WMX Technologies, Inc., Unsec. Notes, 7.10%, 08/01/26 650,000 677,417 - -------------------------------------------------------------- 1,274,992 - -------------------------------------------------------------- Total U.S. Dollar Denominated Non-Convertible Bonds & Notes 28,456,090 - -------------------------------------------------------------- NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES(F)-14.34% CANADA-7.21% Bank of Montreal (Banks-Money Center), Sub. Deb., 7.92%, 07/31/12 CAD 300,000 $ 242,897 - -------------------------------------------------------------- Bell Canada (Telephone), Unsec. Deb., 10.875, 10/11/04 250,000 228,786 - -------------------------------------------------------------- Bell Mobility Cellular (Telecommunications-Cellular/Wireless), Bonds, 6.55%, 06/02/08 750,000 540,042 - -------------------------------------------------------------- Canadian Oil Debco Inc. (Oil & Gas-Exploration & Production), Deb., 11.00%, 10/31/00 250,000 203,876 - -------------------------------------------------------------- Clearnet Communications (Telecommunications-Cellular/Wireless), Sr. Disc. Notes, 11.75%, 08/13/07 (acquired 07/31/97; cost $347,582)(c)(d) 850,000 366,392 - -------------------------------------------------------------- NAV Canada (Services-Commercial & Consumer), Bonds, 7.40%, 06/01/27 1,000,000 800,731 - -------------------------------------------------------------- Telegobe Canada, Inc. (Telephone), Unsec. Deb., 8.35%, 06/20/03 650,000 523,496 - -------------------------------------------------------------- Trans-Canada Pipelines (Oil & Gas-Exploration & Production), Series Q Deb., 10.625%, 10/20/09 375,000 365,477 - -------------------------------------------------------------- Unsec. Notes, 8.55%, 02/01/06 500,000 417,784 - --------------------------------------------------------------
FS-38 204
PRINCIPAL MARKET AMOUNT(a) VALUE CANADA-(CONTINUED) Westcoast Energy, Inc. (Oil & Gas- Exploration & Production), Deb., 6.45%, 12/18/06 (acquired 12/03/96; cost $369,632)(d) CAD 500,000 $ 368,955 - -------------------------------------------------------------- 4,058,436 - -------------------------------------------------------------- FRANCE-0.26% Credit Foncier de France (Financial-Diversified) Sr. Unsec. Unsub. Eurobonds, 6.50%, 02/22/99 SEK 750,000 101,061 - -------------------------------------------------------------- Sr. Unsec. Unsub. Eurobonds, 6.00%, 11/15/01 FRF 250,000 44,838 - -------------------------------------------------------------- 145,899 - -------------------------------------------------------------- GERMANY-2.36% Daimler-Benz A.G. (Automobiles), Gtd. Unsub. Eurobonds, 4.125%, 07/05/03 DEM 430,000 314,258 - -------------------------------------------------------------- International Bank for Reconstruction & Development (Banks-Money Center), Unsec. Global Bonds, 7.125%, 04/12/05 475,000 301,434 - -------------------------------------------------------------- LKB Global (Financial-Diversified), Gtd. Notes, 6.00%, 01/25/06 1,200,000 712,120 - -------------------------------------------------------------- 1,327,812 - -------------------------------------------------------------- ITALY-1.33% KFW International Finance Inc. (Investment Banking/Brokerage), Gtd. Eurobonds, 11.625%, 11/27/98 ITL 1,200,000,000 749,592 - -------------------------------------------------------------- NEW ZEALAND-0.44% International Bank for Reconstruction & Development (Banks-Money Center), Bonds, 6.63%, 08/20/07(b) NZD 750,000 245,869 - -------------------------------------------------------------- SWEDEN-0.78% Swedish Export Credit (Financial-Diversified), Unsec. Unsub. Eurobonds, 11.70%, 12/04/98 ITL 700,000,000 437,965 - -------------------------------------------------------------- UNITED KINGDOM-1.96% Ford Credit Europe PLC (Financial-Diversified), Deb., 6.00%, 03/30/99 DEM 200,000 118,298 - -------------------------------------------------------------- KFW International Finance (Investment Banking/Brokerage), Gtd. Eurobonds, 10.625%, 09/03/01 GBP 100,000 186,255 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE UNITED KINGDOM-(CONTINUED) Sutton Bridge (Financial-Diversified), Gtd. Eurobonds, 8.625%, 06/30/22 (acquired 05/29/97; cost $733,585)(d) GBP 450,000 $ 800,287 - -------------------------------------------------------------- 1,104,840 - -------------------------------------------------------------- Total Non-U.S. Dollar Denominated Non-Convertible Bonds & Notes 8,070,413 - -------------------------------------------------------------- NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES(F)-2.58% FRANCE-0.08% Societe Generale (Banks-Money Center), Conv. Deb., 3.50%, 01/01/00 FRF 231,000 48,841 - -------------------------------------------------------------- JAPAN-0.64% Glaxo Wellcome PLC (Financial-Diversified), Conv. Unsub. Notes, 4.30%, 09/28/98 JPY 4,000,000 55,708 - -------------------------------------------------------------- Sony Corp. (Electronic Equipment), Conv. Deb., 1.40%, 03/31/05 8,000,000 87,744 - -------------------------------------------------------------- Toyota Motor Corp. (Automobiles), Conv. Bonds, 1.20%, 01/28/98 15,000,000 215,060 - -------------------------------------------------------------- 358,512 - -------------------------------------------------------------- SWITZERLAND-0.38% Yamada Denki Co. Ltd. (Retail- Computers & Electronics), Unsec. Conv. Notes, 0.25%, 03/31/00 CHF 300,000 212,105 - -------------------------------------------------------------- UNITED KINGDOM-1.48% British Airport Authority (Airlines), Eurobonds, 5.75%, 03/29/06 GBP 450,000 834,261 - -------------------------------------------------------------- Total Non-U.S. Dollar Denominated Convertible Bonds & Notes 1,453,719 - -------------------------------------------------------------- NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS & NOTES(F)-20.94% CANADA-3.21% B.C. Generic Residual, Deb., 13.88%, 06/21/04(b) CAD 150,000 74,269 - -------------------------------------------------------------- Canadian Government, Bonds, 7.00%, 12/01/06 1,000,000 787,824 - --------------------------------------------------------------
FS-39 205
PRINCIPAL MARKET AMOUNT(a) VALUE Municipal Finance Authority of British Columbia, Bonds, 7.75%, 12/01/05 CAD 500,000 $ 404,842 - -------------------------------------------------------------- Ontario Province, Sr. Unsec. Unsub. Deb., 6.875%, 09/15/00 GBP 35,000 58,193 - -------------------------------------------------------------- Sr. Unsec. Unsub. Global Bonds, 8.00%, 03/11/03 CAD 600,000 480,021 - -------------------------------------------------------------- 1,805,149 - -------------------------------------------------------------- FRANCE-1.09% French Treasury Bill, Notes, 5.75%, 11/12/98 FRF 3,500,000 617,085 - -------------------------------------------------------------- GERMANY-1.29% Bundesrepublik Deutschland, Bonds, 6.75%, 07/15/04 DEM 750,000 471,006 - -------------------------------------------------------------- Bonds, 6.875%, 05/12/05 400,000 252,736 - -------------------------------------------------------------- 723,742 - -------------------------------------------------------------- ITALY-0.48% Republic of Italy, Conv. Bonds, 6.50%, 06/28/01 ITL 400,000,000 273,172 - -------------------------------------------------------------- NEW ZEALAND-4.73% Federal National Mortgage Association, Notes, 7.25%, 06/20/02 NZD 750,000 469,042 - -------------------------------------------------------------- New Zealand Government, Bonds, 8.00%, 02/15/01 1,000,000 644,440 - -------------------------------------------------------------- Bonds, 10.00%, 03/15/02 1,500,000 1,047,453 - -------------------------------------------------------------- Bonds, 8.00%, 04/15/04 750,000 500,116 - -------------------------------------------------------------- 2,661,051 - -------------------------------------------------------------- SWEDEN-4.19% Swedish Government, Bonds, 13.00%, 06/15/01 SEK 3,000,000 492,824 - -------------------------------------------------------------- Bonds, 10.25%, 05/05/03 5,000,000 797,374 - -------------------------------------------------------------- Bonds, 6.00%, 02/09/05 4,000,000 527,110 - -------------------------------------------------------------- Bonds, 6.50%, 10/25/06 4,000,000 539,527 - -------------------------------------------------------------- 2,356,835 - -------------------------------------------------------------- UNITED KINGDOM-5.95% Federal National Mortgage Association, Sr. Unsec. Notes, 6.875%, 06/07/02 GBP 350,000 585,451 - -------------------------------------------------------------- United Kingdom Treasury, Bonds, 8.00%, 12/07/00 350,000 606,708 - -------------------------------------------------------------- Gtd. Notes, 7.00%, 11/06/01 800,000 1,354,548 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE UNITED KINGDOM-(CONTINUED) Bonds, 7.50%, 12/07/06 GBP 450,000 $ 801,823 - -------------------------------------------------------------- 3,348,530 - -------------------------------------------------------------- Total Non-U.S. Dollar Denominated Government Bonds & Notes 11,785,564 - --------------------------------------------------------------
SHARES DOMESTIC COMMON STOCK-0.03% TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.03% Nextel Communications, Inc.(g) 557 $ 14,621 - -------------------------------------------------------------- DOMESTIC CONVERTIBLE PREFERRED STOCKS-2.16% BANKS (REGIONAL)-0.88% Westpac Banking Corp. STRYPES Trust-$3.135 Conv. Pfd. 16,000 496,000 - -------------------------------------------------------------- ENTERTAINMENT-0.00% Time Warner Inc.-Series M, $102.50 PIK Conv. Pfd. 1 1,165 - -------------------------------------------------------------- INSURANCE (LIFE/HEALTH)-1.08% Conseco Inc.-$4.278 Conv. PRIDES 4,000 608,000 - -------------------------------------------------------------- POWER PRODUCERS (INDEPENDENT)-0.20% Citizens Utilities Co.-$2.50 Conv. Pfd. 2,300 109,681 - -------------------------------------------------------------- Total Domestic Convertible Preferred Stocks 1,214,846 - -------------------------------------------------------------- FOREIGN STOCKS & OTHER EQUITY INTERESTS-2.20% UNITED KINGDOM-2.20% J Sainsbury PLC (Retail-Food Chains)(g) 148,367 1,238,390 - -------------------------------------------------------------- WARRANTS-0.09% BROADCASTING (TELEVISION, RADIO & CABLE)-0.00% Wireless One, Inc., expiring 10/19/00(h) 150 0 - -------------------------------------------------------------- ELECTRICAL EQUIPMENT-0.04% Electronic Retailing Systems, expiring 01/24/98(h) 440 22,000 - -------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.01% MVE Inc., expiring 02/15/02(h) 100 3,000 - -------------------------------------------------------------- METAL FABRICATORS-0.00% Gulf States Steel Corp., expiring 04/15/03(h) 60 270 - -------------------------------------------------------------- PERSONAL CARE-0.01% IHF Capital Inc., expiring 11/14/99(h) (acquired 11/04/94-12/07/94; cost $0)(d) 70 3,465 - -------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01% Clearnet Communications Inc., expiring 09/15/05(h) 330 2,970 - --------------------------------------------------------------
FS-40 206
MARKET WARRANTS-(CONTINUED) SHARES VALUE Orion Network Systems, Inc., expiring 01/15/07(h) 420 $ 5,880 - -------------------------------------------------------------- 8,850 - -------------------------------------------------------------- TELEPHONE-0.02% ESAT Holdings Ltd., expiring 02/01/07(h) (acquired 06/16/97; cost $0)(d) 350 1,137 - -------------------------------------------------------------- Intermedia Communications Inc., expiring 06/01/00(h) 150 10,500 - -------------------------------------------------------------- 11,637 - -------------------------------------------------------------- Total Warrants 49,222 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT VALUE U.S. TREASURY SECURITIES-1.65% Notes, 6.50%, 05/31/01 $ 400,000 $ 409,844 - -------------------------------------------------------------- Notes, 6.625%, 02/15/27 100,000 106,047 - -------------------------------------------------------------- Notes, 6.375%, 08/15/27 400,000 412,360 - -------------------------------------------------------------- Total U.S. Treasury Securities 928,251 - -------------------------------------------------------------- U.S. GOVERNMENT AGENCY SECURITIES-0.73% Tennessee Valley Authority, Bonds, 5.98%, 04/01/36 400,000 410,280 - -------------------------------------------------------------- REPURCHASE AGREEMENT(i)-2.13% Sanwa Securities (U.S.A.) Co., L.P. 5.73%, 11/03/97(j) 1,201,988 1,201,988 - -------------------------------------------------------------- TOTAL INVESTMENTS-97.40% 54,823,384 - -------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-2.60% 1,463,735 - -------------------------------------------------------------- NET ASSETS-100.00% $ 56,287,119 - --------------------------------------------------------------
Notes to Schedule of Investments: (a) Principal amount is in U.S. Dollars, except as indicated by note (f). (b) Zero coupon bond issued at a discount. The interest rate shown represents the rate of original issue discount. (c) Discounted bond at purchase. Interest rate shown represents the coupon rate at which the bond will accrue at a specified future date. (d) Restricted Security. May be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. The valuation of these securities has been determined in accordance with procedures established by the Board of Directors. The aggregate market value of these securities at 10/31/97 was $5,275,178 which represented 9.37% of the Fund's net assets. (e) Issued as a unit. Each unit consists of $1,000 Sr. notes plus warrants to purchase 0.8463 shares of common stock. (f) Foreign denominated security. Par value and coupon are denominated in currency of country indicated. (g) Non-income producing security. (h) Non-income producing security acquired as part of a unit with or in exchange for other securities. (i) 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, private accounts, and certain non-registered investment companies managed by the investment advisor or its affiliates. (j) Joint repurchase agreement entered into 10/31/97 with a maturing value of $200,095,500. Collateralized by $201,314,000 U.S. Government obligations, 0% to 8.875% due 11/15/97 to 08/15/27 with an aggregate market value at 10/31/97 of $204,000,545. Abbreviations: CAD - Canadian Dollar Pfd. - Preferred CHF - Swiss Franc PIK - Payment in Kind Conv. - Convertible PRIDES - Preferred Redemption Deb. - Debentures Increased Dividend Equity Securities DEM - German Deutschemark Sec. - Secured Disc. - Discounted SEK - Swedish Krona FRF - French Franc Sr. - Senior GBP - British Pound Sterling STRYPES - Structured Yield Product Gtd. - Guaranteed Exchangeable for Stock ITL - Italian Lire Sub. - Subordinated JPY - Japanese Yen Unsec. - Unsecured NZD - New Zealand Dollar Unsub. - Unsubordinated
See Notes to Financial Statements. FS-41 207 STATEMENT OF ASSETS AND LIABILITIES October 31, 1997 ASSETS: Investments, at market value (cost $53,006,761) $54,823,384 - ----------------------------------------------------------- Foreign currencies, at market value (cost $57,610) 57,391 - ----------------------------------------------------------- Receivables for: Capital stock sold 349,669 - ----------------------------------------------------------- Dividends and interest 1,249,220 - ----------------------------------------------------------- Investment for deferred compensation plan 10,356 - ----------------------------------------------------------- Other assets 17,042 - ----------------------------------------------------------- Total assets 56,507,062 - ----------------------------------------------------------- LIABILITIES: Payables for: Capital stock reacquired 34,206 - ----------------------------------------------------------- Forward contracts 47,608 - ----------------------------------------------------------- Dividends 63,819 - ----------------------------------------------------------- Deferred compensation plan 10,356 - ----------------------------------------------------------- Accrued advisory fees 7,612 - ----------------------------------------------------------- Accrued administrative service fees 2,604 - ----------------------------------------------------------- Accrued distribution fees 34,324 - ----------------------------------------------------------- Accrued transfer agent fees 9,826 - ----------------------------------------------------------- Accrued operating expenses 9,588 - ----------------------------------------------------------- Total liabilities 219,943 - ----------------------------------------------------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING $56,287,119 =========================================================== NET ASSETS: Class A $30,924,029 =========================================================== Class B $25,120,996 =========================================================== Class C $ 242,094 =========================================================== CAPITAL STOCK, $.001 PAR VALUE PER SHARE: CLASS A: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 2,830,028 =========================================================== CLASS B: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 2,300,947 =========================================================== CLASS C: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 22,178 =========================================================== CLASS A: NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 10.93 =========================================================== OFFERING PRICE PER SHARE: (Net asset value of $10.93 divided by 95.25%) $ 11.48 =========================================================== CLASS B: NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 10.92 =========================================================== CLASS C: NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 10.92 ===========================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1997 INVESTMENT INCOME: Interest $3,826,335 - ----------------------------------------------------------- Dividends 31,675 - ----------------------------------------------------------- Total investment income 3,858,010 - ----------------------------------------------------------- EXPENSES: Advisory fees 346,653 - ----------------------------------------------------------- Administrative service fees 74,031 - ----------------------------------------------------------- Directors' fees 8,735 - ----------------------------------------------------------- Distribution fees-Class A 137,912 - ----------------------------------------------------------- Distribution fees-Class B 219,155 - ----------------------------------------------------------- Distribution fees-Class C 240 - ----------------------------------------------------------- Custodian fees 25,984 - ----------------------------------------------------------- Transfer agent fees-Class A 62,912 - ----------------------------------------------------------- Transfer agent fees-Class B 54,149 - ----------------------------------------------------------- Transfer agent fees-Class C 59 - ----------------------------------------------------------- Other 103,320 - ----------------------------------------------------------- Total expenses 1,033,150 - ----------------------------------------------------------- Less: Fees waived by advisor (302,278) - ----------------------------------------------------------- Expenses paid indirectly (2,232) - ----------------------------------------------------------- Net expenses 728,640 - ----------------------------------------------------------- Net investment income 3,129,370 - ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN CURRENCIES AND FORWARD CURRENCY CONTRACTS: Net realized gain (loss) on sales of: Investment securities 109,553 - ----------------------------------------------------------- Foreign currencies (101,917) - ----------------------------------------------------------- Forward currency contracts 389,609 - ----------------------------------------------------------- 397,245 - ----------------------------------------------------------- Net unrealized appreciation (depreciation) of: Investment securities 884,081 - ----------------------------------------------------------- Foreign currencies (1,291) - ----------------------------------------------------------- Forward currency contracts (88,451) - ----------------------------------------------------------- 794,339 - ----------------------------------------------------------- Net gain from investment securities, foreign currencies and forward currency contracts. 1,191,584 - ----------------------------------------------------------- Net increase in net assets resulting from operations $4,320,954 ===========================================================
See Notes to Financial Statements. FS-42 208 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1997 and 1996
1997 1996 ----------- ------------ OPERATIONS: Net investment income $ 3,129,370 $ 1,844,305 - ----------------------------------------------------------------------------------------- Net realized gain on sales of investment securities, foreign currencies and forward currency contracts 397,245 418,371 - ----------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities, foreign currencies and forward currency contracts 794,339 543,300 - ----------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 4,320,954 2,805,976 - ----------------------------------------------------------------------------------------- Dividends to shareholders from net investment income: Class A (1,835,866) (1,175,361) - ----------------------------------------------------------------------------------------- Class B (1,337,369) (705,239) - ----------------------------------------------------------------------------------------- Class C (767) -- - ----------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains on investment securities: Class A (311,081) (122,866) - ----------------------------------------------------------------------------------------- Class B (242,850) (57,565) - ----------------------------------------------------------------------------------------- Class C (605) -- - ----------------------------------------------------------------------------------------- Share transactions-net: Class A 8,692,165 11,543,105 - ----------------------------------------------------------------------------------------- Class B 8,049,066 12,214,514 - ----------------------------------------------------------------------------------------- Class C 239,702 - ----------------------------------------------------------------------------------------- Net increase in net assets 17,573,349 24,502,564 - ----------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 38,713,770 14,211,206 - ----------------------------------------------------------------------------------------- End of period $56,287,119 $ 38,713,770 ========================================================================================= NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $54,262,086 $ 37,281,153 - ----------------------------------------------------------------------------------------- Undistributed net investment income (10,921) 123,655 - ----------------------------------------------------------------------------------------- Undistributed net realized gain on sales of investment securities, foreign currencies and forward currency contracts 263,067 330,414 - ----------------------------------------------------------------------------------------- Unrealized appreciation of investment securities, foreign currencies and forward currency contracts 1,772,887 978,548 - ----------------------------------------------------------------------------------------- $56,287,119 $ 38,713,770 =========================================================================================
NOTES TO FINANCIAL STATEMENTS October 31, 1997 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 operating series portfolios: AIM Global Income Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM International Equity Fund. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares are sold with a contingent deferred sales charge. Class C shares commenced sales on August 4, 1997. 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 the financial statements pertains only to the Fund. The Fund's investment objective is to provide high current income. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations-Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution- size trading in similar groups of securities, developments FS-43 209 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 (except convertible bonds) 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 or absent a last sales price, at the mean between the closing bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company'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 would 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, 1997 were as follows:
UNREALIZED SETTLEMENT CONTRACT TO APPRECIATION DATE DELIVER VALUE RECEIVE (DEPRECIATION) ---------- ------------- ----------- ----------- -------------- 11/18/97 NZD 3,580,000 $ 2,229,087 $ 2,279,923 $ 50,836 11/20/97 DEM 1,400,000 812,843 763,734 (49,109) 12/05/97 JPY 41,000,000 340,690 352,536 11,846 12/10/97 CHF 300,000 215,180 204,026 (11,154) 12/19/97 NZD 1,000,000 623,387 633,000 9,613 01/14/97 DEM 570,000 332,383 327,210 (5,173) 01/28/98 DEM 1,850,000 1,079,618 1,046,380 (33,238) 01/29/98 SEK 18,000,000 2,410,316 2,420,005 9,689 01/30/98 GBP 1,200,000 2,035,398 2,004,480 (30,918) ----------- ----------- -------- $10,078,902 $10,031,294 $(47,608) =========== =========== ========
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 is recorded on the ex-dividend date. It is the policy of the Fund to declare daily dividends from net investment income. Such dividends are paid annually. On October 31, 1997, undistributed net investment income was decreased by $89,944 and undistributed net realized gains increased by $89,944 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-Distribution and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated between the classes. 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, 1997, AIM waived fees of $302,278. The Fund, pursuant to a master administrative services agreement, has agreed to reimburse AIM for administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1997, AIM was reimbursed $74,031 for such services. FS-44 210 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, 1997, the Fund paid AFS $72,578 for such services. The Company has entered into a master distribution agreement with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class A, Class B and Class C shares of the Fund. The Company has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan"), and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.50% of the average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of the Fund. 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, 1997 for the Class A shares and Class B shares and the period August 4, 1997 (date sales commenced) through October 31, 1997, the Class C shares paid AIM Distributors $137,912, $219,155 and $240, respectively, as compensation under the Plans. AIM Distributors received commissions of $59,763 from sales of the Class A shares of the Fund during the year ended October 31, 1997. Such commissions are not an expense of the Fund. They are deducted from, and are not included in the proceeds from sales of Class A shares. During the year ended October 31, 1997, AIM Distributors received commissions of $3,397 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, 1997, the Fund incurred legal fees of $3,931 for services rendered by the law firm of Kramer, Levin, Naftalis, & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES AIM has directed certain portfolio trades to brokers who paid a portion of the Fund's expenses related to pricing services used by the Fund which reduced the Fund's expenses by $190 during the year ended October 31, 1997. The Fund also received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $649 and $1,393, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $2,232 during the year ended October 31, 1997. NOTE 4-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 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. Interest on borrowings under the line of credit is payable on maturity or prepayment date. Prior to an amendment of the line of credit on July 15, 1997, the Fund was limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set by its prospectus for borrowings. During the year ended October 31, 1997, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.05% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1997 was $45,325,570 and $28,881,069, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of October 31, 1997, is as follows: Aggregate unrealized appreciation of investment securities $ 2,907,693 - ------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (1,091,792) - ------------------------------------------------------ Net unrealized appreciation (depreciation) of investment securities $ 1,815,901 ====================================================== Cost of investments for tax purposes is $53,007,483.
FS-45 211 NOTE 7-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the year ended October 31, 1997 and 1996 were as follows:
1997 1996 ------------------------ ----------------------- SHARES AMOUNT SHARES AMOUNT ---------- ----------- --------- ----------- Sold: Class A 1,677,097 $17,985,938 1,609,644 $17,019,341 - ---------------------------------------------------------------------------------------------------------------- Class B 1,244,806 13,337,043 1,313,279 13,876,204 - ---------------------------------------------------------------------------------------------------------------- Class C* 23,915 258,631 -- -- - ---------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 168,472 1,809,673 92,969 985,383 - ---------------------------------------------------------------------------------------------------------------- Class B 118,888 1,275,952 58,431 618,362 - ---------------------------------------------------------------------------------------------------------------- Class C* 71 779 -- -- - ---------------------------------------------------------------------------------------------------------------- Reacquired: Class A (1,035,690) (11,103,446) (613,922) (6,461,619) - ---------------------------------------------------------------------------------------------------------------- Class B (610,857) (6,563,929) (215,814) (2,280,052) - ---------------------------------------------------------------------------------------------------------------- Class C* (1,808) (19,708) -- -- - ---------------------------------------------------------------------------------------------------------------- 1,584,894 $16,980,933 2,244,587 $23,757,619 ================================================================================================================
* Class C Shares commenced sales on August 4, 1997. NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A capital stock and a share of Class B capital stock outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (dates operations commenced) through October 31, 1994 and for a share of Class C capital stock outstanding during the period August 4, 1997 (date sales commenced) through October 31, 1997.
1997 1996 1995 1994 ---------- ------- ------- ------ CLASS A: Net asset value, beginning of period $ 10.85 $10.74 $10.02 $10.00 - ----------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.72 0.79(a) 0.79 0.08 - ----------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 0.21 0.25 0.75 0.01 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 0.93 1.04 1.54 0.09 - ----------------------------------------------------------------------------------------------------------- Less distributions: Dividends from investment income (0.72) (0.81) (0.82) (0.07) - ----------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.13) (0.12) -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions (0.85) (0.93) (0.82) (0.07) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.93 $10.85 $10.74 $10.02 =========================================================================================================== Total return(b) 9.05% 10.22% 16.07% 0.93% =========================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $30,924 $21,926 $10,004 $2,661 =========================================================================================================== Ratio of expenses to average net assets(c) 1.25%(d)(e) 1.25% 1.25% 1.25%(f) =========================================================================================================== Ratio of net investment income to average net assets(g) 6.54%(d) 7.27% 7.38% 6.01%(f) =========================================================================================================== Portfolio turnover rate 61% 83% 128% 6% ===========================================================================================================
(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) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.86%, 2.02%, 3.03% and 5.61% (annualized) for the periods 1997-1994, respectively. (d) Ratios are based on average net assets of $27,582,444. (e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been 1.24%. (f) Annualized. (g) After fee waivers and/or expense reimbursements. The ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements were 5.93%, 6.51%, 5.59% and 1.65% (annualized) for the periods 1997-1994, respectively. FS-46 212
1997 1996 1995 1994 ---------- ------- ------ ------ CLASS B: Net asset value, beginning of period $ 10.84 $10.73 $10.01 $10.00 - ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.67 0.74(a) 0.74 0.07 - ------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 0.21 0.24 0.75 0.01 - ------------------------------------------------------------------------------------------------------- Total from investment operations 0.88 0.98 1.49 0.08 - ------------------------------------------------------------------------------------------------------- Less distributions: Dividends from investment income (0.67) (0.75) (0.77) (0.07) - ------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.13) (0.12) -- -- - ------------------------------------------------------------------------------------------------------- Total distributions (0.80) (0.87) (0.77) (0.07) - ------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 10.92 $10.84 $10.73 $10.01 ======================================================================================================= Total return(b) 8.48% 9.66% 15.56% 0.79% ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $25,121 $16,787 $4,207 $362 ======================================================================================================= Ratio of expenses to average net assets(c) 1.76%(d)(e) 1.75% 1.74% 1.73%(f) ======================================================================================================= Ratio of net investment income to average net assets(g) 6.03%(d) 6.77% 6.88% 3.59%(f) ======================================================================================================= Portfolio turnover rate 61% 83% 128% 6% =======================================================================================================
(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) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.37%, 2.53%, 3.57% and 22.09% (annualized) for the periods 1997-1994, respectively. (d) Ratios are based on average net assets of $21,915,481. (e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have remained the same. (f) Annualized. (g) After fee waivers and/or expense reimbursements. The ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were 5.42%, 6.00%, 5.05% and (16.77)% (annualized) for the periods 1997-1994, respectively.
1997 CLASS C: ---------- Net asset value, beginning of period $10.76 - ------------------------------------------------------------ ------ Income from investment operations: Net investment income 0.15(a) - ------------------------------------------------------------ ------ Net gains on securities (both realized and unrealized) 0.17 - ------------------------------------------------------------ ------ Total from investment operations 0.32 - ------------------------------------------------------------ ------ Less distributions: Dividends from net investment income (0.13) - ------------------------------------------------------------ ------ Distributions from net realized gains (0.03) - ------------------------------------------------------------ ------ Total distributions (0.16) - ------------------------------------------------------------ ------ Net asset value, end of period $10.92 ============================================================ ====== Total return(b) 2.99% ============================================================ ====== Ratios/supplement data: Net assets, end of period (000s omitted) $ 242 ============================================================ ====== Ratio of expenses to average net assets(c) 1.76%(e)(d) ============================================================ ====== Ratio of net investment income (loss) to average net assets(f) 6.03%(c)(d) ============================================================ ====== Portfolio turnover rate 61% ============================================================ ======
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and periods for less than one year, total returns are not annualized. (c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 2.37% (annualized). (d) Ratios are annualized and based on average net assets of $98,262. (e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have remained the same. (f) After fee waivers and/or expense reimbursements. Ratio of net investment income to average net assets prior to fee waivers and/or expense reimbursements was 5.42% (annualized). FS-47 213 INDEPENDENT AUDITORS' REPORT To 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, 1997, 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 financial highlights for each of the years and periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with 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 and financial highlights. Our procedures included confirmation of securities owned as of October 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM International Equity Fund as of October 31, 1997, 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 and periods in the five-year period then ended, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas December 5, 1997 FS-48 214 SCHEDULE OF INVESTMENTS October 31, 1997
MARKET SHARES VALUE FOREIGN STOCKS & OTHER EQUITY INTERESTS-91.55% ARGENTINA-2.07% Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 354,880 $ 8,600,295 - --------------------------------------------------------------- Banco Rio de La Plata S.A. (Banks-Money Center)(a) 415,000 4,357,500 - --------------------------------------------------------------- Perez Companc S.A.-Class B (Oil & Gas-Refining & Marketing) 1,763,181 11,044,194 - --------------------------------------------------------------- Telefonica de Argentina S.A.-ADR (Telephone) 240,600 6,766,875 - --------------------------------------------------------------- YPF Sociedad Anonima-ADR (Oil- International Integrated) 508,200 16,262,400 - --------------------------------------------------------------- 47,031,264 - --------------------------------------------------------------- AUSTRALIA-1.22% Boral Ltd. (Engineering & Construction) 4,080,000 10,731,032 - --------------------------------------------------------------- Coca-Cola Amatil Ltd. (Beverages-Non-Alcoholic) 813,536 6,121,675 - --------------------------------------------------------------- QBE Insurance Group Ltd. (Insurance-Property-Casualty) 1,870,277 8,746,561 - --------------------------------------------------------------- QBE Insurance Group Ltd.-Bonus Shares (Insurance-Property-Casualty) 467,569 2,130,741 - --------------------------------------------------------------- 27,730,009 - --------------------------------------------------------------- AUSTRIA-0.77% OMV A.G. (Oil & Gas-Refining & Marketing) 66,000 9,383,113 - --------------------------------------------------------------- VA Technologie A.G. (Engineering & Construction) 45,700 8,109,128 - --------------------------------------------------------------- 17,492,241 - --------------------------------------------------------------- BELGIUM-1.17% Barco Industries (Manufacturing- Diversified) 41,000 7,909,040 - --------------------------------------------------------------- Colruyt S.A. (Retail-Food Chains) 14,600 7,832,442 - --------------------------------------------------------------- UCB S.A. (Manufacturing-Diversified) 3,100 10,711,631 - --------------------------------------------------------------- 26,453,113 - --------------------------------------------------------------- BRAZIL-1.97% Companhia Energetica de Minas Gerais (Electric Companies) 173,000 6,904,622 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras - Preferred (Oil & Gas-Exploration & Production) 30,271 5,628,951 - --------------------------------------------------------------- Telecomunicacoes Brasileiras S.A.-Telebras-ADR (Telephone) 124,500 12,636,750 - --------------------------------------------------------------- Telecomunicacoes de Sao Paulo S.A.-TELESP-Preferred (Telephone) 39,000 10,188,217 - --------------------------------------------------------------- Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional)(a) 343,000 9,346,750 - --------------------------------------------------------------- 44,705,290 - --------------------------------------------------------------- CANADA-2.86% Bank of Montreal (Banks-Money Center) 118,000 5,094,760 - --------------------------------------------------------------- Canadian National Railway Co. (Railroads) 170,000 9,169,375 - --------------------------------------------------------------- Canadian Natural Resources Ltd. (Oil & Gas-Exploration & Production)(a) 335,000 9,745,627 - --------------------------------------------------------------- Canadian Pacific, Ltd. (Railroads) 307,000 9,152,438 - ---------------------------------------------------------------
MARKET SHARES VALUE CANADA-(CONTINUED) Magna International, Inc.-Class A (Machinery-Diversified) 101,900 $ 6,716,933 - --------------------------------------------------------------- Northern Telecom Ltd. (Communications Equipment) 124,700 11,184,031 - --------------------------------------------------------------- Suncor, Inc. (Oil-International Integrated) 380,000 13,683,613 - --------------------------------------------------------------- 64,746,777 - --------------------------------------------------------------- CHILE-0.65% Cia. de Telecomunicaciones de Chile S.A.-ADR (Telephone) 263,925 7,323,919 - --------------------------------------------------------------- Quinenco S.A.-ADR (Financial- Diversified)(a) 513,900 7,515,788 - --------------------------------------------------------------- 14,839,707 - --------------------------------------------------------------- DENMARK-0.84% Novo Nordisk A/S-Class B (Health Care/Drugs-Generic & Other) 176,600 19,113,428 - --------------------------------------------------------------- FINLAND-0.78% Enso Oy (Paper & Forest Products) 560,000 5,315,034 - --------------------------------------------------------------- Nokia Oy A.B.-Class A (Telecommunications- Cellular/Wireless) 141,000 12,319,528 - --------------------------------------------------------------- 17,634,562 - --------------------------------------------------------------- FRANCE-11.74% Accor S.A. (Lodging-Hotels) 63,200 11,767,312 - --------------------------------------------------------------- Alcatel Alsthom (Manufacturing-Diversified) 160,000 19,305,681 - --------------------------------------------------------------- AXA S.A. (Insurance-Multi-Line) 132,000 9,039,137 - --------------------------------------------------------------- Banque Nationale de Paris (Banks-Major Regional) 250,000 11,051,879 - --------------------------------------------------------------- Cap Gemini Sogeti S.A. (Computers-Software & Services) 162,000 12,862,827 - --------------------------------------------------------------- Carrefour Supermarche S.A. (Retail-Food Chains) 7,500 3,913,665 - --------------------------------------------------------------- Compagnie Francaise d'Etudes et de Construction Technip (Oil & Gas-Refining & Marketing) 86,000 9,109,522 - --------------------------------------------------------------- Elf Aquitaine S.A. (Oil & Gas-Refining & Marketing) 180,500 22,342,477 - --------------------------------------------------------------- Essilor International (Manufacturing-Specialized) 24,940 6,658,449 - --------------------------------------------------------------- Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) 195,000 10,817,839 - --------------------------------------------------------------- Lafarge S.A. (Engineering & Construction) 138,500 8,653,474 - --------------------------------------------------------------- Legrand S.A. (Housewares) 30,500 5,678,845 - --------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 34,800 15,915,122 - --------------------------------------------------------------- Promodes (Retail-Food Chains) 28,000 9,116,110 - --------------------------------------------------------------- Renault S.A. (Automobiles)(a) 465,000 12,938,500 - --------------------------------------------------------------- Renault S.A. (Automobiles) (Acquired 07/31/97; cost $5,810,539)(a)(b) 210,000 5,843,193 - --------------------------------------------------------------- Rexel S.A. (Distributors-Food & Health) 23,200 6,153,686 - --------------------------------------------------------------- Rhone-Poulenc-Class A (Chemicals-Diversified) 270,000 11,772,201 - --------------------------------------------------------------- Schneider S.A. (Housewares) 160,000 8,543,319 - ---------------------------------------------------------------
FS-49 215
MARKET SHARES VALUE FRANCE-(CONTINUED) Societe BIC S.A. (Office Equipment & Supplies) 222,000 $ 15,186,790 - --------------------------------------------------------------- Societe Generale (Banks-Major Regional) 177,000 24,241,321 - --------------------------------------------------------------- Sodexho S.A. (Services-Commercial & Consumer) 9,200 4,588,636 - --------------------------------------------------------------- Total S.A.-Class B (Oil & Gas-Refining & Marketing) 111,000 12,315,694 - --------------------------------------------------------------- Valeo S.A. (Automobile Parts & Equipment) 128,500 8,570,008 - --------------------------------------------------------------- 266,385,687 - --------------------------------------------------------------- GERMANY-5.81% Adidas A.G. (Footwear) 42,000 6,084,129 - --------------------------------------------------------------- Adidas A.G. (Footwear) (Acquired 04/11/97; cost $8,533,263)(b) 81,000 11,733,678 - --------------------------------------------------------------- Allianz A.G. (Insurance-Multi-Line) 23,500 5,239,353 - --------------------------------------------------------------- Bayerische Vereinsbank A.G. (Banks-Major Regional) 187,000 10,857,259 - --------------------------------------------------------------- Commerzbank A.G. (Banks-Major Regional) 295,000 10,019,740 - --------------------------------------------------------------- Continental A.G. (Automobile Parts & Equipment) 285,000 6,800,883 - --------------------------------------------------------------- Deutsche Bank A.G. (Banks-Major Regional) 170,500 11,166,372 - --------------------------------------------------------------- Dresdner Bank A.G. (Banks-Major Regional) 240,000 9,823,787 - --------------------------------------------------------------- Henkel KGaA (Chemicals-Diversified) 105,000 5,456,208 - --------------------------------------------------------------- Mannesmann A.G. (Machinery-Diversified) 24,250 10,249,949 - --------------------------------------------------------------- Merck KGaA (Health Care/Drugs-Generic & Other) 290,000 10,759,137 - --------------------------------------------------------------- SAP A.G. (Computers-Software & Services) 27,000 7,751,909 - --------------------------------------------------------------- SAP A.G.-Preferred (Computers-Software & Services) 27,000 8,049,758 - --------------------------------------------------------------- Schering A.G. (Health Care/Drugs-Generic & Other) 94,000 9,119,749 - --------------------------------------------------------------- VEBA A.G. (Manufacturing-Diversified) 155,000 8,648,358 - --------------------------------------------------------------- 131,760,269 - --------------------------------------------------------------- HONG KONG-4.14% Asia Satellite Telecommunications Holdings Ltd. (Telecommunications- Cellular/Wireless) 1,000,000 2,405,743 - --------------------------------------------------------------- Asia Satellite Telecommunications Holdings Ltd.-ADR (Telecommunications- Cellular/Wireless) 174,500 4,078,938 - --------------------------------------------------------------- Cheung Kong (Holdings) Ltd. (Land Development) 904,000 6,284,680 - --------------------------------------------------------------- China Telecom Ltd.-ADR (Telecommunications-Cellular & Wireless)(a) 179,700 5,817,788 - --------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 9,772,000 11,375,283 - --------------------------------------------------------------- First Pacific Co. Ltd. (Distributors-Food & Health) 11,493,908 7,247,339 - --------------------------------------------------------------- Hong Kong & China Gas Co. Ltd. (Natural Gas) 9,280,960 17,525,967 - --------------------------------------------------------------- HSBC Holdings PLC (Banks-Major Regional) 490,000 11,090,991 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 2,552,000 17,659,186 - --------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer)(a) 2,968,400 5,874,218 - ---------------------------------------------------------------
MARKET SHARES VALUE HONG KONG-(CONTINUED) Sun Hung Kai Properties Ltd. (Land Development) 628,100 $ 4,630,628 - --------------------------------------------------------------- 93,990,761 - --------------------------------------------------------------- INDONESIA-0.39% Gulf Indonesia Resources Ltd. (Oil-International Integrated)(a) 250,000 5,250,000 - --------------------------------------------------------------- PT Indosat (Telephone) 933,000 2,102,809 - --------------------------------------------------------------- PT Indosat-ADR (Telephone) 63,500 1,504,156 - --------------------------------------------------------------- 8,856,965 - --------------------------------------------------------------- IRELAND-0.35% Elan Corp. PLC-ADR (Health Care/Drugs-Generic & Other)(a) 158,800 7,920,150 - --------------------------------------------------------------- ISRAEL-0.38% Teva Pharmaceutical Industries Ltd.-ADR (Health Care/Drugs-Generic & Other) 186,800 8,732,900 - --------------------------------------------------------------- ITALY-3.92% Assicurazioni Generali (Insurance-Multi-Line) 508,500 11,353,396 - --------------------------------------------------------------- Credito Italiano S.p.A. (Banks-Major Regional) 6,200,000 16,596,810 - --------------------------------------------------------------- Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing) 2,050,000 11,586,799 - --------------------------------------------------------------- Fiat S.p.A. (Automobiles) 3,300,000 10,469,167 - --------------------------------------------------------------- Istituto Mobiliare Italiano S.p.A. (Banks-Major Regional) 825,000 7,467,395 - --------------------------------------------------------------- Telecom Italia Mobile S.p.A. (Telecommunications- Cellular/Wireless) 3,800,000 14,028,352 - --------------------------------------------------------------- Telecom Italia S.p.A. (Telephone) 2,777,777 17,375,463 - --------------------------------------------------------------- 88,877,382 - --------------------------------------------------------------- JAPAN-14.52% Advantest Corp. (Electronics- Instrumentation) 249,700 20,644,080 - --------------------------------------------------------------- Bridgestone Corp. (Automobile Parts & Equipment) 477,000 10,304,944 - --------------------------------------------------------------- Canon, Inc. (Office Equipment & Supplies) 797,000 19,337,266 - --------------------------------------------------------------- Denso Corp. (Automobile Parts & Equipment) 370,000 7,993,353 - --------------------------------------------------------------- Fuji Photo Film Co. (Leisure Time-Products) 530,000 19,200,665 - --------------------------------------------------------------- Hitachi Cable, Ltd. (Metal Fabricators) 1,254,000 8,335,688 - --------------------------------------------------------------- Honda Motor Co., Ltd. (Automobiles) 610,000 20,527,628 - --------------------------------------------------------------- Hoya Corp.(Manufacturing-Specialized) 236,000 8,196,759 - --------------------------------------------------------------- Ibiden Co., Ltd. (Electronics-Component Distributors) 1,205,000 20,024,927 - --------------------------------------------------------------- Kyocera Corp.(Electronics-Component Distributors) 71,000 4,064,728 - --------------------------------------------------------------- Matsushita Electric Industrial Co. Ltd. (Electrical Equipment) 569,000 9,550,312 - --------------------------------------------------------------- Minebea Co. Ltd. (Electronics-Component Distributors) 1,614,000 16,093,062 - --------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics-Component Distributors) 326,000 13,218,779 - --------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telephone) 23,200 19,662,651 - --------------------------------------------------------------- Nippon Television Network (Broadcasting-Television, Radio & Cable) 26,530 9,434,848 - ---------------------------------------------------------------
FS-50 216
MARKET SHARES VALUE JAPAN-(CONTINUED) NTT Data Communications Systems Co. (Computers-Software & Services) 4,500 $ 21,499,792 - --------------------------------------------------------------- Ricoh Corp. Ltd. (Office Equipment & Supplies) 1,095,000 14,102,617 - --------------------------------------------------------------- Rohm Co. (Electronics-Component Distributors) 209,000 20,665,559 - --------------------------------------------------------------- SMC Corp.(Machinery-Diversified) 100,000 8,641,462 - --------------------------------------------------------------- Sony Corp. (Electronics-Component Distributors) 234,000 19,423,847 - --------------------------------------------------------------- TDK Corp. (Electrical Equipment) 244,000 20,233,652 - --------------------------------------------------------------- Tokyo Electron Ltd. (Electronics-Semiconductors) 367,100 18,301,620 - --------------------------------------------------------------- 329,458,239 - --------------------------------------------------------------- MEXICO-4.13% Cifra S.A. de C.V. (Retail-General Merchandise) 5,637,000 9,747,943 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 320,500 13,841,594 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-Class B (Beverages-Alcoholic) 2,350,050 16,535,832 - --------------------------------------------------------------- Grupo Industrial Maseca S.A. de CV- Class B (Foods) 6,469,600 6,249,703 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 374,200 11,600,200 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 3,260,000 14,288,014 - --------------------------------------------------------------- Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 609,200 18,885,200 - --------------------------------------------------------------- TV Azteca, S.A. de C.V.-ADR (Broadcasting-Television, Radio & Cable)(a) 136,200 2,604,825 - --------------------------------------------------------------- 93,753,311 - --------------------------------------------------------------- NETHERLANDS-6.57% Akzo Nobel N.V. (Chemicals-Diversified) 75,000 13,215,297 - --------------------------------------------------------------- ASM Lithography Holding N.V. (Machinery-Diversified)(a) 65,000 4,720,577 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 357,800 8,422,076 - --------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 292,000 9,640,587 - --------------------------------------------------------------- Koninklijke Ahold N.V. (Retail-Food Chains) 426,000 10,905,073 - --------------------------------------------------------------- Koninklijke Nutricia Verenigde Bedrijven N.V. (Foods) 153,000 4,373,680 - --------------------------------------------------------------- Koninklijke Pakhoed N.V. (Shipping) 323,000 10,580,891 - --------------------------------------------------------------- Oce-Van Der Grinten N.V. (Office Equipment & Supplies) 60,000 6,845,223 - --------------------------------------------------------------- Philips Electronics N.V. (Household Furniture & Appliances) 358,000 28,027,814 - --------------------------------------------------------------- Randstad Holdings N.V. (Services-Commercial & Consumer) 257,500 10,278,779 - --------------------------------------------------------------- Royal Dutch Petroleum Co. (Oil- International Integrated) 178,000 9,415,710 - --------------------------------------------------------------- Stork N.V. (Manufacturing-Diversified) 135,000 5,840,845 - --------------------------------------------------------------- Vendex International N.V. (Retail-General Merchandise) 215,000 11,738,347 - --------------------------------------------------------------- VNU-Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 332,000 7,866,083 - --------------------------------------------------------------- Wolters Kluwer N.V. (Specialty Printing) 58,000 7,121,916 - --------------------------------------------------------------- 148,992,898 - ---------------------------------------------------------------
MARKET SHARES VALUE NORWAY-0.65% Petroleum Geo-Services A.S.A. (Oil-International Integrated)(a) 215,000 $ 14,821,423 - --------------------------------------------------------------- PHILIPPINES-0.44% Metro Pacific Corp. (Manufacturing-Diversified) 45,013,850 2,996,691 - --------------------------------------------------------------- Philippine Long Distance Telephone Co. (Telephone) 168,960 4,170,381 - --------------------------------------------------------------- Philippine Long Distance Telephone Co.- ADR (Telephone) 119,200 2,890,600 - --------------------------------------------------------------- 10,057,672 - --------------------------------------------------------------- PORTUGAL-1.14% Electricidade de Portugal, S.A.-ADR (Electric Companies)(a) 140,800 4,919,200 - --------------------------------------------------------------- Portugal Telecom S.A. (Telephone) 510,000 20,924,936 - --------------------------------------------------------------- 25,844,136 - --------------------------------------------------------------- SINGAPORE-0.87% City Developments Ltd. (Land Development) 1,600,000 6,704,762 - --------------------------------------------------------------- DBS Land Ltd. (Land Development) 4,096,000 6,969,702 - --------------------------------------------------------------- Overseas Union Bank Ltd. (Banks-Major Regional) 1,846,800 6,156,000 - --------------------------------------------------------------- 19,830,464 - --------------------------------------------------------------- SPAIN-2.00% Banco Bilbao Vizcaya, S.A. (Banks-Major Regional) 432,000 11,552,073 - --------------------------------------------------------------- Endesa S.A. (Electric Companies) 501,000 9,436,585 - --------------------------------------------------------------- Iberdrola S.A. (Electric Companies) 745,000 8,911,116 - --------------------------------------------------------------- Telefonica de Espana (Telephone) 565,000 15,419,330 - --------------------------------------------------------------- 45,319,104 - --------------------------------------------------------------- SWEDEN-2.75% Electrolux A.B. (Household Furniture & Appliances) 290,900 24,080,161 - --------------------------------------------------------------- Hennes & Mauritz A.B.-Class B (Retail/Specialty-Apparel) 370,000 15,141,057 - --------------------------------------------------------------- Sparbanken Sverige A.B.-Class A (Banks-Major Regional) 530,000 12,029,533 - --------------------------------------------------------------- Telefonaktiebolaget LM Ericsson-ADR (Communications Equipment) 250,000 11,062,500 - --------------------------------------------------------------- 62,313,251 - --------------------------------------------------------------- SWITZERLAND-4.23% Adecco S.A. (Services-Commercial & Consumer) 30,000 9,534,012 - --------------------------------------------------------------- Ciba Specialty Chemicals A.G. (Chemicals-Specialty)(a) 122,000 11,980,004 - --------------------------------------------------------------- Clariant A.G. (Chemicals-Specialty) 19,200 14,767,649 - --------------------------------------------------------------- Credit Suisse Group (Banks-Major Regional) 82,300 11,593,412 - --------------------------------------------------------------- Holderbank Financiere Glarus A.G.-Class B (Construction-Cement & Aggregates) 12,100 9,738,761 - --------------------------------------------------------------- Nestle S.A. (Foods) 7,800 10,990,466 - --------------------------------------------------------------- Novartis A.G. (Health Care-Diversified) 13,696 21,449,975 - --------------------------------------------------------------- Zurich Versicherungs-Gesellschaft (Insurance-Multi-Line) 14,500 5,985,360 - --------------------------------------------------------------- 96,039,639 - ---------------------------------------------------------------
FS-51 217
MARKET SHARES VALUE UNITED KINGDOM-15.19% Airtours PLC (Services-Commercial & Consumer) 466,450 $ 9,234,521 - ------------------------------------------------------------------- Amersham International PLC (Health Care/Drugs-Generic & Other) 215,000 8,269,420 - ------------------------------------------------------------------- Barclays PLC (Banks-Major Regional) 500,000 12,524,404 - ------------------------------------------------------------------- Blue Circle Industries PLC (Construction-Cement & Aggregates) 1,570,000 9,219,236 - ------------------------------------------------------------------- Bodycote International PLC (Chemicals-Specialty) 410,000 7,105,775 - ------------------------------------------------------------------- British Aerospace PLC (Aerospace/Defense) 425,000 11,280,352 - ------------------------------------------------------------------- British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 1,410,000 20,722,897 - ------------------------------------------------------------------- Compass Group PLC (Services-Commercial & Consumer) 970,000 10,342,238 - ------------------------------------------------------------------- Dixons Group PLC (Retail-Specialty) 1,110,000 12,980,248 - ------------------------------------------------------------------- EMAP PLC (Publishing) 625,000 8,970,720 - ------------------------------------------------------------------- General Electric Co. PLC (Manufacturing-Diversified) 1,769,800 11,305,541 - ------------------------------------------------------------------- GKN PLC (Manufacturing-Diversified) 530,000 11,888,704 - ------------------------------------------------------------------- Granada Group PLC (Leisure Time- Products) 435,000 5,999,130 - ------------------------------------------------------------------- Hays PLC (Services-Commercial & Consumer) 1,050,050 12,332,050 - ------------------------------------------------------------------- Kingfisher PLC (Retail-Department Stores) 825,000 11,875,953 - ------------------------------------------------------------------- Ladbroke Group PLC (Leisure Time-Products) 4,325,000 19,374,238 - ------------------------------------------------------------------- Lloyds TSB Group PLC (Banks-Major Regional) 570,000 7,124,565 - ------------------------------------------------------------------- Misys PLC (Services-Commercial & Consumer) 250,000 6,302,048 - ------------------------------------------------------------------- Next PLC (Retail-General Merchandise) 1,010,000 12,031,145 - ------------------------------------------------------------------- Pearson PLC (Specialty Printing) 950,000 12,432,128 - ------------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 942,400 10,909,670 - ------------------------------------------------------------------- Railtrack Group PLC (Shipping) 1,450,000 23,183,987 - ------------------------------------------------------------------- Rentokil Initial PLC (Services-Commercial & Consumer) 2,760,000 11,113,416 - ------------------------------------------------------------------- Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 1,350,000 12,944,261 - ------------------------------------------------------------------- Siebe PLC (Electronics-Component Distributors) 370,000 7,107,788 - ------------------------------------------------------------------- Smiths Industries PLC (Machinery-Diversified) 256,000 3,715,210 - ------------------------------------------------------------------- Tarmac PLC (Engineering & Construction) 8,709,800 16,950,926 - ------------------------------------------------------------------- Unilever PLC (Foods) 2,064,000 15,375,169 - ------------------------------------------------------------------- Vodafone Group PLC (Telecommunications- Cellular/Wireless) 1,865,000 10,169,262 - -------------------------------------------------------------------
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) WPP Group PLC (Services- Advertising/Marketing) 2,575,000 $ 11,772,562 - --------------------------------------------------------------- 344,557,564 - --------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests 2,077,258,206 - --------------------------------------------------------------- PRINCIPAL AMOUNT FOREIGN CONVERTIBLE BONDS-1.55% FRANCE-0.40% AXA-UAP (Insurance-Multi-Line), Conv. Sr. Deb., 4.50%, 01/01/99(c) FRF 33,885,000 8,973,144 - ------------------------------------------------------------------- GERMANY-0.41% Volkswagen International Finance N.V. (Automobiles), Conv. Gtd. Notes, 3.00%, 01/24/02 $ 7,880,000 9,278,700 - ------------------------------------------------------------------- HONG KONG-0.12% New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds, 5.00%, 07/15/01 (Acquired 04/10/97-04/11/97; cost $2,056,313)(b) $ 1,750,000 1,653,750 - ------------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds, 5.00%, 07/15/01 $ 1,150,000 1,086,750 - ------------------------------------------------------------------- 2,740,500 - ------------------------------------------------------------------- ITALY-0.43% Pirelli S.p.A. (Electrical Equipment), Conv. Bonds, 5.00%, 12/31/98(c) ITL 10,062,964,600 9,658,782 - ------------------------------------------------------------------- JAPAN-0.19% Ricoh Co., Ltd. (Office Equipment & Supplies), Conv. Bonds, 0.35%, 03/31/03(c) JPY 395,000,000 4,348,774 - ------------------------------------------------------------------- Total Foreign Convertible Bonds 34,999,900 - ------------------------------------------------------------------- REPURCHASE AGREEMENT-4.92%(d) SBC Warburg Inc., 5.40%, 11/03/1997(e) 111,732,336 111,732,336 - ------------------------------------------------------------------- TOTAL INVESTMENTS-98.02% 2,223,990,442 - ------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-1.98% 45,037,322 - ------------------------------------------------------------------- NET ASSETS-100.00% $ 2,269,027,764 ===================================================================
Investment Abbreviations: ADR - American Depository Receipt Conv. - Convertible Deb. - Debenture FRF - French Franc GDR - Global Depository Receipt Gtd. - Guaranteed ITL - Italian Lira JPY - Japanese Yen Sr. - Senior Notes to Schedule of Investments: (a) Non-income producing security. (b) Restricted security. May be resold to qualified institutional buyers in accordance with 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 10/31/97 was $19,230,621 which represented 0.85% of the Fund's net assets. (c) Foreign denominated security. Par value and coupon are denominated in currency indicated. (d) 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, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (e) Joint repurchase agreement entered into 10/31/97 with a maturing value of $300,135,000. Collateralized by $295,632,000 U.S. Government obligations, 5.25% to 8.875% due 12/31/97 to 08/15/02 with an aggregate market value at 10/31/97 of $306,259,515. See Notes to Financial Statements. FS-52 218 STATEMENT OF ASSETS AND LIABILITIES October 31, 1997 ASSETS: Investments, at market value (cost $1,836,302,147) $2,223,990,442 - ------------------------------------------------------------ Foreign currencies, at market value (cost $42,794,789) 43,045,352 - ------------------------------------------------------------ Receivables for: Investments sold 14,136,654 - ------------------------------------------------------------ Capital stock sold 44,111,370 - ------------------------------------------------------------ Dividends and interest 4,967,585 - ------------------------------------------------------------ Investment for deferred compensation plan 26,785 - ------------------------------------------------------------ Other assets 75,088 - ------------------------------------------------------------ Total assets 2,330,353,276 - ------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 49,044,157 - ------------------------------------------------------------ Capital stock reacquired 8,290,939 - ------------------------------------------------------------ Deferred compensation 26,785 - ------------------------------------------------------------ Accrued advisory fees 1,796,123 - ------------------------------------------------------------ Accrued administrative services fees 7,878 - ------------------------------------------------------------ Accrued directors' fees 6,184 - ------------------------------------------------------------ Accrued distribution fees 1,044,063 - ------------------------------------------------------------ Accrued transfer agent fees 367,018 - ------------------------------------------------------------ Accrued operating expenses 742,365 - ------------------------------------------------------------ Total liabilities 61,325,512 - ------------------------------------------------------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING $2,269,027,764 ============================================================ NET ASSETS: Class A $1,577,389,921 ============================================================ Class B $ 678,808,929 ============================================================ Class C $ 12,828,914 ============================================================ CAPITAL STOCK, $.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 94,802,921 ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 41,731,824 ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 788,620 ============================================================ Class A: NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 16.64 ============================================================ OFFERING PRICE PER SHARE: (Net asset value of $16.64 divided by 94.50%) $ 17.61 ============================================================ Class B: NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 16.27 ============================================================ Class C: NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 16.27 ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1997 INVESTMENT INCOME: Dividends (net of $4,176,776 foreign withholding tax) $ 29,139,495 - ----------------------------------------------------------- Interest 4,617,214 - ----------------------------------------------------------- Total investment income 33,756,709 - ----------------------------------------------------------- EXPENSES: Advisory fees 18,284,107 - ----------------------------------------------------------- Administrative services fees 105,163 - ----------------------------------------------------------- Directors' fees 20,121 - ----------------------------------------------------------- Distribution fees-Class A 4,249,575 - ----------------------------------------------------------- Distribution fees-Class B 5,581,303 - ----------------------------------------------------------- Distribution fees-Class C 13,568 - ----------------------------------------------------------- Custodian fees 1,521,866 - ----------------------------------------------------------- Transfer agent fees-Class A 2,237,953 - ----------------------------------------------------------- Transfer agent fees-Class B 1,303,468 - ----------------------------------------------------------- Transfer agent fees-Class C 5,037 - ----------------------------------------------------------- Other 882,828 - ----------------------------------------------------------- Total expenses 34,204,989 - ----------------------------------------------------------- Less: Advisory fees waived (738,005) - ----------------------------------------------------------- Expenses paid indirectly (38,529) - ----------------------------------------------------------- Net expenses 33,428,455 - ----------------------------------------------------------- Net investment income 328,254 - ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on sales of: Investment securities (14,679,896) - ----------------------------------------------------------- Foreign currencies (1,876,119) - ----------------------------------------------------------- (16,556,015) - ----------------------------------------------------------- Net unrealized appreciation of: Investment securities 192,756,147 - ----------------------------------------------------------- Foreign currencies 438,913 - ----------------------------------------------------------- 193,195,060 - ----------------------------------------------------------- Net gain on investment securities and foreign currencies 176,639,045 - ----------------------------------------------------------- Net increase in net assets resulting from operations $176,967,299 ===========================================================
See Notes to Financial Statements. FS-53 219 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1997 and 1996
1997 1996 OPERATIONS: Net investment income $ 328,254 $ 1,130,094 - ----------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies (16,556,015) 43,829,404 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and foreign currencies 193,195,060 98,461,748 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 176,967,299 143,421,246 - ----------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income: Class A (1,250,230) (295,965) - ----------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A (31,812,536) (18,468,041) - ----------------------------------------------------------------------------------------------- Class B (11,361,858) (1,875,276) - ----------------------------------------------------------------------------------------------- Share transactions-net: Class A 363,888,653 350,398,961 - ----------------------------------------------------------------------------------------------- Class B 282,384,176 296,841,074 - ----------------------------------------------------------------------------------------------- Class C 13,462,792 -- - ----------------------------------------------------------------------------------------------- Net increase in net assets 792,278,296 770,021,999 - ----------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 1,476,749,468 706,727,469 - ----------------------------------------------------------------------------------------------- End of period $2,269,027,764 $1,476,749,468 - ----------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $1,897,861,942 $1,238,126,321 - ----------------------------------------------------------------------------------------------- Undistributed net investment income 5,863,515 1,113,111 - ----------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities and foreign currencies (22,453,519) 42,949,270 - ----------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 387,755,826 194,560,766 - ----------------------------------------------------------------------------------------------- $2,269,027,764 $1,476,749,468 ===============================================================================================
NOTES TO FINANCIAL STATEMENTS October 31, 1997 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 operating series portfolios: AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares are sold with a contingent deferred sales charge. Class C shares commenced sales August 4, 1997. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is to provide long-term growth of capital. The Fund seeks to achieve its objective by investing in a diversified portfolio of international equity securities, the issuers of which are considered by AIM to have strong earnings momentum. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations-A security listed or traded on an exchange (except convertible bonds) is 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. 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 last bid and asked prices based upon quotes furnished by market makers for such securities. Securities reported on the NASDAQ National Market System are valued at FS-54 220 the last sales price on the valuation date or absent a last sales price, at the mean of the closing bid and asked prices. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors, such as yield, type of issue, coupon rate and maturity date. Securities for which market quotations are either not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in 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 would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Foreign Currency Translations--Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the 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 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 forward 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. 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, 1997, undistributed net investment income was increased by $5,672,380 and undistributed net realized gains decreased by $5,672,380 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. The Fund has a capital loss carryforward of $14,969,471 (which may be carried forward to offset future capital gains, if any) which expires, if not previously utilized, through the year 2005. F. Expenses--Distribution and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated between the classes. 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. Under the voluntary waiver, 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 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, 1997, AIM waived fees of $738,005. 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, 1997, AIM was reimbursed $105,163 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, 1997, AFS was paid $1,774,819 for such services. The Company has entered into a master distribution agreement with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class A, Class B and Class C shares of the Fund. The Company has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares and Class C shares (the "Class A and Class C Plan"), and the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the Class A Plan and Class C Plan, pays AIM Distributors compensation at the annual rate of 0.30% of the average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Class A Plan and the Class C Plan are designed to compensate AIM Distributors for certain promotional and other sales related costs, and to FS-55 221 implement a dealer incentive program which provides periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors 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, 1997, the Class A shares and Class B shares, and the period August 4, 1997 through October 31, 1997 the Class C shares paid AIM Distributors $4,249,575, $5,581,303 and $13,568, respectively, as compensation under the Plans. AIM Distributors received commissions of $1,172,508 from sales of the Class A shares of the Fund during the year ended October 31, 1997. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1997, AIM Distributors received commissions of $91,984 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, 1997, the Fund incurred legal fees of $9,514 for services rendered by the law firm of Kramer, Levin, Naftalis & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES AIM has directed certain portfolio trades to brokers who paid a portion of the Fund's expenses related to pricing services used by the Fund. For the year ended October 31, 1997, the Fund's expenses were reduced by $7,691. The Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $25,598 and $5,240, respectively, under expense offset arrangements. The effect of the above arrangements resulted in reductions of the Fund's total expenses of $38,529 during the year ended October 31, 1997. NOTE 4-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 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. Interest on borrowings under the line of credit is payable on maturity or prepayment date. Prior to an amendment of the line of credit on July 15, 1997, the Fund was limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by its prospectus for borrowings. During the year ended October 31, 1997, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.05% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1997 was $1,525,690,965 and $943,814,904, respectively. The amount of unrealized appreciation (depreciation) of investment securities, on a tax basis, as of October 31, 1997 is as follows: Aggregate unrealized appreciation of investment securities $463,067,699 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (82,747,088) - --------------------------------------------------------- Net unrealized appreciation of investment securities $380,320,611 ========================================================= Cost of investments for tax purposes is $1,843,669,831.
NOTE 7-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the years ended October 31, 1997 and 1996 were as follows:
1997 1996 ------------------------------ --------------------------- SHARES AMOUNT SHARES AMOUNT ------------ --------------- ----------- ------------- Sold: Class A 105,291,824 $ 1,764,668,535 41,055,911 $ 601,559,902 - ----------------------------------------------------------------------------------- Class B 21,599,075 352,871,134 21,641,528 313,690,762 - ----------------------------------------------------------------------------------- Class C* 1,372,281 23,795,456 -- -- - ----------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 2,035,986 31,231,975 1,305,811 17,576,215 - ----------------------------------------------------------------------------------- Class B 707,879 10,688,975 130,593 1,741,975 - ----------------------------------------------------------------------------------- Class C* -- -- -- -- - ----------------------------------------------------------------------------------- Reacquired: Class A (84,633,652) (1,432,011,857) (18,205,834) (268,737,156) - ----------------------------------------------------------------------------------- Class B (4,913,096) (81,175,933) (1,270,776) (18,591,663) - ----------------------------------------------------------------------------------- Class C* (583,661) (10,332,664) -- -- - ----------------------------------------------------------------------------------- 40,876,636 $ 659,735,621 44,657,233 $ 647,240,035 ===================================================================================
* Class C commenced sales on August 4, 1997. FS-56 222 NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a Class A share outstanding during each of the years in the five-year period ended October 31, 1997, for a Class B share outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (date sales commenced) through October 31, 1994, and for a Class C share outstanding for the period August 4, 1997 (date sales commenced) through October 31, 1997.
1997 1996 1995 1994 1993 ----------- ----------- --------- --------- --------- CLASS A: Net asset value, beginning of period $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88 - -------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04(a) 0.04(a) 0.01 0.02 0.02 - -------------------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 1.68 2.07 0.62 1.31 3.29 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.72 2.11 0.63 1.33 3.31 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.02) (0.01) (0.04) (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.43) (0.38) (0.44) -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (0.45) (0.39) (0.48) (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18 ================================================================================================================================ Total return(b) 11.43% 15.79% 5.24% 10.94% 37.36% ================================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,577,390 $ 1,108,395 $ 654,764 $ 708,159 $ 372,282 ================================================================================================================================ Ratio of expenses to average net assets(c) 1.47%(d)(e) 1.58% 1.67% 1.64% 1.78% ================================================================================================================================ Ratio of net investment income to average net assets(f) 0.24%(d) 0.25% 0.10% 0.22% 0.28% ================================================================================================================================ Portfolio turnover rate 50% 66% 68% 67% 62% ================================================================================================================================ Average brokerage commission rate(g) $ 0.0168 $ 0.0192 N/A N/A N/A ================================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements are 1.51%, 1.60% and 1.68, respectively for 1997-1995. (d) Ratios are based on average net assets of $1,416,524,861. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements are 0.20%, 0.22% and 0.09%, respectively for 1997-1995. (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter.
1997 1996 1995 1994 --------- --------- --------- --------- CLASS B: Net asset value, beginning of period $ 15.13 $ 13.54 $ 13.49 $ 13.42 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.09)(a) (0.07)(a) (0.09) (0.01) - -------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 1.66 2.04 0.61 0.08 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.57 1.97 0.52 0.07 - -------------------------------------------------------------------------------------------------------------------- Less distributions: Dividends from net investment income -- -- (0.03) -- - -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.43) (0.38) (0.44) -- - -------------------------------------------------------------------------------------------------------------------- Total distributions (0.43) (0.38) (0.47) -- - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 16.27 $ 15.13 $ 13.54 $ 13.49 ==================================================================================================================== Total return(b) 10.61% 14.88% 4.35% 0.52% ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 678,809 $ 368,355 $ 51,964 $ 4,833 ==================================================================================================================== Ratio of expenses to average net assets(c) 2.25%(d)(e) 2.35% 2.55% 2.53%(f) ==================================================================================================================== Ratio of net investment income (loss) to average net assets(g) (0.53)%(d) (0.53)% (0.78)% (0.67)%(f) ==================================================================================================================== Portfolio turnover rate 50% 66% 68% 67% ==================================================================================================================== Average brokerage commission rate(h) $ 0.0168 $ 0.0192 N/A N/A ====================================================================================================================
(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) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements are 2.28%, 2.37% and 2.56%, respectively for 1997-1995. (d) Ratios are based on average net assets of $558,130,289. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been 2.24%. (f) Annualized. (g) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements are (0.57)%, (0.55)% and (0.79)%, respectively for 1997-1995. (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. FS-57 223
1997 -------- CLASS C: Net asset value, beginning of period $ 17.64 - ---------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.02)(a) - ---------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.35) - ---------------------------------------------------------------------- Total from investment operations (1.37) - ---------------------------------------------------------------------- Less distributions: Dividends from net investment income -- - ---------------------------------------------------------------------- Distributions from net realized gains -- - ---------------------------------------------------------------------- Total distributions -- - ---------------------------------------------------------------------- Net asset value, end of period $ 16.27 ====================================================================== Total return(b) (7.77)% ====================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 12,829 ====================================================================== Ratio of expenses to average net assets(c) 2.27%(d)(e) ====================================================================== Ratio of net investment income (loss) to average net assets(f) (0.55)%(d) ====================================================================== Portfolio turnover rate 50% ====================================================================== Average brokerage commission rate(g) $ 0.0168 ======================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and for periods less than one year, total return is not annualized. (c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 2.30% (annualized). (d) Ratio is annualized and based on average net assets of $5,564,501. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been 2.26%. (f) After fee waivers and/or expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (0.59)% (annualized). (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. FS-58 224 PART C OTHER INFORMATION Item 24. (a) Financial Statements: (1) Class A shares, Class B shares and Class C shares of AIM Asian Growth Fund In Part A: None In Part B: None (2) Class A shares, Class B shares and Class C shares of AIM European Development Fund In Part A: None In Part B: None (3) 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 In Part A: Financial Highlights In Part B: (1) Reports of Independent Auditors (2) Schedules of Investments as of October 31, 1997 (audited) (3) Statements of Assets and Liabilities as of October 31, 1997 (audited) (4) Statements of Operations for the year ended October 31, 1997 (audited) (5) Statements of Changes in Net Assets for the years ended October 31, 1997 and 1996 (audited) (4) Class C shares of AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund and 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, 1997 (audited) (3) Statement of Assets and Liabilities as of October 31, 1997 (audited) (4) Statement of Operations for the period August 4, 1997 (date sales commenced) to October 31, 1997 (audited) (5) Statement of Changes in Net Assets for the period August 4, 1997 (dated sales commenced) to October 31, 1997 (audited) ---------------------- C-1 225 (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, were filed electronically as an Exhibit to Post- Effective Amendment No. 9 on February 28, 1996. (g) - Articles of Restatement, dated November 14, 1994, were filed electronically as an Exhibit to Post- Effective Amendment No. 9 on February 28, 1996, and are hereby incorporated by reference. (h) - Articles Supplementary to Articles of Incorporation of Registrant, dated June 12, 1997, were filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997, and are hereby incorporated by reference. (i) - Articles of Amendment to Articles of Incorporation of Registrant, dated October 14, 1997, were filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and are hereby incorporated by reference. (2) (a) - By-Laws of Registrant were filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and were filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (b) - First Amendment, dated March 14, 1995, to By-Laws of Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (c) - Amended and Restated By-Laws, dated effective December 11, 1996, were filed electronically as an Exhibit to Post-Effective Amendment No. 10 on February 24, 1997, and are hereby incorporated by reference. (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 C-2 226 Fund were filed as Exhibits to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and were filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and are hereby incorporated by reference. (5) (a) - (1) 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. (2) 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 was filed electronically as an Exhibit to Post- Effective Amendment No. 9 on February 28, 1996. (3) 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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (4) Master Investment Advisory Agreement, dated February 28, 1997, between A I M Advisors, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997, and is hereby incorporated by reference. (5) Amendment No. 1, dated as of November 1, 1997, to Master Investment Advisory Agreement, dated February 28, 1997, between A I M Advisors, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (b) - (1) Master Sub-Advisory Agreement, dated as of November 1, 1997, between A I M Advisors, Inc. and INVESCO Global Asset Management Limited was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (2) Sub-Sub-Advisory Agreement, dated as of November 1, 1997, between INVESCO Global Asset Management Limited and INVESCO Asset Management Limited was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (3) Sub-Sub-Advisory Agreement, dated as of November 1, 1997, between INVESCO Global Asset Management Limited and INVESCO Asia Limited was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (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 C-3 227 Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (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. - (6) (i) Master Distribution Agreement, dated February 28, 1997, between Registrant (on behalf of the portfolios' Class A shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997. - (7) (i) Master Distribution Agreement, dated February 28, 1997, between Registrant (on behalf of the portfolios' Class B shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997, and is hereby incorporated by reference. - (7) (ii)Amendment No. 1, dated November 1, 1997, to Master Distribution Agreement between Registrant (on behalf of the portfolios' Class B shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (8) (i) Amended and Restated Master Distribution Agreement, dated as of August 4, 1997, between Registrant (on behalf of the portfolios' Class A and Class C shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (8) (ii)Amendment No. 1, dated November 1, 1997, to Amended and Restated Master Distribution Agreement, dated as of August 4, 1997, (on behalf of the portfolios' Class A and Class C shares) was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (b) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers is filed herewith electronically. (c) - Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks is filed herewith electronically. (7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's Post- Effective Amendment No. 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, was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996 and is hereby incorporated by reference. (c) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994. C-4 228 (d) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors as approved December 5, 1995, was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (e) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Director's as approved March 12, 1997, 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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (c) - Amendment No. 2, dated September 19, 1995, to the Custodian Contract, dated November 8, 1991, was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (d) - Amendment No. 3, dated November 1, 1997, to the Custodian Contract, dated November 8, 1991, between Registrant and State Street Bank and Trust Company was filed electronically as an Exhibit to Post- Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (e) - Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas Commerce Bank National Association, State Street Bank and Trust Company, A I M Fund Services, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (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) (i) 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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. C-5 229 - (5) (ii)Amendment No. 1, dated August 4, 1997, to the Transfer Agency and Service Agreement, dated as of November 1, 1994, between the Registrant and A I M Fund Services, Inc., was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (6) (i) 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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (6) (ii)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.) was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (6) (iii)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.) was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (6)(iv) Amendment No. 3, dated as of February 1, 1997, 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.) was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997, and is hereby incorporated by reference. - (6)(v) Preferred Registration Technology Escrow Agreement, dated September 10, 1997, between Registrant and First Data Investor 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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (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. C-6 230 - (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. - (5) (i) Administrative Services Agreement, dated as of February 28, 1997, between A I M Advisors, Inc. and Registrant was filed as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997, and is hereby incorporated by reference. - (5) (ii)Amendment No. 1, dated November 1, 1997, to Master Administrative Services Agreement, dated February 28, 1997, between A I M Advisors, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (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, and was filed electronically as an Exhibit to Post-Effective Amendment No. 10 on February 24, 1997, and is hereby incorporated by reference. - (3) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated as of November 1, 1997, among the Registrant, First Data Investor Services Group, Inc., Financial Data Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post- Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. C-7 231 (10) - Opinion and Consent of Ballard Spahr Andrews & Ingersoll relating to AIM Asian Growth Fund and AIM European Development Fund was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (11) (a) - Consent of KPMG Peat Marwick LLP is filed herewith electronically. (b) - Consent of Ballard Spahr Andrews & Ingersoll LLP, is filed herewith electronically. (12) - Financial Statements - None. (13) (a) - (1) Agreement Concerning Initial Capitalization of the Registrant's AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund, dated as of July 1, 1994, was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (2) Agreement concerning Initial Capitalization of the Registrant's AIM Asian Growth Fund and AIM European Development Fund, dated November 3, 1997, 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. - (2) Revised Form of Registrant's IRA Documents was filed as Post-Effective Amendment No. 2 on August 16, 1993. - (3) Forms of Registrant's IRA Documents are filed herewith electronically. (b) - (1) 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. - (2) Forms of Registrant's Simplified Employee Pension Plan and Salary Reduction Simplified Employee Pension Plan Documents are filed herewith electronically. (c) - (1) 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. - (2) Forms of Registrant's Money Purchase Pension and Profit Sharing Plan Document, Trust Agreement, Adoption Agreements, Summary Plan Descriptions and Applications are filed herewith electronically. (d) - (1) Revised Form of Registrant's 403(b) Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997. - (2) Forms of Registrant's 403(b) Plan Documents are filed herewith electronically. (e) - Forms of Registrant's SIMPLE IRA are filed herewith electronically. (f) - Forms of Registrant's Roth IRA are filed herewith electronically. C-8 232 (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. - (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. - (8) Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended as of September 10, 1994, and amended and restated as of June 30, 1997, for Registrant's Class A shares was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997. - (9)(i) Second Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended September 10, 1994, and as amended and restated as of May 2, 1995, and amended and restated as of June 30, 1997, for Registrant's Class B shares was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997, and is hereby incorporated by reference. - (9)(ii) Amendment No. 1, dated November 1, 1997, to Second Amended and Restated Master Distribution Plan for Registrant's Class B shares was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (10)(i) Second Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended as of September 10, 1994, as amended and restated as of June 30, 1997, and as amended and restated as of August 4, 1997, for Registrant's Class A and Class C shares was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (10)(ii) Amendment No. 1, dated November 1, 1997, to Second Amended and Restated Master Distribution Plan for Registrant's Class A and Class C shares was filed electronically C-9 233 as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (b) - Form of Shareholder Service Agreement to be used in connection with Registrant's Master Distribution Plan is filed herewith electronically. (c) - Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master Distribution Plan is filed herewith electronically. (d) - (1) Form of Agency Pricing Agreement (for Class A Shares) to be used in connection with Registrant's Master Distribution Plan is filed herewith electronically. - (2) Form of Service Agreement for Certain Retirement Plans (for the Institutional Classes) to be used in connection with Registrant's Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (e) - Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments to be used in connection with Registrant's Master Distribution Plan are filed herewith electronically. (f) - Form of Variable Group Annuity Contractholder Service Agreement to be used in connection with Registrant's Master Distribution Plan is filed herewith electronically. (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and hereby incorporated by reference. (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 was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (18) (a) - Amended and Restated Multiple Class Plan (Rule 18f-3 Plan), effective as of July 1, 1997, was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 12, 1997. (b) - Second Amended and Restated Multiple Class Plan (Rule 18f-3 Plan), effective September 1, 1997, was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (27) - Financial Data Schedule is filed herewith electronically. Item 25. Persons Controlled by or under Common Control with Registrant Furnish a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant and as to each such person indicate (1) if a company the state or other sovereign power under the laws of which it is organized, and (2) the percentage of voting securities owned or other basis of control by the person, if any, immediately controlling it. Not Applicable C-10 234 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 2, 1998 ------------------------------------ Title of Class Class A Class B Class C -------------- ------- ------- ------- AIM Asian Growth Fund 169 49 3 AIM European Development Fund 135 28 2 AIM Global Aggressive Growth Fund 119,096 114,116 800 AIM Global Growth Fund 16,397 19,966 192 AIM Global Income Fund 2,667 2,413 36 AIM International Equity Fund 79,860 49,666 653
Item 27. Indemnification State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified in any manner against any liability which may be incurred in such capacity, other than insurance provided by any director, officer, affiliated person or underwriter for their own protection. Pursuant to the Maryland General Corporation Law and the Registrant's Charter and By-Laws, the Registrant may indemnify any person who was or is a director, officer, employee or agent of the Registrant to the maximum extent permitted by the Maryland General Corporation Law. The specific terms of such indemnification are reflected in the Registrant's Charter and By-Laws, which are incorporated herein as part of this Registration Statement. No indemnification will be provided by the Registrant to any director or officer of the Registrant for any liability to 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 $25,000,000 limit of liability. C-11 235 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 Advisor Funds, Inc. 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. (b)
Name and Principal Position and 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 John Caldwell Senior Vice President None Marilyn M. Miller Senior Vice President None James L. Salners Senior Vice President None
- ----------- * 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 C-12 236
Name and Principal Position and Offices Position and Offices Business Address* with Principal Underwriter with Registrant - ---------------- -------------------------- --------------- Gordon J. Sprague Senior Vice President None Michael C. Vessels Senior Vice President None B. J. Thompson First Vice President None Kathleen J. Pflueger Secretary Assistant Secretary John J. Arthur Vice President & Treasurer Senior Vice President & Treasurer Ofelia M. Mayo Vice President, Assistant Assistant Secretary Secretary & General Counsel Melville B. Cox Vice President & Vice President Chief Compliance Officer James R. Anderson Vice President None Mary K. Coleman Vice President None Charles R. Dewey Vice President None Sidney M. Dilgren Vice President None Tony D. Green Vice President None William H. Kleh Vice President None Terri L. Ransdell Vice President None Carol F. Relihan Vice President Senior Vice President & Secretary Kamala C. Sachidanandan Vice President None Frank V. Serebrin Vice President None Christopher T. Simutis Vice President None Robert D. Van Sant, Jr. Vice President None Gary K. Wendler Vice President None
- ------------- * 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 C-13 237
Name and Principal Position and Offices Position and Offices Business Address* with Principal Underwriter with Registrant - ---------------- -------------------------- --------------- David E. Hessel Assistant Vice President, None Controller & Assistant Treasurer Luke P. Beausoleil Assistant Vice President None Tisha B. Christopher Assistant Vice President None Glenda A. Dayton Assistant Vice President None Kathleen M. Douglas Assistant Vice President None Terri L. Fiedler Assistant Vice President None Mary E. Gentempo Assistant Vice President None Jeffrey L. Horne Assistant Vice President None Melissa E. Hudson Assistant Vice President None Jodie L. Johnson Assistant Vice President None Kathryn A. Jordan Assistant Vice President None Kim T. Lankford Assistant Vice President None Wayne W. LaPlante Assistant Vice President None Ivy B. McLemore Assistant Vice President None David B. O'Neil Assistant Vice President None Patricia M. Shyman Assistant Vice President None Nicholas D. White Assistant Vice President None Norman W. Woodson Assistant Vice President None 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
- ----------- * 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 C-14 238 (c) Not Applicable Item 30. Location of Accounts and Records With respect to each account, book or other document required to be maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder, furnish the name and address of each person maintaining physical possession of each such account, book or other document. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, maintains physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian, 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 or Part B of this Form (because the contract was not believed to be of interest to a purchaser of securities of the Registrant) under which services are provided to the Registrant, indicating the parties to the contract, the total dollars paid and by whom, for the last three fiscal years. Not Applicable Item 32. Undertakings (b) The Registrant undertakes to file a post-effective amendment, using financial statements which need not be certified, within four to six months from the actual date AIM Asian Growth Fund and AIM European Development Fund shares are sold to the public. (c) 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-15 239 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 20th day of February, 1998. 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 20, 1998 (Charles T. Bauer) /s/ ROBERT H. GRAHAM ------------------------------------- Director & President (Robert H. Graham) (Principal Executive Officer) February 20, 1998 /s/ BRUCE L. CROCKETT ------------------------------------- Director February 20, 1998 (Bruce L. Crockett) /s/ OWEN DALY II ------------------------------------- Director February 20, 1998 (Owen Daly II) /s/ JACK FIELDS -------------------------------------- Director February 20, 1998 (Jack Fields) /s/ CARL FRISCHLING ------------------------------------- Director February 20, 1998 (Carl Frischling) /s/ JOHN F. KROEGER ------------------------------------- Director February 20, 1998 (John F. Kroeger) /s/ LEWIS F. PENNOCK ------------------------------------- Director February 20, 1998 (Lewis F. Pennock) /s/ IAN W. ROBINSON ------------------------------------- Director February 20, 1998 (Ian W. Robinson) /s/ LOUIS S. SKLAR ------------------------------------- Director February 20, 1998 (Louis S. Sklar) /s/ JOHN J. ARTHUR ------------------------------------- Senior Vice President & February 20, 1998 (John J. Arthur) Treasurer (Principal Financial and Accounting Officer)
240 INDEX TO EXHIBITS
Exhibit Number Description ------ ----------- (6)(b) Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers (6)(c) Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks (7)(e) Form of Deferred Compensation Agreement for Registrant's Non- Affiliated Directors as approved on March 12, 1997 (9)(6)(v) Exhibit 1, effective as of August 4, 1997, between Registrant and First Data Investor Services Group, Inc. (9)(6)(vi) Preferred Registration, Technology Escrow Agreement, dated September 10, 1997, between Registrant and First Data Investor Services Group, Inc. (11)(a) Consent of KPMG Peat Marwick LLP (11)(b) Consent of Ballard Spahr Andrews & Ingersoll, LLP (13)(a)(2) Agreement Concerning Initial Capitalization of the Registrant's AIM Asian Growth Fund and AIM European Development Fund (14)(a)(3) Forms of Registrant's IRA Documents (14)(b)(2) Forms of the Registrant's Simplified Employee Pension Plan and Salary Reduction Simplified Employee Pension Plan Documents (14)(c)(2) Forms of Registrant's Money Purchase Pension and Profit Sharing Plan Document, Trust Agreement, Adoption Agreements, Summary Plan Descriptions and Applications (14)(d)(2) Forms of Registrant's 403(b) Plan Documents (14)(e) Forms of Registrant's SIMPLE IRA Documents (14)(f) Forms of Registrant's Roth IRA Documents (15)(b) Form of Shareholder Service Agreement (15)(c) Form of Bank Shareholder Service Agreement (15)(d)(1) Form of Agency Pricing Agreement (for Class A Shares) (15)(e) Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments (15)(f) Form of Variable Group Annuity Contractholder Service Agreement (27) Financial Data Schedule
EX-99.B6.B 2 SELECTED DEALER AGREEMENT 1 EXHIBIT 6(b) [AIM LOGO APPEARS HERE] A I M DISTRIBUTORS, INC. SELECTED DEALER AGREEMENT FOR INVESTMENT COMPANIES MANAGED BY A I M ADVISORS, INC. TO THE UNDERSIGNED SELECTED DEALER: Gentlemen: A I M Distributors, Inc., as the exclusive national distributor of shares of the common stock (the "Shares") of the registered investment companies listed on Schedule A attached hereto which may be amended from time to time by us (the "Funds"), understands that you are a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that you agree to abide by all of the rules and regulations of the NASD for purposes of this Agreement (which you confirm by your signature below). In consideration of the mutual covenants stated below, you and we hereby agree as follows: 1 Sales of Shares through you will be at the public offering price of such Shares (the net asset value of the Shares plus any sales charge applicable to such Shares), as determined in accordance with the then effective prospectus used in connection with the offer and sale of Shares (the "Prospectus"), which public offering price may reflect scheduled variations in, or the elimination of, the Sales Charge on sales of the Funds' Shares either generally to the public or in connection with special purchase plans, as described in the Prospectus. You agree that you will apply any scheduled variation in, or elimination of, the Sales Charge uniformly to all offerees in the class specified in the Prospectus. 2 You agree to purchase Shares solely through us and only for the purpose of covering purchase orders already received from customers or for your own bona fide investment. You agree not to purchase for any other securities dealer unless you have an agreement with such other dealer or broker to handle clearing arrangements and then only in the ordinary course of business for such purpose and only if such other dealer has executed a Selected Dealer Agreement with us. You also agree not to withhold any customer order so as to profit therefrom. 3 The procedures relating to the handling of orders shall be subject to instructions which we will forward from time to time to all selected dealers with whom we have entered into a Selected Dealer Agreement. The minimum initial order shall be specified in the Funds' then current prospectuses. All purchase orders are subject to receipt of Shares by us from the Funds concerned and to acceptance of such orders by us. We reserve the right in our sole discretion to reject any order. 4 With respect to the Funds the Shares of which are indicated on the attached Schedule as being sold with a Sales Charge (the "Load Funds"), you will be allowed the concessions from the public offering price provided in the Load Funds' prospectus. With respect to the Funds, the Shares of which are indicated on the attached Schedule A as being sold with a contingent deferred sales charge (the "CDSC Funds"), you will be paid a commission or concession as disclosed in the CDSC Fund's then current prospectus. With respect to the Funds whose Shares are indicated on the attached Schedule as being sold without a Sales Charge or a contingent deferred sales charge (the "No-Load Funds"), you may charge a reasonable administrative fee. For the purpose of this Agreement the terms "Sales Charge" and "Dealer Commission" apply only to the Load Funds and the CDSC Funds. All commissions and concessions are subject to change without notice by us and will comply with any changes in regulatory requirements. You agree that you will not combine customer orders to reach breakpoints in commissions for any purpose whatsoever unless authorized by the Prospectus or by us in writing. 5 You agree that your transactions in shares of the Funds will be limited to (a) the purchase of Shares from us for resale to your customers at the public offering price then in effect or for your own bona fide investment, (b) exchanges of Shares between Funds, as permitted by the Funds' then current registration statement (which includes the Prospectus) and in accordance with procedures as they may be modified by us from time to time, and (c) transactions involving the redemption of Shares by a Fund or the repurchase of Shares by us as an accommodation to shareholders. Redemptions by a Fund and repurchases by us will be effected in the manner and upon the terms described in the Prospectus. We will, upon your request, assist you in processing such orders for redemptions or repurchases. To facilitate prompt payment following a redemption or repurchase of Shares, the owner's signature shall appear as registered on the Funds' records and, as described in the Prospectus, it may be required to be guaranteed by a commercial bank, trust company or a member of a national securities exchange. 7/97 2 6 Sales and exchanges of Shares may only be made in those states and jurisdictions where the Shares are registered or qualified for sale to the public. We agree to advise you currently of the identity of those states and jurisdictions in which the Shares are registered or qualified for sale, and you agree to indemnify us and/or the Funds for any claim, liability, expense or loss in any way arising out of a sale of Shares in any state or jurisdiction in which such Shares are not so registered or qualified. 7 We shall accept orders only on the basis of the then current offering price. You agree to place orders in respect of Shares immediately upon the receipt of orders from your customers for the same number of shares. Orders which you receive from your customers shall be deemed to be placed with us when received by us. Orders which you receive prior to the close of business, as defined in the Prospectus, and placed with us within the time frame set forth in the Prospectus shall be priced at the offering price next computed after they are received by you. We will not accept from you a conditional order on any basis. All orders shall be subject to confirmation by us. 8 Your customer will be entitled to a reduction in the Sales Charge on purchases made under a Letter of Intent or Right of Accumulation described in the Prospectus. In such case, your Dealer's Concession will be based upon such reduced Sales Charge; however, in the case of a Letter of Intent signed by your customer, an adjustment to a higher Dealer's Concession will thereafter be made to reflect actual purchases by your customer if he should fail to fulfil his Letter of Intent. When placing wire trades, you agree to advise us of any Letter of Intent signed by your customer or of any Right of Accumulation available to him of which he has made you aware. If you fail to so advise us, you will be liable to us for the return of any commissions plus interest thereon. 9 You and we agree to abide by the Rules of Fair Practice of the NASD and all other federal and state rules and regulations that are now or may become applicable to transactions hereunder. Your expulsion from the NASD will automatically terminate this Agreement without notice. Your suspension from the NASD or a violation by you of applicable state and federal laws and rules and regulations of authorized regulatory agencies will terminate this Agreement effective upon notice received by you from us. You agree that it is your responsibility to determine the suitability of any Shares as investments for your customers, and that AIM Distributors has no responsibility for such determination. 10 With respect to the Load Funds and the CDSC Funds, and unless otherwise agreed, settlement shall be made at the offices of the Funds' transfer agent within three (3) business days after our acceptance of the order. With respect to the No-Load Funds, settlement will be made only upon receipt by the Fund of payment in the form of federal funds. If payment is not so received or made within ten (10) business days of our acceptance of the order, we reserve the right to cancel the sale or, at our option, to sell the Shares to the Funds at the then prevailing net asset value. In this event, or in the event that you cancel the trade for any reason, you agree to be responsible for any loss resulting to the Funds or to us from your failure to make payments as aforesaid. You shall not be entitled to any gains generated thereby. 11 If any Shares of any of the Load Funds sold to you under the terms of this Agreement are redeemed by the Fund or repurchased for the account of the Funds or are tendered to the Funds for redemption or repurchase within seven (7) business days after the date of our confirmation to you of your original purchase order therefore, you agree to pay forthwith to us the full amount of the concession allowed to you on the original sale and we agree to pay such amount to the Fund when received by us. We also agree to pay to the Fund the amount of our share of the Sales Charge on the original sale of such Shares. 12 Any order placed by you for the repurchase of Shares of a Fund is subject to the timely receipt by the Fund's transfer agent of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation, in which case you agree to be responsible for any loss resulting to the Fund or to us from such cancellation. 13 We reserve the right in our discretion without notice to you to suspend sales or withdraw any offering of Shares entirely, to change the offering prices as provided in the Prospectus or, upon notice to you, to amend or cancel this Agreement. You agree that any order to purchase Shares of the Funds placed by you after notice of any amendment to this Agreement has been sent to you shall constitute your agreement to any such amendment. 14 In every transaction, we will act as agent for the Fund and you will act as principal for your own account. You have no authority whatsoever to act as our agent or as agent for the Funds, any other Selected Dealer or the Funds' transfer agent and nothing in this Agreement shall serve to appoint you as an agent of any of the foregoing in connection with transactions with your customers or otherwise. 15 No person is authorized to make any representations concerning the Funds or their Shares except those contained in the Prospectus and any such information as may be released by us as information supplemental to the Prospectus. If you should make such unauthorized representation, you agree to indemnify the Funds and us from and against any and all claims, liability, expense or loss in any way arising out of or in any way connected with such representation. 7/97 3 16 We will supply you with copies of the Prospectuses and Statements of Additional Information of the Funds (including any amendments thereto) in reasonable quantities upon request. You will provide all customers with a Prospectus prior to or at the time such customer purchases Shares. You will provide any customer who so requests a copy of the Statement of Additional Information on file with the U.S. Securities and Exchange Commission. 17 You shall be solely responsible for the accuracy, timeliness and completeness of any orders transmitted by you on behalf of your customers by wire or telephone for purchases, exchanges or redemptions, and shall indemnify us against any claims by your customers as a result of your failure to properly transmit their instructions. 18 No advertising or sales literature, as such terms are defined by the NASD, of any kind whatsoever will be used by you with respect to the Funds or us unless first provided to you by us or unless you have obtained our prior written approval. 19 All expenses incurred in connection with your activities under this Agreement shall be borne by you. 20 This Agreement shall not be assignable by you. This Agreement shall be constructed in accordance with the laws of the State of Texas. 21 Any notice to you shall be duly given if mailed or telegraphed to you at your address as registered from time to time with the NASD. 22 This Agreement constitutes the entire agreement between the undersigned and supersedes all prior oral or written agreements between the parties hereto. A I M DISTRIBUTORS, INC. Date: By: X ------------------ --------------------------------------- The undersigned accepts your invitation to become a Selected Dealer and agrees to abide by the foregoing terms and conditions. The undersigned acknowledges receipt of prospectuses for use in connection with offers and sales of the Funds. Date: By: X ------------------ -------------------------------------- Signature -------------------------------------- Print Name Title -------------------------------------- Dealer's Name -------------------------------------- Address -------------------------------------- City State Zip Please sign both copies and return one copy of each to: A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 7/97 4 [AIM LOGO APPEARS HERE] A I M DISTRIBUTORS, INC. SCHEDULE "A" TO SELECTED DEALER AGREEMENT
Shares Sold Shares Sold Fund With Sales Charges* With CDSC** - -------------------------------------------------------------------------------- AIM Advisor Flex Fund Yes Yes AIM Advisor International Value Fund Yes Yes AIM Advisor Large Cap Value Fund Yes Yes AIM Advisor MultiFlex Fund Yes Yes AIM Advisor Real Estate Fund Yes Yes AIM Aggressive Growth Fund Yes No AIM Asian Growth Fund Yes Yes AIM Balanced Fund Yes Yes AIM Blue Chip Fund Yes Yes AIM Capital Development Fund Yes Yes AIM Charter Fund Yes Yes AIM Constellation Fund Yes Yes AIM European Development Fund Yes Yes AIM Global Aggressive Growth Fund Yes Yes AIM Global Growth Fund Yes Yes AIM Global Income Fund Yes Yes AIM Global Utilities Fund Yes Yes AIM Growth Fund Yes Yes AIM High Yield Fund Yes Yes AIM Income Fund Yes Yes AIM Intermediate Government Fund Yes Yes AIM International Equity Fund Yes Yes AIM Limited Maturity Treasury Shares Yes No AIM Money Market Fund Yes Yes AIM Cash Reserve Shares No No AIM Municipal Bond Fund Yes Yes AIM Tax-Exempt Bond Fund of Connecticut Yes No AIM Tax-Exempt Cash Fund No No AIM Tax-Free Intermediate Fund Yes No
10/97 5 Shares Sold Shares Sold Fund With Sales Charges* With CDSC** - -------------------------------------------------------------------------------- AIM Value Fund Yes Yes AIM Weingarten Fund Yes Yes
A I M Distributors may from time to time make payments of finders fees or sponsor other incentive programs as described in the applicable fund prospectus and statement of additional information, which are incorporated herein by reference as they may be amended from time to time. *Trades at $1 million and over breakpoint automatically subject to CDSC with exception of AIM Advisor Cash Fund, AIM Cash Reserve Shares, AIM Limited Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund. **For all Funds sold with CDSC (includes Class B and Class C shares). A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 10/97 EX-99.B6.C 3 FORM OF BANK SELLING GROUP AGREEMENT 1 EXHIBIT 6(c) [AIM LOGO APPEARS HERE] A I M DISTRIBUTORS, INC. BANK ACTING AS AGENT FOR ITS CUSTOMERS Agreement Relating to Shares of AIM Family of Mutual Funds (Confirmation and Prospectus to be sent by A I M Distributors, Inc. to Customer) A I M Distributors, Inc. is the exclusive national distributor of the shares of the registered investment companies listed on Schedule A hereto which may be amended from time to time by us (the "Funds"). As exclusive agent for the Funds, we are offering to make available shares of common stock or of beneficial interest, as the case may be, of the Funds (the "Shares") for purchase by your customers on the following terms: 1 In all sales of Shares you shall act as agent for your customers, and in no transaction shall you have any authority to act as agent for any Fund or for us. 2 The customers in question are, for all purposes, your customers and not customers of A I M Distributors, Inc. In receiving orders from your customers who purchase Shares, A I M Distributors, Inc. is not soliciting such customers and, therefore, has no responsibility for determining whether Shares are suitable investments for such customers. 3 It is hereby understood that in all cases in which you place orders with us for the purchase of Shares (a) you are acting as agent for the customer; (b) the transactions are without recourse against you by the customer; (c) as between you and the customer, the customer will have full beneficial ownership of the securities; (d) each such transaction is initiated solely upon the order of the customer; and (e) each such transaction is for the account of the customer and not for your account. 4 Orders received from you will be accepted by us only at the public offering price applicable to each order, as established by the then current Prospectus of the appropriate Fund, subject to the discounts (defined below) provided in such Prospectus. Following receipt from you of any order to purchase Shares for the account of a customer, we shall confirm such order to you in writing. We shall be responsible for sending your customer a written confirmation of the order with a copy of the appropriate Fund's current Prospectus. We shall send you a copy of such confirmation. Additional instructions may be forwarded to you from time to time. All orders are subject to acceptance or rejection by us in our sole discretion. 5 Members of the general public, including your customers, may purchase Shares only at the public offering price determined in the manner described in the current Prospectus of the appropriate Fund. With respect to the Funds, the Shares of which are indicated on the attached Schedule A as being sold with a sales charge (i.e. the "Load Funds"), you will be allowed to retain a commission or concession from the public offering price provided in such Load Funds' current Prospectus. With respect to the Funds, the Shares of which are indicated on the attached Schedule A as being sold with a contingent deferred sales charge (the "CDSC Funds"), you will be paid a commission or concession as disclosed in the CDSC Fund's then current prospectus. With respect to the Funds whose Shares are indicated on the attached Schedule as being sold without a sales charge or a contingent deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed to retain any commission or concession. All commissions or concessions set forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to change without notice by us and will comply with any changes in regulatory requirements. 6 The tables of sales charges and discounts set forth in the current Prospectus of each Fund are applicable to all purchases made at any one time by any "purchaser", as defined in the current Prospectus. For this purpose, a purchaser may aggregate concurrent purchases of securities of any of the Funds. 7 Reduced sales charges may also be available as a result of quantity discounts, rights of accumulation or letters of intent. Further information as to such reduced sales charges, if any, is set forth in the appropriate Fund Prospectus. In such case, your discount will be based upon such reduced sales charge; however, in the case of a letter of intent signed by your customer, an adjustment to a higher discount will thereafter be made to reflect actual purchases by your customer if he should fail to fulfill his letter of intent. You agree to advise us promptly as to the amounts of any sales made by you to your customers qualifying for reduced sales charges. If you fail to so advise us of any letter of intent signed by your customer or of any right of accumulation available to him of which he has made you aware, you will be liable to us for the return of any discount plus interest thereon. 8 By accepting this Agreement you agree: a. that you will purchase Shares only from us; b. that you will purchase Shares from us only to cover purchase orders already received from your customers; and c. that you will not withhold placing with us orders received from your customers so as to profit yourself as a result of such withholdings. 9 We will not accept from you a conditional order for Shares on any basis. 10 Payment for Shares ordered from us shall be in the form of a wire transfer or a cashiers check mailed to us. Payment shall be made within three (3) business days after our acceptance of the order placed on behalf of your customer. Payment shall be equal to the public offering price less the discount retained by you hereunder. 7/97 2 11 If payment is not received within ten (10) business days of our acceptance of the order, we reserve the right to cancel the sale or, at our option, to sell Shares to the Fund at the then prevailing net asset value. In this event you agree to be responsible for any loss resulting to the Fund from the failure to make payment as aforesaid. 12 Shares sold hereunder shall be available in book-entry form on the books of the Funds' Transfer Agent unless other instructions have been given. 13 No person is authorized to make any representations concerning Shares of any Fund except those contained in the applicable current Prospectus and printed information subsequently issued by the appropriate Fund or by us as information supplemental to such Prospectus. You agree that you will not make Shares available to your customers except under circumstances that will result in compliance with the applicable Federal and State Securities and Banking Laws and that you will not furnish to any person any information contained in the then current Prospectus or cause any advertisement to be published in any newspaper or posted in any public place without our consent and the consent of the appropriate Fund. 14 Sales and exchanges of Shares may only be made in those states and jurisdictions where Shares are registered or qualified for sale to the public. We agree to advise you currently of the identity of those states and jurisdictions in which the Shares are registered or qualified for sales, and you agree to indemnify us and/or the Funds for any claim, liability, expense or loss in any way arising out of a sale of Shares in any state or jurisdiction not identified by us as a state or jurisdiction in which such Shares are so registered or qualified. We agree to indemnify you for any claim, liability, expense or loss in any way arising out of a sale of shares in any state or jurisdiction identified by us as a state or jurisdiction in which shares are so registered or qualified. 15 You shall be solely responsible for the accuracy, timeliness and completeness of any orders transmitted by you on behalf of your customers by wire or telephone for purchases, exchanges or redemptions, and shall indemnify us against any claims by your customers as a result of your failure to properly transmit their instructions. 16 All sales will be made subject to our receipt of Shares from the appropriate Fund. We reserve the right, in our discretion, without notice, to modify, suspend or withdraw entirely the offering of any Shares and, upon notice, to change the sales charge or discount or to modify, cancel or change the terms of this Agreement. You agree that any order to purchase Shares of the Funds placed by you after any notice of amendment to this Agreement has been sent to you shall constitute your agreement to any such agreement. 17 The names of your customers shall remain your sole property and shall not be used by us for any purpose except for servicing and information mailings in the normal course of business to Fund Shareholders. 18 Your acceptance of this Agreement constitutes a representation that you are a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as amended, and are duly authorized to engage in the transactions to be performed hereunder. All communications to us should be sent to A I M Distributors, Inc., Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall be duly given if mailed or telegraphed to you at the address specified by you below or to such other address as you shall have designated in writing to us. This Agreement shall be construed in accordance with the laws of the State of Texas. A I M DISTRIBUTORS, INC. Date: By: X ------------------ --------------------------------------- The undersigned agrees to abide by the foregoing terms and conditions. Date: By: X ------------------ -------------------------------------- Signature -------------------------------------- Print Name Title -------------------------------------- Dealer's Name -------------------------------------- Address -------------------------------------- City State Zip Please sign both copies and return one copy of each to: A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 7/97 3 [AIM LOGO APPEARS HERE] A I M DISTRIBUTORS, INC. SCHEDULE "A" TO BANK SELLING GROUP AGREEMENT
Shares Sold Shares Sold Fund With Sales Charges* With CDSC** - -------------------------------------------------------------------------------- AIM Advisor Flex Fund Yes Yes AIM Advisor International Value Fund Yes Yes AIM Advisor Large Cap Value Fund Yes Yes AIM Advisor MultiFlex Fund Yes Yes AIM Advisor Real Estate Fund Yes Yes AIM Aggressive Growth Fund Yes No AIM Asian Growth Fund Yes Yes AIM Balanced Fund Yes Yes AIM Blue Chip Fund Yes Yes AIM Capital Development Fund Yes Yes AIM Charter Fund Yes Yes AIM Constellation Fund Yes Yes AIM European Development Fund Yes Yes AIM Global Aggressive Growth Fund Yes Yes AIM Global Growth Fund Yes Yes AIM Global Income Fund Yes Yes AIM Global Utilities Fund Yes Yes AIM Growth Fund Yes Yes AIM High Yield Fund Yes Yes AIM Income Fund Yes Yes AIM Intermediate Government Fund Yes Yes AIM International Equity Fund Yes Yes AIM Limited Maturity Treasury Shares Yes No AIM Money Market Fund Yes Yes AIM Cash Reserve Shares No No AIM Municipal Bond Fund Yes Yes AIM Tax-Exempt Bond Fund of Connecticut Yes No AIM Tax-Exempt Cash Fund No No AIM Tax-Free Intermediate Fund Yes No
10/97 4 Shares Sold Shares Sold Fund With Sales Charges* With CDSC** - -------------------------------------------------------------------------------- AIM Value Fund Yes Yes AIM Weingarten Fund Yes Yes
A I M Distributors may from time to time make payments of finders fees or sponsor other incentive programs as described in the applicable fund prospectus and statement of additional information, which are incorporated herein by reference as they may be amended from time to time. *Trades at $1 million and over breakpoint automatically subject to CDSC with exception of AIM Advisor Cash Management Fund, AIM Cash Reserve Shares, AIM Limited Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund. **For all Funds sold with CDSC (includes Class B and Class C shares). A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 10/97 EX-99.B7.E 4 FORM OF DEFERRED COMPENSATION AGREEMENT 1 EXHIBIT 7(e) 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 and method of payment of amounts that you defer: for amounts previously deferred and for future elections you now designate a specific Payment Date and payment method which generally may be changed with at least one year's advance notice. PAYMENT DATE ELECTION Deferred fees (and the income, gains and losses credited during the deferral period) generally will be paid out as elected by you in installments or a single sum in cash within 30 days of the Payment Date elected. (For payments in connection with your termination of service as a trustee, see below.) Deferrals must be for a minimum two year period (unless 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 second anniversary of the applicable Election Date or your retirement date. Thus, fees previously deferred and fees payable for the calendar year beginning January 1, 1997 may be deferred to the first day of any calendar quarter in any year from 1999. EXTENDING A PAYMENT DATE At least one year prior to any Payment Date, you may extend that Date, provided that the additional period of deferral is at least two years. You may make this change in Payment Date only once. -1- 2 PAYMENT METHOD The value of your deferrals (based on your election as to how your deferral account is to be considered invested) will be paid in cash, in one lump sum or in annual installments (over a period not to exceed 10 years) as you select at the time you select your Payment Date. You may change this election, but the change will not be given effect unless it is made at least one year before your Payment Date or your ceasing to be a trustee (whichever occurs first). This one year requirement is waived in the case of your death (see Termination of Service, below). TERMINATION OF SERVICE Upon your death, your account under the Agreement will be paid out as elected by you in installments or 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 timely 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. -2- 3 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, if the Funds and the Director have previously entered into an additional agreement whereby the Funds will provide to the Director a vehicle under which the Director can defer receipt of directors' fees payable by the Funds 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- 4 (f) "Deferral Accounts" shall mean the accounts maintained to reflect the Director's Compensation Deferrals made pursuant to Section 3 hereof (or pursuant to any prior agreement) and any other credits or debits thereto. (g) "Deferral Year" shall mean each calendar year during which the Director makes, or is entitled to make, Compensation Deferrals under Section 3 hereof. (h) "Retirement" shall have the same meaning as set forth under the Retirement Plan. (i) "Retirement Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees." (j) "Valuation Date" shall mean the last business day of each calendar year and any other day upon which the Funds makes valuations of the Deferral Accounts. 1.2 Plurals and Gender. Where appearing in this Agreement the singular shall include the plural and the masculine shall include the feminine, and vice versa, unless the context clearly indicates a different meaning. 1.3 Directors and Trustees. Where appearing in this Agreement, "Director" shall also refer to "Trustee" and "Board of Directors" shall also refer to "Board of Trustees." 1.4 Headings. The headings and sub-headings in this Agreement are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof. 1.5 Separate Agreement for Each Fund. This Agreement is drafted, and shall be construed, as a separate agreement between the Director and each of the Funds. 2. 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- 5 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- 6 (2) The Director shall make an investment designation on a form provided by the Presidents of the Funds which shall remain effective until another valid direction has been made by the Director as herein provided. The Director may amend his investment designation by giving written direction to the Presidents of the Funds in such manner and at such time as the Funds may permit, but no less frequently than quarterly on thirty (30) days' notice prior to the end of a calendar quarter. A timely change to a Director's investment designation shall become effective as soon as practicable following receipt by the Presidents of the Funds. (3) The investment media deemed to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director's Deferral Accounts that may be invested any particular medium, shall be the same as from time-to-time communicated to the Director by the Presidents of the Funds. (b) Except as provided below, the Director's Deferral Accounts shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. If - (1) the Director does not furnish the Presidents of the Funds with complete, written investment instructions, or (2) the written investment instructions from the Director are unclear, then the Director's election to make Compensation Deferrals hereunder shall be held in abeyance and have no force or effect until such time as the Director shall provide the Presidents of the Funds with complete investment instructions. Notwithstanding the above, the Boards of Directors, in their sole discretion, may disregard the Director's election and determine that all Compensation Deferrals shall be deemed to be invested in a fund determined by the Boards of Directors. In the event that any fund under which any portion of the Director's Deferral Accounts is deemed to be invested ceases to exist, such portion of the Deferral Accounts thereafter shall be held in the successor to such fund, subject to subsequent deemed investment elections. The 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- 7 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. At least one year before the Payment Date initially designated pursuant to paragraph 4.1(a) above, the Participant may irrevocably elect to extend such Payment Date to the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c). (c) Limitation. The Director shall select a Payment Date (or extended Payment Date) that is no sooner than the earlier of (i) the January 1 that follows the second anniversary of the Participant's deferral election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the year after the Participant's Retirement. (d) Methods of Payment. Distributions from the Director's Deferral Accounts shall be paid in cash in a single sum unless the Participant elects, at the time a Payment Date is selected pursuant to paragraph 4.1(a) or 4.1(b), to receive the amount payable in generally equal quarterly installments over a period not to exceed ten (10) years. In addition, as least one year before the Payment Date, a Director may change the method of payment previously selected. (e) Irrevocability. Except as provided in paragraph 4.1(b) and 4.1(d), a designation of a Payment Date and an election of installment payments shall be irrevocable; provided, however, that payment shall be made or begin on a different date as follows: (1) Upon the Director's death, payment shall be made in accordance with Section 4.2, (2) Upon the Director's ceasing to serve as a director of all of the Funds for reasons other than death or Retirement, payment shall be made or begin within three months after the end of the calendar year in which such termination occurs in accordance with the method elected by the Director pursuant to paragraph 4.1(d) provided the designation of such method had been made at least one year before such termination occurred, except that the Boards of Directors, in their sole discretion, may accelerate the distribution of such Deferral Accounts, (3) Upon termination of this Agreement, payment shall be made in accordance with Section 5.2, and -5- 8 (4) In the event of the liquidation, dissolution or winding up of a Fund or the distribution of all or substantially all of a Fund's assets and property relating to one or more series of its shares to the shareholders of such series (for this purpose a sale, conveyance or transfer of a Fund's assets to a trust, partnership, association or corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a termination of the Fund or such a distribution), all unpaid balances of the Deferral Accounts related to such Fund as of the effective date thereof shall be paid in a lump sum on such effective date. 4.2 Death Prior to Complete Distribution of Deferral Accounts. Upon the death of the Director prior to the commencement of the distribution of the amounts credited to his Deferral Accounts, the balance of such Accounts shall be distributed to his Beneficiary in accordance with the method of payment selected pursuant to paragraph 4.1(d), commencing as soon as practicable after the Director's death. In the event of the death of the Director after the commencement of such distribution, but prior to the complete distribution of his Deferral Accounts, the balance of the amounts credited to his Deferral Accounts shall be distributed to his Beneficiary over the remaining period during which such amounts were distributable to the Director under Section 4.1 hereof. Notwithstanding the above, the Boards of Directors, in their sole discretion, may accelerate the distribution of the Deferral Accounts. 4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the Director's Beneficiary shall be the person or persons so designated by the Director in a written instrument submitted to the Presidents of the Funds. In the event the Director fails to properly designate a Beneficiary, his Beneficiary shall be the person or persons in the first of the following classes of successive preference Beneficiaries surviving at the death of the Director: the Director's (1) surviving spouse or (2) estate. 4.4 Payments Due Missing Persons. The Funds shall make a reasonable effort to locate all persons entitled to benefits under this Agreement. However, notwithstanding any provisions of this Agreement to the contrary, if, after a period of five (5) years from the date such benefit shall be due, any such persons entitled to benefits have not been located, their rights under this Agreement shall stand suspended. Before this provision becomes operative, the Funds shall send a certified letter to all such persons to their last known address advising them that their benefits under this Agreement shall be suspended. Any such suspended amounts shall be held by the Funds for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable) and thereafter, if unclaimed, such amounts shall be forfeited. -6- 9 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. (b) The Funds reserve the right to amend, in whole or in part, and in any manner, any or all of the provisions of this Agreement by action of their Boards of Directors for the purposes of complying with any provision of the Code or any other technical or legal requirements, provided that: (1) No such amendment shall make it possible for any part of the Director's Deferral Accounts to be used for, or diverted to, purposes other than for the exclusive benefit of the Director or his Beneficiaries, except to the extent otherwise provided in this Agreement; and (2) No such amendment may reduce the amount of the Director's Deferral Accounts as of the effective date of such amendment. 5.2 Termination. The Director and the Funds may, by written instrument signed by, or on behalf of, such parties, terminate this Agreement at any time. In the event of the termination of this Agreement, the Boards of Directors, in their sole discretion, may choose to pay out the Director's Deferral Accounts prior to the designated Payment Dates. Otherwise, following a termination of this Agreement, such Accounts shall continue to be maintained in accordance with the provisions of this Agreement until the time they are paid out. 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. -7- 10 (b) The rights of the Director and the Beneficiaries to the amounts held in the Deferral Accounts are unsecured and shall be subject to the creditors of the Funds. With respect to the payment of amounts held under the Deferral Accounts, the Director and his Beneficiaries have the status of unsecured creditors of the Funds. This Agreement is executed on behalf of the Funds by an officer, or other representative, of the Funds as such and not individually. Any obligation of the Funds hereunder shall be an unsecured obligation of the Funds and not of any other person. 6.2 Agents. The Funds may employ agents and provide for such clerical, legal, actuarial, accounting, advisory or other services as it deems necessary to perform their duties under this Agreement. The Funds shall bear the cost of such services and all other expenses they incur in connection with the administration of this Agreement. 6.3 Liability and Indemnification. Except for their own gross negligence, willful misconduct or willful breach of the terms of this Agreement, the Funds shall be indemnified and held harmless by the Director against liability or losses occurring by reason of any act or omission of the Funds or any other person. 6.4 Incapacity. If the Funds shall receive evidence satisfactory to them that the Director or any Beneficiary entitled to receive any benefit under the Agreement is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of the Director or Beneficiary and that no guardian, committee or other representative of the estate of the Director or Beneficiary shall have been duly appointed, the Funds may make payment of such benefit otherwise payable to the Director or Beneficiary to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit. 6.5 Cooperation of Parties. All parties to this Agreement and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Agreement or any of its provisions. 6.6 Governing Law. This Agreement is made and entered into in the State of Texas and all matters concerning its validity, construction and administration shall be governed by the laws of the State of Texas. 6.7 Nonguarantee of Directorship. Nothing contained in this Agreement shall be construed as a contract or guarantee of the right of the Director to be, or remain as, a director of any of the Funds or to receive any, or any particular rate of, Compensation from any of the Funds. -8- 11 6.8 Counsel. The Funds may consult with legal counsel with respect to the meaning or construction of this Agreement, their obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel. 6.9 Spendthrift Provision. The Director's and Beneficiaries' interests in the Deferral Accounts may not be anticipated, sold, encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor become subject to execution, garnishment or attachment and any attempt to do so by any person shall render the Deferral Accounts immediately forfeitable. 6.10 Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Director at the home address set forth in the Funds' records and to the Funds at the address set forth on the first page of this Agreement, provided that all notices to the Funds shall be directed to the attention of the Presidents of the Funds or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6.11 Entire Agreement. This Agreement contains the entire understanding between the Funds and the Director with respect to the payment of non-qualified elective deferred compensation by the Fund to the Director. Effective as of the date hereof, this Agreement replaces, and supersedes, all other non-qualified elective deferred compensation agreements by and between the Director and the Funds. 6.12 Interpretation of Agreement. Interpretations of, and determinations (including factual determinations) related to, this Agreement made by the Funds in good faith, including any determinations of the amounts of the Deferral Accounts, shall be conclusive and binding upon all parties; and the Funds shall not incur any liability to the Director for any such interpretation or determination so made or for any other action taken by it in connection with this Agreement in good faith. 6.13 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Funds and their successors and assigns and to the Director and his heirs, executors, administrators and personal representatives. 6.14 Severability. In the event any one or more provisions of this Agreement are held to be invalid or unenforceable, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall remain in full force and effect unaffected by such invalidity or unenforceability. -9- 12 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. -10- 13 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 -11- 14 APPENDIX A ---------- AIM ADVISOR FUNDS, INC. AIM EQUITY FUNDS, INC. AIM FUNDS GROUP AIM INTERNATIONAL FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS AIM SUMMIT FUND, INC. AIM TAX-EXEMPT FUNDS, INC. AIM VARIABLE INSURANCE FUNDS, INC. SHORT-TERM INVESTMENTS CO. SHORT-TERM INVESTMENTS TRUST TAX-FREE INVESTMENTS CO. 15 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 50 percent (50%) 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 two years after the year this election is made) as the Payment Date for the amounts credited to my Deferral Account pursuant to the election made above. If my Retirement (as defined in the Agreement) occurs sooner, I 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. -5- 16 Payment Method -------------- I hereby elect to receive the amounts credited to my Deferral Account in (check one) o a single payment in cash o quarterly installments for a period of ____ years (select no more than 10 years) o annual installments for a period of ____ (select no more than 10 years) beginning within 30 days following the payment date selected above. I understand that the amounts credited to my Deferral Account shall remain the general assets of the AIM Funds and that, with respect to the payment of such amounts, I am merely a general creditor of the AIM Funds. I may not sell, encumber, pledge, assign or otherwise alienate the amounts credited to my Deferral Account. I hereby agree that the terms of the Agreement are incorporated herein and are made a part hereof. Dated as of the day and year first above written. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -6- 17 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 -1- 18 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- EX-99.B9.6V 5 EXHIBIT 1, EFFECTIVE AS OF 8-4-97 1 EXHIBIT 9(6)(v) EXHIBIT 1 LIST OF FUNDS AIM ADVISOR FUNDS, INC. Portfolios: Classes: AIM Advisor Cash Management Fund Class A and Class C Shares AIM Advisor Flex Fund Class A and Class C Shares AIM Advisor Income Fund Class A and Class C Shares AIM Advisor International Value Fund Class A and Class C Shares AIM Advisor Large Cap Value Fund Class A and Class C Shares AIM Advisor MultiFlex Fund Class A and Class C Shares AIM Advisor Real Estate Fund Class A and Class C Shares AIM EQUITY FUNDS, INC. Portfolios: Classes: AIM Blue Chip Fund Class A, Class B and Class C Shares AIM Capital Development Fund Class A, Class B and Class C Shares AIM Charter Fund Class A, Class B and Class C Shares AIM Weingarten Fund Class A, Class B and Class C Shares AIM Aggressive Growth Fund Class A Shares AIM Constellation Fund Class A and Class C Shares AIM FUNDS GROUP Portfolios: Classes: AIM Balanced Fund Class A, Class B and Class C Shares AIM Global Utilities Fund Class A, Class B and Class C Shares AIM Growth Fund Class A, Class B and Class C Shares AIM High Yield Fund Class A, Class B and Class C Shares AIM Income Fund Class A, Class B and Class C Shares AIM Intermediate Government Fund Class A, Class B and Class C Shares AIM Municipal Bond Fund Class A, Class B and Class C Shares AIM Value Fund Class A, Class B and Class C Shares AIM Money Market Fund Class A, Class B, Class C and AIM Cash Reserve Shares AIM INTERNATIONAL FUNDS, INC. Portfolios: Classes: AIM International Equity Fund Class A, Class B and Class C Shares AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares AIM Global Growth Fund Class A, Class B and Class C Shares AIM Global Income Fund Class A, Class B and Class C Shares AIM Asian Growth Fund Class A, Class B and Class C Shares AIM European Development Fund Class A, Class B and Class C Shares
2 AIM INVESTMENT SECURITIES FUNDS Portfolios: Classes: Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares AIM TAX-EXEMPT FUNDS, INC. Portfolios: Classes: AIM Tax-Exempt Cash Fund Class A Shares AIM Tax-Exempt Bond Fund Of Connecticut Class A Shares Intermediate Portfolio AIM Tax-Free Intermediate Shares - Class A
On behalf of the Funds and respective Portfolios and Classes as set forth in this Exhibit 1, which may be amended from time to time. By: /s/ ROBERT H. GRAHAM ------------------------------ Title: President FIRST DATA INVESTOR SERVICES GROUP, INC. By: /s/ LEONARD A. WEISS ------------------------------ Title: EVP and CFO Effective as of August 4, 1997. EX-99.B9.6VI 6 PREFERRED REGISTRAITON, TECH ESCROW AGREEMENT 1 9(6)(vi) EXHIBIT 2 PREFERRED REGISTRATION TECHNOLOGY ESCROW AGREEMENT Account Number 0609111-00002-0109001 Recitals This Preferred Registration Technology Escrow Agreement including any Exhibits ("Agreement") is effective this 10th day of September 1997, by and among Data Securities International, Inc. ("DSI"), a Delaware corporation, First Data Investor Services Group, Inc. ("Depositor"), and each registered investment company listed on the attached Schedule A hereof ("Preferred Registrant"). WHEREAS, Depositor has entered into a certain Remote Access and Related Services Agreement dated December 23, 1994, as amended by Amendment Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the Preferred Registrant which pursuant thereto certain proprietary software, as described in Section 12(i) of the Remote Agreement, in object-code form and other materials of Depositor have been licensed to Preferred Registrant (the "Software"); WHEREAS, Depositor and Preferred Registrant desire the Agreement to be supplementary to said contract pursuant to 11 United States Code Section 365(n); WHEREAS, availability of or access to the source code and other proprietary data related to the Software is critical to Preferred Registrant in the conduct of its business; WHEREAS, Depositor has deposited or will deposit with DSI such source code and other proprietary data to provide for retention, administration and controlled access for Preferred Registration under conditions specified herein; NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the promises, mutual covenants and conditions contained herein, the parties hereto agree as follows: 1. Deposit Account. Following the delivery of the executed Agreement, DSI shall open a deposit account ("Deposit Account") for Depositor. The opening of the Deposit Account means that DSI shall establish an account ledger in the name of Depositor, assign a deposit account number ("Deposit Account Number"), calendar renewal notices to be sent to Depositor as provided in Section 30, and request the initial deposit ("Initial Deposit") from Depositor. Depositor has an obligation to make the Initial Deposit. In the event that Depositor has not made the Initial Deposit within sixty (60) days of the execution of this 1 2 Agreement, DSI shall request the initial Deposit from Depositor and notify Preferred Registrant that such Initial Deposit has not been received. 2. Preferred Registration Account. Following the execution and delivery of the Agreement, DSI shall open a registration account ("Registration Account") for Preferred Registrant. The opening of the Registration Account means that DSI shall establish under the Deposit Account an account ledger with a unique registration number ("Registration Number") in the name of Preferred Registrant, calendar renewal notices to be sent to Preferred Registrant as provided in Section 30, and request the Initial Deposit from Depositor. DSI shall notify Preferred Registrant upon receipt of Initial Deposit. 3. Term of Agreement. The Agreement will commence on the effective date and continue through January 31, 2000, unless terminated earlier as provided in the Agreement. The Agreement may be extended for one (1) year terms. 4. Exhibit A, Notices and Communications. Notices and invoices to Depositor, Preferred Registrant or DSI should be sent to the parties at the addresses identified in the Exhibit A. Documents, payment of fees, deposits of material, and any written communication should be sent to the DSI offices as identified in the Exhibit A. Depositor and Preferred Registrant agree to each name their respective designated contact ("Designated Contact") to receive notices from DSI and to act on their behalf in the performance of their obligations as set forth in the Agreement. Depositor and Preferred Registrant agree to notify DSI immediately in the event of a change of their Designated Contact in the manner stipulated in Exhibit A. 5. Exhibit B and Deposit Material. Depositor will submit proprietary data and related material ("Deposit Material") to DSI for retention and administration in the Deposit Account. The Deposit Material will be submitted together with a completed document called a "Description of Deposit Material", hereinafter referred to as Exhibit B. Each Exhibit B should be signed by Depositor prior to submission to DSI and will be signed by DSI upon completion of the Deposit Material inspection. Depositor represents and warrants that it lawfully possesses all Deposit Material, can transfer Deposit Material to DSI and has the authority to store Deposit Material in accordance with the terms of the Agreement. 2 3 6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit Material, DSI will be responsible only for reasonably matching the labeling of the materials to the item descriptions listed on the Exhibit B and validating the count of the materials to the quantity listed on the Exhibit B. DSI will not be responsible for any other claims made by the Depositor on the Exhibit B. Acceptance will occur when DSI concludes that the Deposit Material Inspection is complete. Upon acceptance DSI will sign the Exhibit B and assign it the next Exhibit B number. DSI shall issue a copy of the Exhibit B to Depositor and Preferred Registrant within ten (10) days of acceptance. 7. Initial Deposit. The Initial Deposit will consist of all material initially supplied by Depositor to DSI. 8. Deposit Changes. Depositor may desire or may be obligated to update the Deposit Account with supplemental or replacement Deposit Material of technology releases. Supplemental Deposit ("Supplemental") is Deposit Material which is to be added to the Deposit Account. Replacement Deposit ("Replacement") is Deposit Material which will replace existing Deposit Material as identified by any one or more Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be destroyed or returned to Depositor. 9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and their associated Deposit Material currently in DSI's possession. Destroyed or returned Deposit Material is not part of the Deposit; however, DSI shall keep records of the destruction or return of Deposit Material. 10. Replacement Option. Within ten (10) days of receipt of Replacement from Depositor, DSI will send a letter to Preferred Registrant stating that Depositor requests to replace existing Deposit Material, and DSI will include a copy of the new Exhibit B(s) listing the new Deposit Material. Preferred Registrant has twenty (20) days from the mailing of such letter by DSI to instruct DSI to retain the existing Deposit Material held by DSI, and if so instructed, DSI will change the Replacement to a Supplemental. Conversion to Supplemental may cause an additional storage unit fee as specified by DSI's Fee and Services Schedule. If Preferred Registrant does not instruct DSI to retain the existing Deposit Material, DSI shall permit such Deposit Material to be replaced with the Replacement. Within ten (10) days of acceptance of the Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s) to Depositor and Preferred Registrant. DSI will either destroy or return to Depositor all Deposit Material replaced by the Replacement. 3 4 11. Storage Unit. DSI will store the Deposit in defined units of space, called storage units. The cost of the first storage unit will be included in the annual Deposit Account fee. 12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked receptacle in which it shall place the Deposit and shall put the receptacle under the administration of one or more of its officers, selected by DSI, whose identity shall be available to Depositor at all times. DSI shall exercise a professional level of care in carrying out the terms of the Agreement. DSI acknowledges Depositor's assertion that the Deposit shall contain proprietary data and that DSI has an obligation to preserve and protect the confidentiality of the Deposit. Except as provided for in the Agreement, DSI agrees that it shall not divulge, disclose, make available to third parties, or make any use whatsoever of the Deposit. 13. Audit Rights. DSI agrees to keep records of the activities undertaken and materials prepared pursuant to the Agreement. DSI may issue to Depositor and Preferred Registrant an annual report profiling the Deposit Account. Such annual report will identify the Depositor, Preferred Registrant, the current Designated Contacts, selected special services, and the Exhibit B history, which includes Deposit Material acceptance and destruction or return dates. Upon reasonable notice, during normal business hours and during the term of the Agreement, Depositor or Preferred Registrant will be entitled to inspect the records of DSI pertaining to the Agreement, and accompanied by an employee of DSI, inspect the physical status and condition of the Deposit. The Deposit may not be changed during the audit. 14. Renewal Period of Agreement. Upon payment of the initial fee or renewal fee, the Agreement will be in full force and will have an initial period of at least one (1) year unless otherwise specified. The Agreement may be renewed for additional periods upon receipt by DSI of the specified renewal fees prior to the last day of the period ("Expiration Date"). DSI may extend the period of the Agreement to cover the processing of any outstanding instruction made during any period of the Agreement. Preferred Registrant has the right to pay renewal fees and other related fees. In the event Preferred Registrant pays the renewal fees and Depositor is of the opinion that any necessary condition for renewal is not met, Depositor may so notify DSI and Preferred Registrant in writing. The resulting dispute will be resolved pursuant to the dispute resolution process defined in Section 25. 4 5 15. Expiration. If the Agreement is not renewed, or is otherwise terminated, all duties and obligations of DSI to Depositor and Preferred Registrant will terminate. If Depositor requests the return of the Deposit, DSI shall return the Deposit to Depositor only after any outstanding invoices and the Deposit return fee are paid. If the fees are not received by the Expiration Date of the Agreement, DSI, at its option, may destroy the Deposit. 16. Certification by Depositor. Depositor represents to Preferred Registrant that: a. The Deposit delivered to DSI consists of the following: source code deposited on computer magnetic media; all necessary and available information, proprietary information, and technical documentation which will enable a reasonably skilled programmer of Preferred Registrant to create, maintain and/or enhance the Software without the aid of Depositor or any other person or reference to any other materials; maintenance tools (test programs and program specifications); proprietary or third party system utilities (compiler and assembler descriptions); description of the system/program generation; descriptions and locations of programs not owned by Depositor but required for use and/or support; and names of key developers for the technology on Depositor's staff. b. The Deposit will be defined in the Exhibit B(s). These representations shall be deemed to be made continuously throughout the term of the Agreement. 17. Indemnification. Depositor and Preferred Registrant agree to defend and indemnify DSI and hold DSI harmless from and against any and all claims, actions and suits, whether in contract or in tort, and from and against any and all liabilities, losses, damages, costs, charges, penalties, counsel fees, and other expenses of any nature (including, without limitation, settlement costs) incurred by DSI as a result of performance of the Agreement except in the event of a judgment which specifies that DSI acted with gross negligence or willful misconduct. 18. Filing for Release of Deposit by Preferred Registrant. Upon notice to DSI by Preferred Registrant of the occurrence of a release condition as defined in Section 21 and payment of the release request fee, DSI shall notify Depositor by certified mail or commercial express mail service with a copy of the notice from Preferred Registrant. If Depositor provides contrary instruction within ten (1O) days of the mailing of the notice to Depositor, DSI shall not deliver a copy of the Deposit to Preferred Registrant. 19. Contrary Instruction. "Contrary Instruction" is the filing of an instruction with DSI by Depositor stating that a Contrary Instruction is in effect. Such Contrary Instruction 5 6 means an officer of Depositor warrants that a release condition has not occurred or has been cured. DSI shall send a copy of the instruction by certified mail or commercial express mail service to Preferred Registrant. DSI shall notify both Depositor and Preferred Registrant that there is a dispute to be resolved pursuant to Section 25. Upon receipt of Contrary Instruction, DSI shall continue to store the Deposit pending Depositor and Preferred Registrant joint instruction, resolution pursuant to Section 25, order by a court of competent jurisdiction, or termination by non-renewal of the Agreement. 20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if DSI does not receive Contrary Instruction from Depositor, DSI is authorized to release the Deposit, or if more than one Preferred Registrant is registered to the Deposit, a copy of the Deposit, to the Preferred Registrant filing for release following receipt of any fees due to DSI including Deposit copying and delivery fees. 21. Release Conditions of Deposit to Preferred Registrant. Release conditions are: a. Depositor ceases to do business, makes an assignment for the benefit of creditors, becomes insolvent (as revealed by its books and records or otherwise), is generally unable to pay its debts as such debts become due, or commences, or has commenced against it a case under any chapter of state or federal bankruptcy laws; and Depositor fails to cure any such event within 60 days after receiving notice from Preferred Registrant; and b. Preferred Registrant has paid all amounts due Depositor under the Remote Agreement. 22. Grant of Use License. Subject to the terms and conditions of the Agreement, Depositor hereby transfers and upon execution by DSI, DSI hereby accepts a non-exclusive, nontransferable, royalty-free license ("Use License") for the unexpired term of the Remote Agreement subject to Section 15 thereof which DSI will transfer to Preferred Registrant upon controlled release of the Deposit as described in the Agreement. The Use License will be solely for Preferred Registrant's internal purposes in connection with support, maintenance, and operation of the Software solely as set forth in the Remote Agreement and not for any other purpose or person. 23. Use License Representation. Depositor represents and warrants to Preferred Registrant and DSI that it has no knowledge of any incumbrance or infringement of the Deposit, or that any claim has been made that the Deposit infringes any patent, trade secret, copyright or other proprietary right of any third party. Depositor warrants that it has 6 7 the full right, power, and ability to enter into and perform the Agreement, to grant the foregoing Use License, and to permit the Deposit to be placed with DSI. 24. Conditions Following Release. Following a release and subject to payment to DSI of all outstanding fees, DSI shall transfer the Use License to Preferred Registrant. Additionally Preferred Registrant shall be required to maintain the confidentiality of the released Deposit. 25. Disputes. In the event of a dispute, DSI shall so notify Depositor and Preferred Registrant in writing. Upon agreement of the parties at the time of a dispute, such dispute will be settled by arbitration in accordance with the commercial rules of the American Arbitration Association ("AAA"). Unless otherwise agreed to by Depositor and Preferred Registrant, arbitration will take place in San Diego, California, USA. 26. Verification Rights. Depositor grants to Preferred Registrant the option to verify the Deposit for accuracy, completeness and sufficiency. Depositor agrees to permit DSI and at least one employee of Preferred Registrant to be present at Depositor's facility to verify, audit and inspect of the Deposit for the benefit of Preferred Registrant. If DSI is present or is selected to perform the verification, DSI will be paid according to DSI's then current verification service hourly rates and any out of pocket expenses. 27. General. DSI may act in reliance upon any instruction, instrument, or signature believed to be genuine and may assume that any employee giving any written notice, request, advice or instruction in connection with or relating to the Agreement has apparent authority and has been duly authorized to do so. DSI may provide copies of the Agreement or account history information to any employee of Depositor or Preferred Registrant upon their request. For purposes of termination or replacement, Deposit Material shall be returned only to Depositor's Designated Contact, unless otherwise instructed by Depositor's Designated Contact. DSI is not responsible for failure to fulfill its obligations under the Agreement due to causes beyond DSI's control. The Agreement is to be governed by and construed in accordance with the laws of the State of California. The Agreement constitutes the entire agreement between the parties concerning the subject matter hereof, and supersedes all previous communications, representations, understandings, and agreements, either oral or written, between the parties. The Agreement may be amended only in a writing signed by the parties. 7 8 If any provision of the Agreement is held by any court to be invalid or unenforceable, that provision will be severed from the Agreement and any remaining provisions will continue in full force. 28. Title to Media. Subject to the terms of the Agreement, title to the media, upon which the proprietary data is written or stored, is and shall be irrevocably vested in DSI. Notwithstanding the foregoing, Depositor will retain ownership of the proprietary data contained on the media including all copyright, trade secret, patent or other intellectual property ownership rights subsisting in such proprietary data. 29. Termination of Rights. The Use License as described above will terminate in the event that the Agreement is terminated without the Use License transferring to Preferred Registrant. 30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit Material, or when service is requested, whichever is earliest. If invoiced fees are not paid within sixty (60) days of the date of the invoice, DSI may terminate the Agreement. If the payment is not timely received by DSI, DSI shall have the right to accrue and collect interest at the rate of one and one-half percent per month (18% per annum) from the date of the invoice for all late payments. Renewal fees will be due in full upon the receipt of invoice unless otherwise specified by the invoice. In the event that renewal fees are not received thirty (30) days prior to the Expiration Date, DSI shall so notify Depositor and Preferred Registrant. If the renewal fees are not received by the Expiration Date, DSI may terminate the Agreement without further notice and without liability of DSI to Depositor or Preferred Registrant. DSI shall not be required to process any request for service unless the payment for such request shall be made or provided for in a manner satisfactory to DSI. All service fees and renewal fees will be those specified in DSI's Fee and Services Schedule in effect at the time of renewal or request for service, except as otherwise agreed. For any increase in DSI's standard fees, DSI shall notify Depositor and Preferred Registrant at least ninety (90) days prior to the renewal of the Agreement. 8 9 For any service not listed on the Fee and Services Schedule, DSI shall provide a quote prior to rendering such service. Fees invoiced by DSI are the responsibility of the Preferred Registrant and as such all invoices in accordance with this Agreement are to be sent to the Preferred Registrant. On behalf of the Investment Companies and respective Portfolios and Classes set forth in Schedule A attached hereto as may be amended from time to time. By: /s/ ROBERT H. GRAHAM FIRST DATA INVESTOR SERVICES --------------------------------- GROUP, INC. Name: Robert H. Graham ------------------------------- By: /s/ ILLEGIBLE Title: President --------------------------------- ------------------------------ Name: ILLEGIBLE ------------------------------- Title: Executive Vice President ------------------------------ DATA SECURITIES INTERNATIONAL, INC. By: /s/ CHRISTIE WOODWARD --------------------------------- Name: Christie Woodward ------------------------------- Title: Contract Administrator ------------------------------
10 SCHEDULE A LIST OF FUNDS AIM ADVISOR FUNDS, INC.
Portfolios: Classes: AIM Advisor Cash Management Fund Class A and Class C Shares AIM Advisor Flex Fund Class A and Class C Shares AIM Advisor Income Fund Class A and Class C Shares AIM Advisor International Value Fund Class A and Class C Shares AIM Advisor Large Cap Value Fund Class A and Class C Shares AIM Advisor MultiFlex Fund Class A and Class C Shares AIM Advisor Real Estate Fund Class A and Class C Shares
AIM EQUITY FUNDS, INC.
Portfolios: Classes: AIM Blue Chip Fund Class A, B and Class C Shares AIM Capital Development Fund Class A, B and Class C Shares AIM Charter Fund Class A, B and Class C Shares AIM Weingarten Fund Class A, B and Class C Shares AIM Aggressive Growth Fund Class A Shares AIM Constellation Fund Class A Shares and Class C Shares
AIM FUNDS GROUP
Portfolios: Classes: AIM Balanced Fund Class A, Class B and Class C Shares AIM Global Utilities Fund Class A, Class B and Class C Shares AIM Growth Fund Class A, Class B and Class C Shares AIM High Yield Fund Class A, Class B and Class C Shares AIM Income Fund Class A, Class B and Class C Shares AIM Intermediate Government Fund Class A, Class B and Class C Shares AIM Municipal Bond Fund Class A, Class B and Class C Shares AIM Value Fund Class A, Class B and Class C Shares AIM Money Market Fund Class A, Class B, Class C and AIM Cash Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes: AIM International Equity Fund Class A, Class B and Class C Shares AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares AIM Global Growth Fund Class A, Class B and Class C Shares AIM Global Income Fund Class A, Class B and Class C Shares AIM Asian Growth Fund Class A, Class B and Class C Shares AIM European Development Fund Class A, Class B and Class C Shares
11 AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes: Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes: AIM Tax-Exempt Cash Fund Class A AIM Tax-Exempt Bond Fund of Connecticut Class A Intermediate Portfolio AIM Tax-Free Intermediate Shares - Class A
12 EXHIBIT A DESIGNATED CONTACT Account Number: 0609111-00002-01090011 NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO: COMMUNICATION, INCLUDING DELINQUENCIES TO First Data Investor Services Group, Inc. DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------ 4400 Computer Drive First Data Investor Services Group, Inc. ------------------------------------------------ - ---------------------------------------- Westboro, MA 01581 4400 Computer Drive ------------------------------------------------ - ---------------------------------------- Westboro, MA 01581 ------------------------------------------------ - ---------------------------------------- Invoice Contact: Brendan Bowen - ---------------------------------------- -------------------------------- Designated Contact: John Corey --------------------- Telephone: (508) 871-9601 ------------------------------ Facsimile: ------------------------------ State of Incorporation: Massachusetts ----------------- NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO: SHOULD BE ADDRESSED TO: A I M Fund Service, Inc. ----------------------------------------------- A I M Fund Service, Inc. Eleven Greenway Plaza Eleven Greenway Plaza ----------------------------------------------- Houston, TX 77046 Houston, TX 77046 ----------------------------------------------- ----------------------------------------------- Designated Contact: Jack Caldwell Invoice Contact: Jack Caldwell --------------------- ------------------------------- Telephone: (713) 214-1633 ------------------------------ Facsimile: ------------------------------ Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI Contact should be given Contact or authorized SHOULD BE ADDRESSED TO: employee Registrant. DSI CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable SHOULD BE ADDRESSED TO: DSI Attn: Contract Administration Telephone: ------------------------------------- Facsimile: ------------------------------------- Telephone: ------------------------------ Facsimile: ------------------------------ Date: -----------------------------------
13 ]EXHIBIT B DESCRIPTION OF DEPOSIT MATERIAL Deposit Account Number: 0609111-00002 ------------------------------------------------------------------ Depositor Company Name: First Data Investor Services Group ------------------------------------------------------------------ DEPOSIT TYPE: X Initial Supplemental Replacement - ------ ------ ------ If Replacement: Destroy Deposit Return Deposit ------ ------ ENVIRONMENT: Host System CPU/OS: MS Windows 3.11 or MS/Windows 95 OS on Intel x 86 processor based PC ---------------------------------------------------------------------- Version: --------------------------------------------------------------------------------- Backup: ---------------------------------------------------------------------------------- Source System CPU/OS: MS Windows 3.11 OS on Intel Pentium 133 MHz PC -------------------------------------------------------------------- Version: --------------------------------------------------------------------------------- Compiler: Impress Imaging - Plexus AD v4.1, Informix ESQL v2.2, MS Visual C++ v4.1 -------------------------------------------------------------------------------- Impress Clearinghouse & Toolbar - MS Visual C++ v4.1 -------------------------------------------------------------------------------- ACE Plus - MS Visual Basic 4.0, MS Access v2.0 -------------------------------------------------------------------------------- Special Instructions: --------------------------------------------------------------------
DEPOSIT MATERIAL: Exhibit B Name: Impress Imaging System Version: v5.2.06.01 ------------------------- ----------------------------- Impress Clearinghouse Version: v5.2.02.01 ------------------------- ----------------------------- Impress Toolbar Version: v5.2.01.01 ------------------------- ----------------------------- ACE Plus Version: v2.05.07 ------------------------- -----------------------------
Item Label Description Media Quantity AIM Funds Source, CD 1 August 8, 1997
For Depositor, I certify that the above For DSI, I received the above described described Deposit Material was sent to DSI: Deposit Material subject to the terms on the reverse side of this Exhibit: By: ILLEGIBLE By: /s/ CHRISTIE WOODWARD --------------------------------------- --------------------------------------- Print Name: ILLEGIBLE Print Name: Christie Woodward ------------------------------- ------------------------------- Date: 9/3/97 Date of Acceptance: 9-10-97 ------------------------------------- ----------------------- ISE: EXHIBIT B#: --------- ---------------
14 EXHIBIT B DESCRIPTION OF DEPOSIT MATERIAL Deposit Account Number: 0609111-00002 -------------------------------------------------------- Depositor Company Name: First Data Investor Services Group -------------------------------------------------------- DEPOSIT TYPE: X Initial Supplemental Replacement - ------ ------ ------ If Replacement: Destroy Deposit Return Deposit ------ ------ ENVIRONMENT: Host System CPU/OS: 3090/MVS ------------------------------------------------------------ Version: ----------------------------------------------------------------------- Backup: ------------------------------------------------------------------------ Source System CPU/OS: 3090/MVS ---------------------------------------------------------- Version: ----------------------------------------------------------------------- Compiler: Standard IBM Compiler ---------------------------------------------------------------------- Special Instructions: ---------------------------------------------------------- DEPOSIT MATERIAL: Exhibit B Name: FSR Source Code - 931761 Version: ------------------------- ----------------------------- FSR JCL - 931384 ------------------------- -----------------------------
Item Label Description Media Quantity DSN=P03AIM.PRIV.VENDOR.SEA.CSSP Data Tape 1 ROD. PANLIB VOLSER=932154 DSN=P03AIM.PRIV.VENDOR.SEQ.ESC Data Tape 1 ROW.TAPE VOLSER=932155
For Depositor, I certify that the above For DSI, I received the above described described Deposit Material was sent to DSI: Deposit Material subject to the terms on the reverse side of this Exhibit: By: ILLEGIBLE By: /s/ CHRISTIE WOODWARD --------------------------------------- --------------------------------------- Print Name: ILLEGIBLE Print Name: Christie Woodward ------------------------------- ------------------------------- Date: 9/3/97 Date of Acceptance: 9-10-97 ------------------------------------- ----------------------- ISE: EXHIBIT B#: --------- ---------------
EX-99.B11.A 7 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 11(a) INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors and Shareholders AIM International Funds, Inc.: We consent to the use of our reports on the AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund, and AIM International Equity Fund (series portfolios of AIM International Funds, Inc.) dated December 5, 1997 included herein and the references to our firm under the headings "Financial Highlights" in the Prospectuses and "Audit Reports" in the Statement of Additional Information. /s/ KPMG PEAT MARWICK LLP ------------------------------ KPMG Peat Marwick LLP Houston, Texas February 19, 1998 EX-99.B11.B 8 CONSENT OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP 1 EXHIBIT 11(b) CONSENT OF COUNSEL AIM International Funds, Inc. ------------------------------ We hereby consent to the use of our name and to the reference to our firm under the caption "General Information - Legal Counsel" in the Prospectuses for the AIM International Equity Fund, and for the AIM Global Aggressive Growth Fund, AIM Global Growth Fund, and AIM Global Income Fund, and under the caption "Miscellaneous Information - Legal Matters" in the Statement of Additional Information for such Funds, which are included in Post-Effective Amendment No. 14 to the Registration Statement under the Securities Act of 1933 (No. 33-44611) and Amendment No. 16 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, LLP ------------------------------------------ Ballard Spahr Andrews & Ingersoll, LLP Philadelphia, Pennsylvania February 11, 1998 EX-99.B13.A2 9 AGREEMENT CONCERNING INITIAL CAPITALIZATION 1 EXHIBIT 13(a)(2) [INVESCO TRUST COMPANY LETTERHEAD] November 3, 1997 Board of Directors AIM International Funds, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 RE: INITIAL CAPITAL INVESTMENT IN TWO NEW PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC. (THE "FUND") Gentlemen: We are purchasing shares of the Fund for the purpose of providing initial investment for the two 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. We hereby agree to purchase shares equal to the following dollar amount for each portfolio: AIM Asian Growth Fund $1,000,000 AIM European Development Fund $1,000,000 We understand that the initial net asset value per share for each of the portfolios named above will be $10.00. 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 ten 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, INVESCO Trust Company By: /s/ RONALD L. GROOMS Ronald L. Grooms Sr. Vice President and Treasurer EX-99.B14.A3 10 FORMS OF REGISTRANT'S IRA DOCUMENTS 1 EXHIBIT 14(a)(3) [AIM LOGO APPEARS HERE] IRA APPLICATION To open your AIM IRA account. Complete Sections 1-11. Return completed application and check to: A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Phone: 800-959-4246. Make check payable to INVESCO Trust Company. Please Note: To establish an IRA for your spouse, please copy and submit a separate application. Minors cannot open an AIM IRA account. - -------------------------------------------------------------------------------- 1. INVESTOR INFORMATION (Please print or type.) Name ----------------------------------------------------------------------- First Name Middle Last Name Address -------------------------------------------------------------------- Street ---------------------------------------------------------------------------- City State Zip Code Social Security Number Birth Date / / ---------------------- ------------------- (Required to Open Account) Month Day Year Home Telephone ( ) Work Telephone ( ) --- ----------------- --- ----------------- - -------------------------------------------------------------------------------- 2. DEALER INFORMATION (To be completed by securities dealer.) Name of Broker/Dealer Firm ------------------------------------------------- Main Office Address -------------------------------------------------------- Representative Name and Number --------------------------------------------- Authorized Signature of Dealer --------------------------------------------- Branch Address ------------------------------------------------------------- Branch Telephone ----------------------------------------------------------- [ ] Investor is authorized for NAV purchase. (If authorized for NAV purchase, other than the Broker, please attach NAV Certification Form.) - -------------------------------------------------------------------------------- 3. ACCOUNT TYPE (Choose one only.) [ ] IRA [ ] Rollover IRA [ ] SEP IRA* [ ] SARSEP IRA* (No new SARSEP plans after 12/31/96) *Employer (for SEP & SARSEP plans only) ------------------------------------- - -------------------------------------------------------------------------------- 4. CONTRIBUTION (Indicate type of contribution.) [ ] REGULAR - Contribution for tax year 19___. [ ] ROLLOVER - Represents a rollover from an employer's pension, profit sharing or 401(k) plan, another IRA or a 403(b) custodial account or annuity. Please complete a Direct Rollover Form, unless coming from another IRA. [ ] TRANSFER - Transfer from another IRA account. Please complete an IRA Asset-Transfer Form. [ ] SEP - Employer sponsored. Complete separate application for each employee. [ ] SARSEP - Employee salary-reduction SEP. Complete separate application for each employee. (No new SARSEP plans after 12/31/96.) 13 2 - -------------------------------------------------------------------------------- 5. FUND INVESTMENT Indicate Fund(s) and contribution amount(s). MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open an IRA is $250.
Fund $ or % of Assets Class of Shares (Check one) [ ]AIM Advisor Flex Fund $ [ ]Class A [ ]Class C ------------------------ [ ]AIM Advisor International Value Fund $ [ ]Class A [ ]Class C ------------------------ [ ]AIM Advisor Large Cap Value Fund $ [ ]Class A [ ]Class C ------------------------ [ ]AIM Advisor MultiFlex Fund $ [ ]Class A [ ]Class C ------------------------ [ ]AIM Advisor Real Estate Fund $ [ ]Class A [ ]Class C ------------------------ [ ]AIM Balanced Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Blue Chip Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Capital Development Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Cash Reserve Shares $ [ ]Class C ------------------------ [ ]AIM Charter Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Constellation Fund $ [ ]Class A [ ]Class C ------------------------ [ ]AIM Global Aggressive Growth Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Global Growth Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Global Income Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Global Utilities Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Intermediate Government Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Growth Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM High Yield Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Income Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM International Equity Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Limited Maturity Treasury Shares $ [ ]Class A ------------------------ [ ]AIM Money Market Fund $ [ ]Class A [ ]Class B ------------------------ [ ]AIM Value Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ [ ]AIM Weingarten Fund $ [ ]Class A [ ]Class B [ ]Class C ------------------------ Total $ ------------------------
If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, AIM Cash Reserve Shares will be purchased. If you are funding your retirement account through a transfer, please indicate the contribution amounts both in this section and in Section 3 of the Asset-Transfer Form. - -------------------------------------------------------------------------------- 6. ACCOUNT OPTIONS Please indicate options you desire: TELEPHONE EXCHANGE PRIVILEGE Unless indicated below, I authorize the Transfer Agent to accept instructions from any person to exchange shares in my account(s) by telephone in accordance with the procedures and conditions set forth in the Fund's current prospectus. [ ] I DO NOT want the Telephone Exchange Privilege. DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class of shares.) I have at least $5,000 in shares in my __________________________ Fund, for which no certificates have been issued, and I would like to exchange: $ into the Fund, Account # ---------------- ------------ ----------------- ($50 minimum) $ into the Fund, Account # ---------------- ------------ ----------------- ($50 minimum) $ into the Fund, Account # ---------------- ------------ ----------------- ($50 minimum) on a [ ] monthly [ ] quarterly basis starting in the month of_____________ on the [ ] 10th or [ ] 25th of the month. 14 3 DIVIDENDS AND CAPITAL GAINS (For clients over 59 1/2) All distributions are subject to income tax. [ ] Reinvest dividends and capital gains (Automatic for clients under 59 1/2.) [ ] Mail dividends and capital gains to home address [ ] Mail dividends to my bank Name of Bank --------------------------------------------------------------- Address Account # -------------------------------------- --------------------- - -------------------------------------------------------------------------------- 7. WITHHOLDING ELECTION Distributions from your IRA will be subject to an automatic federal income tax withholding of 10%, unless otherwise noted below: [ ] I do not want any federal income tax withheld from my distribution. [ ] Withhold federal income tax at a rate of _________% (NOTE: The percentage indicated must be a whole percentage and higher than 10%). - -------------------------------------------------------------------------------- 8. REDUCED SALES CHARGE (optional) RIGHT OF ACCUMULATION (This option is for Class A shares only.) I apply for Right of Accumulation reduced sales charges based on the following accounts in The AIM Family of Funds--Registered Trademark--: Fund(s) Account No(s). ------------------------------ ------------------------ ------------------------------ ------------------------ ------------------------------ ------------------------ LETTER OF INTENT I agree to the Letter of Intent provisions in the Application Instructions. I plan to invest during a 13-month period a dollar amount of at least: [ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000 - -------------------------------------------------------------------------------- 9. BENEFICIARY INFORMATION I hereby designate the following beneficiary(ies) to receive the balance in my IRA custodial account upon my death. To be effective, the designation of beneficiary and any subsequent change in designation of beneficiary must be filed with the Custodian prior to my death. The balance of my account shall be distributed in equal amounts to the beneficiary(ies) who survives me. If no beneficiary is designated or no designated beneficiary or contingent beneficiary survives me, the balance in my IRA will be distributed to the legal representatives of my estate. This designation revokes any prior designations. I retain the right to revoke this designation at any time. I hereby certify that there is no legal impediment to the designation of this beneficiary. PRIMARY BENEFICIARY(IES) Name % Relationship ------------------------------------- -------------------- Address -------------------------------------------------------------------- Street City State Zip Code Beneficiary's Social Security Number Birth Date / / -------------- -- -- -- Month Day Year Name % Relationship ------------------------------ ------ -------------------- Address -------------------------------------------------------------------- Street City State Zip Code Beneficiary's Social Security Number Birth Date / / -------------- -- -- -- Month Day Year 15 4 CONTINGENT BENEFICIARIES In the event that I die and no primary beneficiary listed above is alive, distribute all Fund accounts in my IRA to the following contingent beneficiary(ies) who survives me, in equal amounts unless otherwise indicated. Name % Relationship ------------------------------ ------ -------------------- Address -------------------------------------------------------------------- Street City State Zip Code Beneficiary's Social Security Number Birth Date / / -------------- -- -- ---- Month Day Year Name % Relationship ------------------------------ ------ -------------------- Address -------------------------------------------------------------------- Street City State Zip Code Beneficiary's Social Security Number Birth Date / / -------------- -- -- ---- Month Day Year - -------------------------------------------------------------------------------- 10. AUTHORIZATION AND SIGNATURE I hereby establish the A I M Distributors, Inc. Individual Retirement Account (IRA) appointing INVESCO Trust Company as Custodian. I have received and read the current prospectus of the investment company(ies) selected in this agreement and have read and understand the IRA custodial agreement and disclosure statement and consent to the custodial account fees as specified. I understand that a $10 annual AIM Fund IRA Maintenance Fee will be deducted in early December from my AIM IRA. WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9) Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is required to have the following certification: Under the penalties of perjury I certify by signing this Application as provided below that: 1. The number shown in Section 1 of this Application is my correct Social Security (or Tax Identification) Number, and 2. I am not subject to backup withholding either because (a) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (b) the IRS has notified me that I am no longer subject to backup withholding. (This paragraph (2) does not apply to real estate transactions, mortgage interest paid, the acquisition or abandonment of secured property, contributions to an individual retirement arrangement and payments other than interest and dividends.) You must cross out paragraph (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. In addition, the Fund hereby incorporates by reference into this section of the Application either the IRS instructions for Form W-9 or the substance of those instructions whichever is attached to this Application. SIGNATURE PROVISIONS I, the undersigned Depositor, have read and understand the foregoing Application and the attached material included herein by reference. In addition, I certify that the information which I have provided and the information which is included within the Application and the attached material included herein by reference is accurate including but not limited to the representations contained in the Withholding Information section of this Application above. (The Internal Revenue Service does not require your consent to any provision of this document other than the certifications to avoid backup withholding.) Dated / / --- --- --- Signature of IRA Shareholder ----------------------------------------------- 16 5 - -------------------------------------------------------------------------------- 11. MAILING INSTRUCTIONS Make check payable to INVESCO Trust Company. Return Application to: REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY AIM Fund Services, Inc. AIM Fund Services, Inc. P.O. Box 4739 11 Greenway Plaza, Suite 763 Houston, TX 77210-4739 Houston, TX 77046 - -------------------------------------------------------------------------------- 12. SERVICE ASSISTANCE Our knowledgeable Client Service Representatives are available to assist you between 7:30 a.m. and 6:00 p.m. Central time at 800-959-4246. 17 [AIM LOGO APPEARS HERE] 6 INSTRUCTIONS FOR IRA ASSET-TRANSFER FORM The IRA Asset-Transfer Form is used to transfer assets from an existing IRA to an AIM Prototype IRA. NOTE: It is not necessary to complete this form if the check representing the transfer of assets has been attached to the application. 1. Complete Sections 1 through 6 of the IRA Asset Transfer Form (on pages 19 through 20 of this booklet). 2. Be sure that you have included your bank account or mutual fund account number in Section 2 of the form, as well as the complete mailing address for your existing custodian. You should contact your existing custodian to verify that firm's proper mailing address. 3. Be sure that your AIM account number is in Section 3 of the form. If you do not have an AIM IRA, please complete the IRA Application included on pages 13 through 16 of this booklet. NOTE: If you currently hold AIM shares through a brokerage firm, check with your investment representative to determine if you should establish your IRA with the brokerage firm or directly with AIM. If you decide to establish your IRA directly with AIM, you must complete the AIM IRA Application. 4. Contact your existing custodian to determine whether a signature guarantee is required in Section 5 of the IRA Asset Transfer Form. Signature guarantees can be obtained at your bank or brokerage firm. 5. You may wish to attach a current account statement for your existing IRA to the IRA Asset Transfer Form. 6. Please mail any insurance or annuity policies and contracts directly to the company which issued them. Do not attach them to the IRA Application or IRA Asset Transfer Form. 7. Please mail the completed IRA Asset Transfer Form, along with the completed IRA Application (if establishing a new AIM IRA) to: REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY AIM Fund Services, Inc. AIM Fund Services, Inc. P.O. Box 4739 11 Greenway Plaza, Suite 763 Houston, TX 77210-4739 Houston, TX 77046 NOTE: If your existing account is a qualified plan, such as a profit sharing, 401(k) or 403(b) plan, please complete the Direct Rollover Form on page 23. Refer to the Instructions for Direct Rollover Form to complete that form. 18 7 [AIM LOGO APPEARS HERE] IRA ASSET-TRANSFER FORM Use this form only when transferring assets from an existing IRA to an AIM IRA. Note: Use this form ONLY if you want AIM to request the money directly from another custodian. Complete Sections 1-5. If you do not already have an AIM IRA, you must also submit an AIM IRA Application. AIM will arrange the transfer for you. - -------------------------------------------------------------------------------- 1. INVESTOR INFORMATION (PLEASE PRINT OR TYPE.) Name ----------------------------------------------------------------------- First Name Middle Last Name Address -------------------------------------------------------------------- Street ---------------------------------------------------------------------------- City State Zip Code Social Security Number Birth Date / / ---------------------- -- -- -- Month Day Year Home Telephone ( ) Work Telephone ( ) --- ----------------- --- ----------------- - -------------------------------------------------------------------------------- 2. CURRENT TRUSTEE/CUSTODIAN Name of Resigning Trustee -------------------------------------------------- Account Number of Resigning Trustee ---------------------------------------- Address of Resigning Trustee ----------------------------------------------- Street ---------------------------------------------------------------------------- City State Zip Code Attention Telephone ---------------------------------- ----------------------- - -------------------------------------------------------------------------------- 3. IRA ACCOUNT INFORMATION Please deposit proceeds in my [ ]New* [ ]Existing Existing AIM Account Number ------------------ [ ]IRA Account [ ]Rollover IRA Account [ ]SEP IRA Account [ ]SARSEP IRA Account INVESTMENT ALLOCATION: Fund Name Class % --------------------------- --------------------- ------------ Fund Name Class % --------------------------- --------------------- ------------ Fund Name Class % --------------------------- --------------------- ------------ *If this is a new AIM IRA account, you must attach a completed AIM IRA Application. If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be purchased. - -------------------------------------------------------------------------------- 4. TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN OPTION 1: Please liquidate from the account(s) listed in Section 2 and issue a check to my IRA with INVESCO Trust Company. Amount to liquidate: [ ] All [ ] Partial amount of $_______________ When to liquidate: [ ] Immediately [ ] At maturity ____ /___ /___ OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund, you may choose to transfer them "in kind.") Please deposit "in kind" the shares of the AIM Fund held in my account to INVESCO Trust Company. NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED. Amount to transfer "in kind" immediately:[ ]all [ ] partial amount of shares_____________ 19 8 - -------------------------------------------------------------------------------- 5. AUTHORIZATION AND SIGNATURE I have established an Individual Retirement Account with the AIM Funds and have appointed INVESCO Trust Company as the successor Custodian. Please accept this as your authorization and instruction to liquidate or transfer in kind the assets noted above, which your company holds for me. Your Signature Date / / ---------------------------------- ----- ----- ----- Note: Your resigning trustee or custodian may require your signature to be guaranteed. Call that institution for requirements. Name of Bank or Brokerage Firm --------------------------------------------- Signature Guaranteed by --------------------------------------------------- (Name and title) - -------------------------------------------------------------------------------- 6. DISTRIBUTION ELECTION INFORMATION SECTION 6 OF FORM TO BE COMPLETED BY PRIOR CUSTODIAN If this participant is age 70 1/2 or older this year, the resigning Trustee/Custodian must complete this section. Election made by the participant as of the required beginning date: 1. Method of calculation [ ] declining years [ ] recalculation [ ] annuitization [ ] amortization 2. Life expectancy [ ] single life payout [ ] joint life expectancy factor-Joint birth date and relationship________________ 3. The amount withheld from this rollover to satisfy this year's required distribution $____________________ The life-expectancy ages used to calculate this required payment was _________________________________________ Signature of Current Custodian/Trustee ------------------------------------ - -------------------------------------------------------------------------------- REMAINDER OF FORM TO BE COMPLETED BY AIM 7. CUSTODIAN ACCEPTANCE This is to advise you that INVESCO Trust Company, as custodian, will accept the account identified above for: Depositor's Name Account Number -------------------- --------------------- This transfer of assets is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt of all or any of the plan assets. No federal income tax is to be withheld from this transfer of assets. Authorized Signature Mailing Date / / ------------------------ ---- ---- ---- (INVESCO Trust Company) - -------------------------------------------------------------------------------- 8. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN Please attach a copy of this form to the check and return to: INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Make check payable to INVESCO Trust Company. Indicate the AIM account number and the social security number of the IRA holder on all documents. 20 [AIM LOGO APPEARS HERE] 9 [AIM LOGO APPEARS HERE] DIRECT ROLLOVER FORM To directly roll over distributions from your employer's qualified plan to your AIM IRA. Note: Use this form ONLY if you want AIM to request the money directly from another custodian. Effective January 1, 1993, the Unemployment Compensation Amendments of 1992 require that certain distributions from 403(b) accounts and employer qualified plans (Keogh, money purchase pension, profit sharing and 401(k) plans) are subject to 20% withholding tax, unless the distribution is "directly rolled over" to a new employer's qualified plan, a 403(b) account or an IRA. Your employer will inform you what portion of your distribution is eligible for rollover. Please use this form to request a "direct rollover" to your AIM IRA. If you currently do not have an IRA, you must also submit an AIM IRA Application with this request. You may also use your former employer's direct rollover form. PLEASE CONTACT YOUR EMPLOYER TO DETERMINE IF ADDITIONAL FORMS ARE REQUIRED. - -------------------------------------------------------------------------------- 1 PLAN TYPE Indicate type of retirement plan to be rolled over. [ ] 403(b) Plan [ ] Employer's Qualified Retirement Plan - -------------------------------------------------------------------------------- 2 INVESTOR INFORMATION (Please print or type.) Name ------------------------------------------------------------------------- First Name Middle Last Name Address ---------------------------------------------------------------------- Street City State Zip Code Social Security Number Birth Date / / -------------------- ---- ---- ---- Day Phone ( ) Month Day Year ---- ------------ - -------------------------------------------------------------------------------- 3 CURRENT PLAN CUSTODIAN OR FORMER EMPLOYER INFORMATION Name of Resigning Custodian or Former Employer ------------------------------ Former Employer Plan Name or Fund Account Number ------------------- -------- Address of Releasing Institution -------------------------------------------- City State Zip Code ----------------------- ------------- --------- Attention Telephone ------------------------------ --------------------- - -------------------------------------------------------------------------------- 4 ROLLOVER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN OPTION 1: Please liquidate from the account(s) listed in Section 3 and issue a check to my IRA with INVESCO Trust Company. Amount to liquidate: [ ] All [ ] Partial amount of $_______________ When to liquidate: [ ] Immediately [ ] At maturity_____ /_____ /_____ OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund, you may choose to roll them over "in kind.") NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE ROLLED OVER IN KIND. Amount to roll over "in kind" immediately: [ ] all [ ] partial amount of shares_____________ - -------------------------------------------------------------------------------- 5 IRA ACCOUNT INFORMATION Please deposit proceeds in my [ ] New* [ ] Existing Existing AIM Account Number ---------------- [ ] IRA Account [ ] Rollover IRA Account INVESTMENT ALLOCATION: Fund Name Class % ---------------------- ------------------------- --------- Fund Name Class % ---------------------- ------------------------- --------- Fund Name Class % --------------------- ------------------------- --------- *If this is a new AIM IRA account, you must attach a completed AIM IRA application. If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be purchased. 23 10 - -------------------------------------------------------------------------------- 6 AUTHORIZATION AND SIGNATURE I have established an Individual Retirement Account with the AIM Funds and have appointed INVESCO Trust Company as the successor Custodian. Please accept this as your authorization and instruction to liquidate or transfer in kind the assets noted above, which your company holds for me. Your Signature Date / / -------------------------------- ---- ---- ---- Note: Your resigning trustee or custodian may require your signature to be guaranteed. Call that institution for requirements. Name of Bank or Brokerage Firm --------------------------------------------- Signature Guaranteed by --------------------------------------------------- (Name and title) NOTE: SOME CUSTODIANS OF RETIREMENT PLANS REQUIRE THE COMPLETION OF THEIR OWN FORM BEFORE SENDING A CHECK TO AIM. [ ] Yes, I have [ ] No, I have not filed the necessary completed forms with the current custodian. - -------------------------------------------------------------------------------- 7 DISTRIBUTION ELECTION INFORMATION SECTION 7 OF FORM TO BE COMPLETED BY PRIOR CUSTODIAN If this participant is age 70 1/2 or older this year, the resigning Trustee/Custodian must complete this section. Election made by the participant as of the required beginning date: 1. Method of calculation [ ] declining years [ ] recalculation [ ] annuitization [ ] amortization 2. Life expectancy [ ] single life payout [ ] joint life expectancy factor-Joint birth date and relationship______ 3. The amount withheld from this rollover to satisfy this year's required distribution $____________________ The life-expectancy ages used to calculate this required payment was _______ Signature of Current Custodian/Trustee ------------------------------------- - -------------------------------------------------------------------------------- REMAINDER OF FORM TO BE COMPLETED BY AIM 8 CUSTODIAN ACCEPTANCE This is to advise you that INVESCO Trust Company, as custodian, will accept the account identified above for: Depositor's Name Account Number --------------------- ---------------------- This direct rollover is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt of all or any of the plan assets. No federal income tax is to be withheld from this direct rollover. Authorized Signature Mailing Date / / ------------------------- ---- ---- ---- (INVESCO Trust Company) - -------------------------------------------------------------------------------- 9 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN Please attach a copy of this form to the check and return to: INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Make check payable to INVESCO Trust Company. Indicate the AIM account number and the social security number of the IRA holder on all documents. 24 [AIM LOGO APPEARS HERE] 11 [AIM LOGO APPEARS HERE] AUTOMATIC BANK DRAFT To establish regular, monthly purchases of Fund shares. The Automatic Bank Draft is a service available to shareholders of The AIM Family of Funds--Registered Trademark--, making possible regular, monthly purchases of Funds to allow dollar-cost averaging. Each month, A I M Fund Services,Inc. will arrange for an amount of money selected by you ($50 minimum per Fund) to be deducted from your checking account and used to purchase shares of a specified AIM Fund. You will receive confirmations from A I M Fund Services, Inc., and your bank statement will reflect the amount of the draft. - -------------------------------------------------------------------------------- 1 DRAFT AMOUNT I authorize you to withdraw a total of $ __________________ ($50 minimum per Fund) from my checking account at the bank shown below, beginning in __________________________________ and invest this amount in shares of the AIM Fund listed below. You have the option of selecting the 10th, 25th or both dates each month for the automatic bank draft. Please refer to Section 2 for this selection. ALL DRAFTS WILL BE CONSIDERED CURRENT-YEAR IRA CONTRIBUTIONS. I agree that if the check is not honored by my bank upon presentation, AIM Fund Services, Inc. may discontinue this service. I also authorize AIM Fund Services, Inc. to liquidate sufficient shares of the Fund to make up any deficiency resulting from a dishonored check. I understand that this program may be discontinued at any time by the Fund or by myself by written notice to AIM Fund Services, Inc. received no later than ten business days prior to the above designated investment date. - -------------------------------------------------------------------------------- 2 FUND ACCOUNT INFORMATION (Please enter information exactly as your account is registered.) Name(s) AIM Account # --------------------------------- ----------------------- --------------------------------- Fund $ --------------------- -------------------------------------------------- $50 Minimum per draft. Draft date: [ ]10th [ ]25th Fund $ --------------------- -------------------------------------------------- $50 Minimum per draft. Draft date: [ ]10th [ ]25th Fund $ --------------------- -------------------------------------------------- $50 Minimum per draft. Draft date: [ ]10th [ ]25th Fund $ --------------------- -------------------------------------------------- $50 Minimum per draft. Draft date: [ ]10th [ ]25th Fund $ --------------------- -------------------------------------------------- $50 Minimum per draft. Draft date: [ ]10th [ ]25th *Total $ -------------------------------- Signature Signature -------------------------- ------------------------------ (All registered owners must sign.) (All registered owners must sign.) *Please note that each draft (per Fund account) will be treated as a separate item by your bank. - -------------------------------------------------------------------------------- 3 BANK AUTHORIZATION Name of Bank ----------------------------------------------------------------- Address of Bank -------------------------------------------------------------- Bank Account # ABA Routing # ---------------------- --------------------------- Please honor checks on my account by The Shareholders Services Group, Inc. (TSSG), a wholly-owned subsidiary of First Data Corporation. Your authority to do so shall continue until you receive further notice from me revoking this authority. You may terminate your participation in this arrangement by written notice either to TSSG or me. I agree that your rights with respect to each check shall be the same as if it were drawn by me. I further agree that should any check be dishonored, with or without cause, intentionally or inadvertently, you shall be under no liability whatsoever. ------------------------------- ------------------------------------------- Depositor's Name (please print) Signature (exactly as appearing on bank records) ------------------------------- ------------------------------------------- Depositor's Name (please print) Signature (exactly as appearing on bank records) 25 12 - -------------------------------------------------------------------------------- 4 VOIDED CHECK ATTACH YOUR VOIDED CHECK HERE. AIM Fund Services, Inc. P.O. Box 4739 Houston, Texas 77210-4739 Phone: 800-959-4246 [Voided Check Graphic] 26 [AIM LOGO APPEARS HERE] 13 [AIM LOGO APPEARS HERE] Form 5305-A (Rev. October 1992) Department of the Treasury Internal Revenue Service INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT (under Section 408(a) of the Internal Revenue Code) Please fill out and retain with your tax records. Do NOT file with Internal Revenue Service or AIM. - -------------------------------------------------------------------------------- Name of depositor --------------------------------------------------------------- Date of birth of depositor / / Social Security Number ----- ----- ----- ----------- Month Day Year Address of depositor [ ] Check if Amendment ------------------------------------- Name of Custodian INVESCO Trust Company Address or principal place of business of custodian The State of Colorado The Depositor whose name appears above is establishing an individual retirement account under section 408(a) to provide for his or her retirement and for the support of his or her beneficiaries after death. The Custodian named above has given the Depositor the disclosure statement required under Regulations section 1.408-6. The Depositor assigned the custodial account ________ dollars ($______) in cash. The Depositor and the Custodian make the following agreement: - -------------------------------------------------------------------------------- A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT ARTICLE I The Custodian may accept additional cash contributions on behalf of the Depositor for a tax year of the Depositor. The total cash contributions are limited to $2,000 for the tax year unless the contribution is a rollover contribution described in section 402(c) (but only after December 31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified employee pension plan as described in section 408(k). Rollover contributions before January 1, 1993, include rollovers described in section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified employee pension plan as described in section 408(k). ARTICLE II The Depositor's interest in the balance in the custodial account is nonforfeitable. ARTICLE III 1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance contracts, nor may the assets of the custodial account be commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5)). 2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within the meaning of section 408(m)) except as otherwise permitted by section 408(m)(3) which provides an exception for certain gold and silver coins and coins issued under the laws of any state. ARTICLE IV 1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the distribution of the Depositor's interest in the custodial account shall be made in accordance with the following requirements and shall otherwise comply with section 408(a)(6) and Proposed Regulations section 1.408-8, including the incidental death benefit provisions of Proposed Regulations section 1.401(a)(9)-2, the provisions of which are incorporated by reference. 2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin to the Depositor under paragraph 3, or to the surviving spouse under paragraph 4, other than in the case of a life annuity, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Depositor and the surviving spouse and shall apply to all subsequent years. The life expectancy of a nonspouse beneficiary may not be recalculated. 3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or begin to be, distributed by the Depositor's required beginning date (April 1 following the calendar year end in which the Depositor reaches age 70 1/2. By that date, the Depositor may elect, in a manner acceptable to the Custodian, to have the balance in the custodial account distributed in: (a) A single-sum payment. (b) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the life of the Depositor. (c) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the joint and last survivor lives of the Depositor and his or her designated beneficiary. (d) Equal or substantially equal annual payments over a specified period that may not be longer than the Depositor's life expectancy. (e) Equal or substantially equal annual payments over a specified period that may not be longer than the joint life and last survivor expectancy of the Depositor and his or her designated beneficiary. 4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to him or her, the entire remaining interest will be distributed as follows: (a) If the Depositor dies on or after distribution of his or her interest has begun, distribution must continue to be made in accordance with paragraph 3. (b) If the Depositor dies before distribution of his or her interest has begun, the entire remaining interest will, at the election of the Depositor or, if the Depositor has not so elected, at the election of the beneficiary or beneficiaries, either (i) Be distributed by the December 31 of the year containing the fifth anniversary of the Depositor's death, or (ii) Be distributed in equal or substantially equal payments over the life expectancy of the designated beneficiary or beneficiaries starting by December 31 of the year following the year of the Depositor's death. If, however, the beneficiary is the Depositor's surviving spouse, then this distribution is not required to begin before December 31 of the year in which the Depositor would have turned age 70 1/2. (c) Except where distribution in the form of an annuity meeting the requirements of section 408(b)(3) and its related regulations has irrevocably commenced distributions are treated as having begun on the Depositor's required beginning date, even though payments may actually have been made before that date. (d) If the Depositor dies before his or her entire interest has been distributed and if the beneficiary is other than the surviving spouse, no additional cash contributions or rollover contributions may be accepted in the account. 5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or substantially equal annual payments, to determine the minimum annual payment for each year, divide the Depositor's entire interest in the Custodial account as of the close of business on December 31 of the preceding year by the life expectancy of the Depositor (or the joint life and last survivor expectancy of the Depositor and the Depositor's designated beneficiary, or the life expectancy of the designated beneficiary, whichever applies). In the case of distributions under paragraph 3, determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the Depositor and designated beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2. In the case of distribution in accordance with paragraph 4(b)(ii), determine life expectancy using the attained age of the designated beneficiary as of the beneficiary's birthday in the year distributions are required to commence. 27 14 6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the minimum distribution requirements described above. This method permits an individual to satisfy these requirements by taking from one individual retirement account the amount required to satisfy the requirement for another. ARTICLE V 1. THE DEPOSITOR AGREES to provide the Custodian with information necessary for the Custodian to prepare any reports required under section 408(i) and Regulations sections 1.408-5 and 1.408.6. 2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service and the Depositor prescribed by the Internal Revenue Service. ARTICLE VI Notwithstanding any other articles which may be added or incorporated, the provisions of Articles I through III and this sentence will be controlling. Any additional articles that are not consistent with section 408(a) and the related regulations will be invalid. ARTICLE VII This agreement will be amended from time to time to comply with the provisions of the Code and related regulations. Other amendments may be made with the consent of the persons whose signatures appear below. ARTICLE VIII 1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual Retirement Custodial Account Agreement and the related IRA Account Application (referred to herein as the "IRA Adoption Agreement") (such Agreements being collectively referred to herein as the "Agreement"), the Depositor directs the Custodian to invest all custodial account funds after deductions for sales charges and Custodian fees, in shares issued by the investment company or companies selected by the Depositor on the related IRA Adoption Agreement, until the Depositor hereafter gives the Custodian contrary instructions pursuant to Article XIII below. The investment companies from which the Depositor may select are enumerated on the applicable list prepared by A I M Distributors, Inc. (the "Distributor"), a copy of which accompanies the Adoption Agreement. Such investment companies are part of "The AIM Family of Funds--Registered Trademark--," which are managed or advised by subsidiaries of A I M Management Group Inc., and any such investment company will hereafter be referred to as "Investment Company." 2. (i) ANNUAL CASH CONTRIBUTIONS: The Depositor may make annual cash contributions to the account within the limits specified in Article I. All contributions shall be hand delivered or mailed to the Custodian by the Depositor, with an indication of the taxable year to which such contribution relates. Additionally, if the Depositor's employer maintains a qualified simplified employee pension (SEP), such employer may contribute on behalf of the Depositor, the lesser of 15% of the Depositor's compensation from such employer or $30,000. (ii) ROLLOVER CONTRIBUTIONS: In addition to any annual contributions referred to in Paragraph (i) above, but subject to this Paragraph (ii), the Depositor may contribute to the account, at any time, a rollover contribution of such cash or other property as shall constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the account all rollover contributions which consist of cash, and it may, but shall be under no obligation to, accept any other rollover contribution. In the case of rollover contributions composed of assets other than cash, the prospective Depositor shall provide the Custodian with a description of such assets and such other information as the Custodian may reasonably require. The Custodian may accept all or any part of such a rollover contribution if it determines that the assets of which such contribution consists are either in a medium proper for investment hereunder or that the assets can be promptly liquidated for cash. The Depositor warrants that any rollover contribution to the account consists of cash, the same property received in the distribution or, in the case of amounts distributed to the Depositor from a qualified employer's plan or annuity, the proceeds from the sale of the same property received in the distribution. The Depositor also warrants that in the case of a rollover into the account of amounts distributed to the Depositor from a qualified employer's plan or annuity, only amounts in excess of the amounts considered to be the Depositor's employee contributions included in such distribution constitute the contribution to this account. Additionally, the Depositor affirms that the contribution to the account does not consist of amounts received from an inherited individual retirement account or annuity. An individual retirement account or annuity shall be treated as inherited if it was acquired by reason of the death of an individual other than the Depositor's spouse. The Depositor also affirms that in the case of a rollover into the account of amounts distributed from an individual retirement account or annuity or retirement bond, he has not during the one year period ending on the date of the distribution received any other distribution from an individual retirement account or annuity or retirement bond which constituted a rollover contribution (as described in section 408(d)(3) of the Code). 3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes, interest and penalties which might accrue or be assessed by reason of any excess deposit, and interest, if any, earned thereon. Any contributions made by or on behalf of the Depositor in respect of a taxable year of the Depositor shall be made by or on behalf of the Depositor to the Custodian for deposit in the custodial account within the time period for claiming any income tax deduction for such taxable year. It shall be the sole responsibility of the Depositor to determine the amount of the contributions made hereunder. The Depositor shall execute such forms as the Custodian may require in connection with any contribution hereunder. ARTICLE IX 1. THE CUSTODIAN SHALL from time to time, subject to the provisions of Articles IV and V, make distributions out of the custodial account to the Depositor, in such manner and amounts as may be specified in written instructions of the Depositor. All such instructions shall be deemed to constitute a certification by the Depositor that the distribution so directed is one that the Depositor is permitted to receive. A declaration of the Depositor's intention as to the disposition of an amount distributed pursuant to Article V hereof shall be in writing and given to the Custodian. The Custodian shall have no liability with respect to any contribution to the custodial account, any investment of assets in the custodial account or any distribution therefrom pursuant to instructions received from the Depositor or pursuant to this Agreement, or for any consequences to the Depositor arising from such contributions, investments or distributions including, but not limited to, excise and other taxes and penalties which might accrue or be assessed by reason thereof, nor shall the Custodian be under any duty to make any inquiry or investigation with respect thereto. 2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code), all or a portion of the balance in the custodial account may be distributed to him/her as soon as practicable after the Custodian receives written notice of the Depositor's disability and a written request for distribution. The Custodian may require such proof of disability as it deems necessary prior to the time that amounts are distributed to the Depositor due to such disability. 3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and penalties which might accrue or be assessed for having failed to make the annual minimum withdrawal required in any year. ARTICLE X A Depositor shall have the right to designate a beneficiary or beneficiaries to receive any amounts remaining in his account in the event of his death. Any prior beneficiary designation may be changed or revoked at any time by a Depositor by written designation signed by the Depositor on a form acceptable to, and filed with, the Custodian; provided, however, that such designation, or change or revocation of a prior designation shall not become effective until it has been received by the Custodian, nor shall it be effective unless received by the Custodian no later than thirty days before the death of the Depositor, and provided further that the last such designation of beneficiary or change or revocation of beneficiary executed by the Depositor, if received by the Custodian within the time specified, shall control. Unless otherwise provided in the beneficiary designation, amounts payable by reason of the Depositor's death will be paid in equal shares only to the primary beneficiary or beneficiaries who survive the Depositor, or, if no primary beneficiary survives the Depositor, to the contingent beneficiary or beneficiaries who survive the Depositor. If the Depositor had not, by the date of his death, properly designated a beneficiary in accordance with the preceding sentences, or if no designated beneficiary survives the Depositor, then the Depositor's beneficiary shall be the Depositor's estate. ARTICLE XI 1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for performing duties pursuant to this Agreement shall be in such amount as shall be established from time to time. The Depositor agrees to pay the Custodian the fees specified in its current fee schedule and authorizes the Custodian to charge the Depositor's custodian account for the amount of such fees. 2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new fee schedule. The Custodian's fees, any income, gift, estate and inheritance taxes and other taxes of any kind whatsoever, including transfer taxes incurred in connection with the investment or reinvestment of the assets of the custodial account, that may be levied or assessed in respect of such assets, and all other administrative expenses incurred by the Custodian in the performance of its duties including fees for legal services rendered to the Custodian, may be charged to the custodial account with the right to liquidate Investment Company shares for this purpose, or at the Custodian's option, shall be billed to the Depositor directly. 28 15 ARTICLE XII 1. THIS AGREEMENT SHALL take effect only when accepted and signed by the Custodian. As directed, the Custodian shall then open and maintain a separate custodial account for Depositor and invest the initial contribution hereunder in shares of the Investment Company. Where the IRA Adoption Agreement is checked for spousal accounts, separate custodial accounts will be opened and maintained in each spouse's name. The amounts specified in the IRA Adoption Agreement shall be credited to each spouse's separate custodial account except that no more than $2,000 shall be credited to either custodial account. 2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any such written instructions are not received as required however, or if received, are in the opinion of the Custodian unclear, or if the accompanying contribution exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the Custodian may hold or return all or a portion of the contribution uninvested without liability for loss of income or appreciation, and without liability for interest, pending receipt of written instructions or clarification. 3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on Investment Company shares held in the custodial account shall (unless received in additional such shares) be reinvested in shares of the Investment Company, which shall be credited to the custodial account. If any distribution on such shares may be received at the election of the Depositor in additional such shares or in cash or other property, the Custodian shall elect to receive it in additional Investment Company shares. 4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall be registered in the name of the Custodian (with or without identifying the Depositor) or of its nominees. The Custodian shall deliver, or cause to be executed and delivered, to the Depositor all notices, prospectuses, financial statements, proxies and proxy solicitation materials relating to such Investment Company shares held in the custodial account. The Custodian shall not vote any Investment Company shares except in accordance with the written instructions received from the Depositor. ARTICLE XIII 1. THE CUSTODIAN SHALL keep adequate records of transactions it is required to perform hereunder. Not later than six months after the close of each calendar year or after the Custodian's registration or removal pursuant to Article XV below, the Custodian shall render to the Depositor or the Depositor's legal representative a written report or reports reflecting the transactions effected by it during such period and the assets and liabilities of the custodial account at the close of the period. Sixty days after rendering such report(s), the Custodian shall (to the extent permitted by law) be forever released and discharged from all liability and accountability to anyone with respect to its acts and transactions shown in or reflected by such report(s), except with respect to those as to which the Depositor or the Depositor's legal representative shall have filed written objections with the Custodian within the latter such sixty-day period. 2. THE CUSTODIAN SHALL receive and invest contributions as directed by the Depositor, hold and distribute such investments, and keep adequate records and reports thereon, all in accordance with this Agreement. The parties do not intend to confer any other fiduciary duties of the Custodian, and none shall be implied. The Custodian shall not be liable (and assumes no responsibility) for the collection of contributions, the deductibility or propriety of any contribution under this Agreement, or the purposes or propriety of any distribution from the account, which matters are the responsibility of the Depositor or the Depositor's legal representative. 3. THE DEPOSITOR, to the extent permitted by law, shall always fully indemnify the Custodian and save it harmless from any and all liability whatsoever which may arise in connection with this Agreement and matters which it contemplates, except that which arises due to the Custodian's negligence and willful misconduct. The Custodian shall not be obligated or expected to commence or defend any legal action or preceding in connection with this Agreement or such matters unless agreed upon by the Custodian and Depositor or said legal representative, and unless fully indemnified for so doing to the Custodian's satisfaction. 4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting upon any written order from the Depositor or the Depositor's legal representative or any other notice, request, consent, certificate or other instruments or paper believed by it to be genuine and to have been properly executed, and as long as it acts in good faith in taking or omitting to take any other action in reliance thereon. ARTICLE XIV 1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing to the Depositor, and may be removed by the Depositor at any time upon thirty days' notice in writing to the Custodian. Upon such resignation or removal, the Depositor shall appoint a successor custodian to serve under this Agreement. Upon receipt by the Custodian of written acceptance of such appointment by the successor custodian, the Custodian shall transfer to such successor the assets of the custodial account and all necessary records (or copies thereof) pertaining thereto, provided that (at the Custodian's request) any successor custodian shall agree not to dispose of any such records without the Custodian's consent. The Custodian is authorized, however, to reserve such assets as it may deem advisable for payment of any other liabilities constituting a charge on or against the assets of the custodial account or on or against the Custodian, with any balance of such reserve remaining after the payment of all such items to be paid over to the successor custodian. 2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such successor custodian. 3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under this Agreement, must be a bank (as defined in Section 408(n) of the Code) or such other person who qualifies with the Internal Revenue Service to serve in the manner prescribed by Code section 408(a)(2) and satisfies the Custodian, upon request, as to such qualification. 4. AFTER THE CUSTODIAN HAS transferred the custodial account assets (including any reserve balance as contemplated above) to the successor custodian, the Custodian shall be relieved of all further liability with respect to this Agreement, the custodial account and the assets thereof. ARTICLE XV 1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds of the account to the depositor if within thirty days after the resignation or removal of the Custodian pursuant to Article XV above, the Depositor has not appointed a successor custodian which has accepted such appointment unless within that time the Distributor appoints such successor and gives written notice thereof to the Depositor and the Custodian. The Distributor shall have the right, but not the duty, to appoint such a successor. Termination of the custodial account shall be effected by distributing all of the assets therein in cash or in kind to the Depositor in a lump sum, subject to the Custodian's right to reserve funds as provided in said Article XV. 2. UPON TERMINATION of the custodial account in any manner provided for in this Article XVI, this Agreement shall terminate and have no further force and effect, and the Custodian shall be relieved from all further liability with respect to this Agreement, the custodial account and all assets thereof so distributed. ARTICLE XVI 1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this Agreement shall be effective when mailed if sent by first class mail to the Depositor at the Depositor's last known address as shown on the Custodian's records. Any notice required or permitted to be given to the Custodian, shall become effective upon actual receipt by the Custodian at such address as the Custodian shall provide the Depositor from time to time in writing. 2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and administered in accordance with the laws of The State of Colorado. The Custodian and the Depositor hereby waive and agree to waive right to trial by jury in an action or proceeding instituted in respect to this custodial account. The Depositor further agrees that the venue of any litigation between him and the Custodian with respect to the custodial account shall be in the State of Colorado. 3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an Individual Retirement Account and to entitle the Depositor to any retirement savings deduction which he may qualify for under section 219 of the Code, and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with that intent. 4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to regulations promulgated thereunder. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. 5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it specifically agrees to in writing, and no implied covenants or obligations shall be read into this Agreement against the Custodian. The Custodian shall not be liable under this Agreement, except for its own bad faith, gross negligence or willful misconduct. 6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or any payment therefrom shall be assignable, transferable, or subject to sale, mortgage, pledge, hypothecation, communication, anticipation, garnishment, attachment, execution, or levy of any kind and the Custodian shall not recognize any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or anticipate the same, except as required by law. 7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this Agreement from time to time as it deems appropriate, and hereby consents to all such amendments, provided, however, that all such amendments are in compliance with the provisions of the Code and the regulations promulgated thereunder. All such amendments shall be effective as of the date specified in a written notice of amendment which will be sent to the Depositor. 29 16 INSTRUCTIONS (Section references are to the Internal Revenue Code unless otherwise noted.) PURPOSE OF FORM This model custodial account agreement may be used by an individual who wishes to adopt an individual retirement account under section 408(a). When fully executed by the Depositor and the Custodian not later than the time prescribed by law for filing the Federal income tax return for the Depositor's tax year (not including any extensions thereof), a Depositor will have an individual retirement account (IRA) custodial account which meets the requirements of section 408(a). This account must be created in the United States for the exclusive benefit of the Depositor or his/her beneficiaries. DEFINITIONS Custodian. -- The Custodian must be a bank or savings and loan association, as defined in section 408(n), or other person who has the approval of the Internal Revenue Service to act as custodian. DEPOSITOR. -- The Depositor is the person who establishes the custodial account. IRA FOR NON-WORKING SPOUSES Contributions to an IRA custodial account for a non-working spouse must be made to a separate IRA custodial account established by the non-working spouse. This form may be used to establish the IRA custodial account for the non-working spouse. An individual's social security number will serve as the identification number of his or her individual retirement account. For more information, obtain a copy of the required disclosure statement from your custodian or get Publication 590, Individual Retirement Arrangements. (IRAs). SPECIFIC INSTRUCTIONS Article IV -- Distribution made under this Article may be made in a single sum, periodic payment, or a combination of both. The distribution option should be reviewed in the year the Depositor reaches age 70 1/2 to make sure the requirements of section 408(a)(6) have been met. Article IX -- This article and any that follow it may incorporate additional provisions that are agreed upon by the Depositor and the Custodian to complete the agreement. These may include, for example: definitions, investment powers, voting rights, exculpatory provisions, amendment and termination, removal of Custodian, Custodian's fees, state law requirements, beginning date of distributions, accepting only cash, treatment of excess contributions, prohibited transactions with the Depositor, etc. Use additional pages if necessary and attach them to this form. Note: This form may be reproduced and reduced in size for adoption to passbook or card purposes. THE AIM FAMILY OF FUNDS--Registered Trademark-- INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT DISCLOSURE STATEMENT Under applicable federal regulations, a custodian of an individual retirement account is required to furnish each depositor who has established or is establishing an individual retirement account with a statement which discloses certain information regarding the account. INVESCO Trust Company (hereinafter referred to as the "Custodian") is providing this Disclosure Statement to you in accordance with that requirement, and this Disclosure Statement contains general information about the The AIM Family of Funds--Registered Trademark-- Individual Retirement Custodial Account (hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed in conjunction with both the Individual Retirement Custodial Account agreement (From 5305-A and any attachments thereto, hereinafter referred to as the "Custodial Agreement") and the Adoption Agreement for your IRA. You should review this Disclosure Statement and the IRA documents with your attorney or tax advisor. The Custodian cannot give tax advice or determine whether or not the IRA is appropriate for you. A. SEVEN DAY RIGHT TO REVOKE YOUR IRA. You may revoke your IRA at any time within seven business days after the date the IRA is established, by giving proper notice. For purposes of revocation, it will be assumed that you received the Disclosure Statement no later than the date of your check with which you opened your IRA. Written notice must be hand delivered or sent by first class mail, in which case, the revocation will be effective as of the date the notice is postmarked (or if sent by certified or registered mail, the date of certification or registration). Notice of revocation should be made to: A I M Distributors, Inc., Eleven Greenway Plaza, Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention: Shareholder Services Department, area code (800) 959-4246. If you revoke your IRA, you are entitled to a refund of your entire contribution to the IRA, without adjustment for such items as sales commissions, administrative expenses or fluctuation in market value. If you do not revoke within seven business days after the establishment of the IRA, you will be deemed to have accepted the terms and conditions of the IRA and cannot later revoke the IRA without certain potential penalties. B. STATUTORY REQUIREMENTS. An IRA is a trust or custodial account created or organized in the United States for your exclusive benefit or that of your beneficiaries. It must be created by a written governing instrument that meets the following requirements: (1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union, savings and loan association or another person eligible to act as trustee or custodian; (2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no contribution will be accepted unless it is in cash or cash equivalent, including, but not by way of limitation, personal checks, cashier's checks, and wire transfers; (3) EXCEPT FOR ROLLOVERS and simplified employee pension ("SEP") contributions, contributions of more than $2,000 for any tax year may not be made; (4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT; (5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life insurance contracts, nor may the assets be commingled with other property except in a common trust fund or common investment fund. Furthermore, as provided in section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"), your IRA may not be invested in "collectibles," such as art works, antiques, metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and silver coins), and certain other types of tangible personal property. An investment in a collectible would be treated as a distribution from your IRA which would be includible in your gross income, and, if you had not attained the age of 59 1/2, the distribution would also be subject to the premature distribution penalty as discussed in Part E(4) below; (6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed on or before April 1 of the calendar year following the calendar year in which you reach age 70 1/2. The distribution may be made in a single sum, or you may receive periodic distributions, so long as your entire interest is distributed in equal or substantially equal payments over any of the following periods: (a) your life; (b) the lives of you and your designated beneficiary; (c) a period certain not extending beyond your life expectancy; (d) a period certain not extending beyond the life expectancy of you and your designated beneficiary. If the distributions from your IRA are to be made over one of the foregoing periods, the amount distributed each year must meet the minimum distribution requirements set forth in your IRA Custodial Agreement, or you will incur a penalty as described in Part E(8) below; (7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire interest has been distributed to you, payments must continue at least as rapidly as under the method of distribution in effect, at your death. If you die before distributions have commenced, generally your entire interest must be distributed within five years of your death. However, if your interest is payable to a designated beneficiary, payments may be made over the life or a period not exceeding the life expectancy of the beneficiary; provided, however, that such payments must commence within one year of your death unless your designated beneficiary is your surviving spouse, in which case payments need not commence until the date on which you would have attained age 70 1/2. You should advise the Custodian as to your beneficiary and the method of distribution desired. C. INVESTMENT OF YOUR IRA. Under the terms of the Custodial Agreement, your contributions will be invested by the Custodian in full and fractional shares of the investment company or companies that you select. As provided in the Custodial Agreement, you may only invest your IRA Funds in shares of investment companies which are part of "The AIM Family of Funds--Registered Trademark--," which are managed or advised by subsidiaries of A I M Management Group Inc. You will be provided with a list of the investment companies from which you may choose to invest. Subject to the foregoing and to any additional restrictions described in the Custodial Agreement, you have complete control over the investment of your IRA Funds. The Custodian will not provide any form of investment advice or make investment recommendations of any type, so you will make all investment decisions on the basis of information you obtain from other sources. When you make a decision on how you wish to invest Funds held in your IRA, you should provide the Custodian with specific 30 17 instructions, detailing your investment decision so that the Custodian can effectuate such investments as provided in your IRA Custodial Agreement. If you fail to direct the Custodian as to the Investment of all or any portion of your IRA account, the Custodian shall hold such uninvested amount in your account and shall incur no liability for interest or earnings thereon. All dividends and capital gain distributions received on shares of an investment company held in your IRA will be reinvested in shares of that investment company, if available, which shall be credited to the Custodian account. Detailed information about the shares of the AIM fund(s) you select must be furnished to you in the form of prospectuses governed by rules of the Securities and Exchange Commission. D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS. Except in the case of rollover contributions (see Part F below), generally you may contribute up to the lesser of $2,000 or 100% of your compensation (earned income) to your IRA for any taxable year. A non-working spouse may contribute up to $2,000 to a separate IRA. Section 219 of the Code contains special provisions governing whether amounts contributed to your IRA will be deductible from gross income for federal income tax purposes. To the extent you are not eligible or elect not to make deductible IRA contributions, you may make nondeductible IRA contributions within the aforementioned limits which are reduced by the amount of any deductible contributions. The following is a summary of the rules regarding the deductibility of contributions to your IRA. You should consult your tax advisor to determine the specific application of such rules to your IRA contributions for any particular taxable year. (1) IF NEITHER YOU NOR YOUR SPOUSE IS an "active participant" (as determined under section 219(g) of the Code and any regulations or rulings thereunder) in a retirement plan during any part of the taxable year, you may take a deduction for contributions to your IRA for such taxable year in an amount equal to the lesser of $2,000 or 100% of your compensation (earned income) for such taxable year. (2) IF EITHER YOU OR YOUR SPOUSE (unless you file separate income tax returns as noted below) is considered an "active participant" in a retirement plan for any part of the taxable year, the extent, if any, to which contributions to your IRA will be deductible depends on the amount of your adjusted gross income ("AGI"). The maximum IRA deduction as specified in Paragraph (1) above will be reduced in the same ratio that the excess of your AGI over $25,000 (for a single individual), $40,000 (for a married couple filing jointly) and zero (for a married couple filing separately) bears to $10,000. Thus, if you are an active participant in a retirement plan, no IRA deduction will be permitted if: (a) You are a single individual with AGI in excess of $35,000, (b) you are married and file a joint return with AGI in excess of $50,000, or (c) you are married, file separate returns and either you or your spouse have AGI in excess of $10,000. (3) IF YOU ARE MARRIED and your spouse has no compensation for the taxable year, or elects to be treated as having no compensation for such year, you are permitted an additional deduction in the amount of $2,000 for contributions to an IRA for the benefit of your spouse provided that your spouse has not attained age 70 1/2 and you file a joint income tax return for such year, subject to the provisions of (1) or (2) above, whichever is applicable. (see below) You will be considered an "active participant" for any particular taxable year if you are covered by a retirement plan for any part of such year. Generally, you will be considered covered by a retirement plan for a year if your employer or union has a retirement plan under which money is added to your account or you are eligible to earn retirement credits for such year. For example, if you are covered under a profit-sharing plan, certain government plans, a salary reduction arrangement (such as a tax-sheltered annuity arrangement or a 401(k) plan), a SEP or a plan which promises you a retirement benefit which is based upon the number of years of service you have with the employer, you are likely to be an active participant. Your Form W-2 for the year should indicate your participation status. You are an active participant for a year even if you are not yet vested in your retirement benefit. Also, if you make required contributions or voluntary employee contributions to a retirement plan, you are an active participant. In certain plans you may be an active participant even if you were only with the employer for part of the year. You should note that if you are married but file a separate tax return, and you did not live with your spouse at any time during the taxable year, your spouse's active participation does not affect your ability to make deductible contributions. No deduction will be allowed under (1) or (2) above for any contribution which is made for the taxable year during which you attain age 70 1/2 or for any subsequent year. You are permitted to contribute and deduct up to $4,000 for contributions to your IRA and a spousal IRA, subject to the provisions of (1) and (2) above. However, in no event shall the contribution to either IRA exceed $2,000. It should be noted that if both you and your spouse work, each may contribute up to $2,000 of compensation (earned income) to his or her own IRA. If your employer maintains a SEP, your employer may contribute to your IRA up to the lesser of 15% of your compensation from such employer or $30,000. Since SEP contributions are excluded from your gross income, such contributions are not deductible for federal income tax purposes. If contributions to your IRA are deductible as outlined above, you may claim such deduction even if you do not itemize your deductions on your federal income tax return. You must make contributions to your IRA during the taxable year for which you claim the deduction or by the deadline for filing your federal income tax return for such year (without regard to any filing deadline extension). For example, if you are a calendar-year taxpayer, you must make contributions no later than April 15th in order to take a deduction for the previous year. If any portion of a contribution to your IRA is nondeductible as outlined above, you must so designate on your federal income tax return, as required under section 408(o)(4) of the Code and file From 8606 with your tax return. E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS. (1) IN GENERAL. Except as described below, your IRA and earnings thereon are exempt from federal income tax until distributions are made from the IRA. (2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other than rollover contributions) have been deductible for federal income tax purposes then all distributions from your IRA will be taxable as ordinary income. However, if you have made any nondeductible IRA contributions, distributions from your IRA will be treated as partially a return of deductible contributions, if any, (taxable), partially a return of nondeductible contributions (nontaxable) and partially a distribution of earnings (taxable). The portion of an IRA distribution which will be excludable from income will be determined by multiplying the total amount distributed by a fraction, the numerator of which is the aggregate of all your nondeductible IRA contributions, and the denominator of which is the aggregate balance of all of your IRAs (including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of your IRAs will be treated as a single IRA, (b) all distributions during a taxable year will be treated as a single distribution and (c) the aggregate balance of your IRAs will be determined as of the end of the calendar year with or within which your taxable year ends, after adding back any distributions for such year. Distributions from your IRA are not eligible for any special tax treatment such as five-or ten-year averaging or capital gains treatment. (3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the limits stated in Part D above, you will be assessed a 6% nondeductible excise tax on such excess amounts. This tax is payable for each year the excess is permitted to remain in your IRA. However, if the excess contribution has not been taken as a deduction, and if the excess and all earnings thereon are returned before the due date for filing your income tax return for the year in which the excess contribution was made, the 6% excise tax will not be assessed. The earnings on such excess contribution that are returned to you will be taxable as ordinary income and will be deemed to have been earned and taxable in the tax year during which the excess contribution was made. In addition, if you are not disabled or have not reached age 59 1/2, the earnings will be subject to the 10% premature withdrawal penalty discussed below. The 6% excess contribution tax may be eliminated for future tax years by withdrawing the excess contribution from your IRA before the due date for filing your tax return for that year or by under-contributing for a subsequent year by an amount equal to the excess contribution. If the total contributions for the year to your IRA are $2,000 or less, and there are no employer contributions for the year, you may withdraw any excess contributions after the due date for filing your tax return, including extensions, and not include the amount withdrawn in your gross income. This applies only to the part of the excess that you did not take a deduction for. It is not necessary to withdraw the interest or other income earned on the excess. You will have to pay the 6% tax on the excess amount for each year the excess contribution was in the IRA. If the contributions to your IRA for any year are more than $2,000, you must include in your gross income any excess over $2,000, unless it is an excess rollover contribution attributable to erroneous information. You may also have to pay a 10% tax on premature distributions on the amount you withdraw, unless you are age 59 1/2 or disabled. If less than the maximum amount of contributions has been made in years before the year you make an excess contribution, the prior year's difference may not be used to reduce the excess contribution. Qualified rollover contributions, as described in Part F below, are not considered excess contributions. (4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may be payable, distributions from your IRA that occur before you reach age 59 1/2 (except in the event of disability, death, rollover, medical expenses in excess of 7.5% of adjusted gross income, medical insurance premiums in the event of unemployment or as a qualifying distribution of an excess contribution), will be assessed a 10% additional income tax on the amount distributed which is includible in your gross income. However, the additional 10% income tax will not be imposed if the distribution is one of a scheduled series of level payments to be made over your life or life expectancy or over the joint lives or joint life expectancies of you and your beneficiary. Amounts treated as distributions from the IRA because of pledging the IRA as described below, or prohibited transactions as described below, will also be considered premature distributions if they occur before you reach age 59 1/2 (assuming you are not disabled). 31 18 (5) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the portion so pledged is treated as being distributed to you in that year. In addition to any regular income tax that may be payable on the distribution, the premature distribution penalty as discussed above may also be applicable. (6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a prohibited transaction, as described in section 4975 of the Code with respect to your IRA, your IRA will lose its exemption from tax and you must include the fair market value of your IRA in your gross income for the year during which the prohibited transaction occurred. In addition to any regular income tax that may be payable, the premature distribution penalty as discussed above may also be applicable. (7) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income tax that may be payable on distributions from your IRA, you will be assessed penalties on certain accumulations if funds in your IRA are not distributed in accordance with the rules described in Part B above. If the amount distributed from your IRA during the year is less than the minimum amount required to be distributed during such year, an excise tax will be imposed. The tax imposed is equal to 50% of the amount by which the minimum required distribution exceeds the amount actually distributed during the year. (8) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. Generally, for estate tax purposes, the value of your IRA will be fully includible in your gross estate in the event of your death. For gift tax purposes, beneficiary designations will not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who has no earned income or elects to be treated as having no earned income will qualify for the annual present interest gift exclusion. You should consult your tax advisor with respect to the application of community property laws on estate and gift tax issues relating to your IRA. (9) INHERITED IRAS. Your IRA will be treated as an inherited IRA if, upon your death, it is acquired by a beneficiary other than your surviving spouse. An inherited IRA may not be rolled over to a qualified plan or to another IRA, nor may an inherited IRA accept any regular or rollover deposits. Only a beneficiary who is your surviving spouse will be allowed to roll over the IRA funds into his or her own IRA. (10) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of distributions from your IRA is subject to federal income tax withholding unless you elect not to have withholding applied. If you elect not to have withholding applied to taxable distributions from your IRA, or if insufficient federal income tax is withheld from any distribution, you may be responsible for payment of estimated taxes, as well as for penalties under the estimated tax rules, if withholding and estimated tax payments were not sufficient. Additional information regarding withholding and the necessary election forms will be provided no later than at the time a distribution is requested. F. ROLLOVER CONTRIBUTIONS. A rollover is a tax-free distribution of cash or other assets from one retirement program to another. There are two kinds of rollover contributions to an IRA. In one, you contribute amounts distributed to you from one IRA to another IRA. With the other, you contribute amounts distributed to you from your employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable IRA contribution which is not subject to the limits on regular contributions discussed in Part D above. However, you may not deduct a rollover contribution to your IRA on your tax return. If you receive a distribution from the qualified plan of your employer or former employer, the distribution must be an "eligible rollover distribution" in order for you to be able to roll all or part of the distribution over to your IRA. The portion you contribute to your IRA will not be taxable to you until you withdraw it from the IRA. Your employer or former employer will give you the opportunity to roll over the distribution directly from the plan to the IRA. If you elect, instead, to receive the distribution, you must deposit it into the IRA within 60 days after you receive it. An "eligible rollover distribution" is any distribution from a qualified plan that would be taxable other than (1) a distribution that is one of a series of periodic payments for an employee's life or over a period of 10 years or more, (2) a required distribution after you attain age 70 1/2 and (3) certain corrective distributions. If the entire amount in your IRA has been contributed in a tax-free rollover from your employer's or former employer's qualified plan or 403(b) plan, you may later roll over the IRA to a new employer's plan if such plan permits rollovers. Your IRA would then serve as a conduit for those assets. However, you may later roll those IRA funds into a new employer's plan only if you make no further contributions to that IRA, or commingle the IRA rollover funds with existing IRA assets. G. AMENDMENTS. The Custodian of your IRA may amend the agreements establishing your IRA at any time. The Custodian will comply with the amendment procedures set forth in your Custodial Agreement. H. FINANCIAL DISCLOSURE. Because the value of assets held in your IRA is subject to market fluctuation, the value of your IRA can neither be guaranteed nor projected. There is no assurance of growth in the value of your IRA or guarantee of investment results. You will, however, be provided with periodic statements of your IRA, including current market values of investments. Certain fees will be charged by the Custodian in connection with your IRA. Such fees are disclosed on the Custodian's fee schedule, a copy of which has been provided to you. Upon thirty days' prior written notice, the Custodian may substitute a new fee schedule. Any fees or other expenses incurred in connection with your IRA will be deducted from your IRA (with liquidation of Fund Shares, if necessary), or at the Custodian's option, such fees or expenses may be billed to you directly. For its services to the various funds, in The AIM Family of Funds--Registered Trademark--, INVESCO Trust Company receives a custodian fee. This fee is in addition to fees it receives for acting as Custodian under the IRA. INVESCO Trust Company and A I M Distributors, Inc. also will receive additional fees for performing specific services with respect to the various funds in the AIM Family of Funds. Any such fees will be fully disclosed to you. Potential investors should obtain a copy of the current Prospectus relating to the fund(s) selected for investment prior to making an investment. Also, copies of the Statement of Additional Information relating to such fund(s) will be provided upon your request to A I M Distributors, Inc. I. MISCELLANEOUS. Each year you will be provided a statement(s) of account which will give the amount of contributions to the IRA, the year to which each contribution relates, and the total value of the IRA as of the end of the year. Information relating to contributions and distributions must be reported annually to the Internal Revenue Service and to you. You must also file Form 5329 (Return for Individual Retirement Savings Arrangement) with the Internal Revenue Service for each taxable year during which you are assessed any penalty or tax as discussed in Part E above. Your IRA has been approved by the Internal Revenue Service. Such approval is a determination as to the form of the IRA, and does not represent a determination of the IRA's merits as an investment. Further information about IRAs can be obtained from any district office of the Internal Revenue Service or from the Custodian. All provisions in this Disclosure Statement are subject to the Code and to the regulations promulgated thereunder. This Disclosure Statement constitutes a nontechnical restatement and summary of certain provisions of the Code which may affect your IRA. This is not a legal document. Your legal rights and obligations are governed by the federal tax laws and regulations and your Custodial Agreement and Adoption Agreement with the Custodian. 32 EX-99.B14.B2 11 REGISTRANT'S SIMPLIFIED EMPLOYEE PENSION PLAN 1 EXHIBIT 14(b)(2) SEP AND SARSEP IRA ADOPTION AGREEMENT [AIM LOGO APPEARS HERE] The undersigned Employer hereby establishes a Simplified Employee Pension Plan (SEP) and/or a Salary Reduction Simplified Employee Pension Plan (SARSEP) for the exclusive benefit of Employees who are eligible to participate. The terms of the Plan are set forth in this Adoption Agreement and the accompanying Plan Document which is hereby adopted and incorporated herein by reference. - -------------------------------------------------------------------------------- 1. EMPLOYER AND PLAN INFORMATION Employer's Name ------------------------------------------------------------- Address --------------------------------------------------------------------- Tax I.D. Number Telephone Number ---------------------------- -------------- Form of Business: [ ] Sole Proprietor [ ] Partnership [ ] Corporation [ ] Electing S Corporation Name of individual authorized to issue instructions to AIM: ---------------------------------------------------------------------------- Plan Year: Plan Type: [ ] Calendar year. [ ] SEP IRA only [ ] Employer's Taxable Year ending on . [ ] SARSEP IRA only ------ [ ] Combined SEP and SARSEP IRA - -------------------------------------------------------------------------------- 2. EFFECTIVE DATES (a) New Plan: Effective as of . ------------------ (b) Amended and Restated Plan: (i) Original Plan effective as of . ------------------------ (ii) Amended and Restated Plan effective as of . ---------------------- (c) Elective Deferrals effective as of . ----------------------- - -------------------------------------------------------------------------------- 3. ELIGIBILITY REQUIREMENTS (a) Age: [ ] No requirement. [ ] Minimum age _____________ (not over 21). (b) Service: Employees who have performed services for the Employer during at least ________ (maximum 3) of the immediately preceding 5 Plan Years. (c) Excluded Classes of Employees (select all applicable options): [ ] None. [ ] Employees covered by a collective bargaining agreement under which retirement plan benefits have been the subject of good faith bargaining. [ ] Employees whose Compensation as defined at Code Section 414(q)(7) is less than $400 (as adjusted for inflation) during the Plan Year. [ ] Non-resident aliens. - -------------------------------------------------------------------------------- 4. EMPLOYER ALLOCATION FORMULA [ ] (a) Proportionate Allocation described at paragraph 3.3(a) of the SEP and SARSEP Plan Document, or [ ] (b) Integrated Allocation described at paragraph 3.3(b) of the Plan Document. This allocation formula may not be adopted if the Employer maintains any other plan which is integrated with Social Security. 15 2 - -------------------------------------------------------------------------------- 5. EMPLOYEE ELECTIVE DEFERRALS (FOR SARSEP ONLY) % limit ________ (not to exceed 15%). Dollar limit $ _________________(not to exceed $9,240 as indexed). - -------------------------------------------------------------------------------- 6. CASH BONUS OPTION An Employee [ ] may [ ] may not defer a bonus. - -------------------------------------------------------------------------------- 7. LIMITATIONS ON USE OF PROTOTYPE An Employer may adopt this Plan even if such Employer maintains another qualified defined contribution plan, provided that contributions are limited in accordance with Code Section 415. An Employer may not participate in this Plan if the Employer maintains currently or has ever maintained a defined benefit plan which is now terminated. An Employer who participates in this Plan and who adopts a qualified defined benefit plan, may no longer participate in this Plan. Thereafter, such Employer shall be considered to have an individually drafted plan. - -------------------------------------------------------------------------------- 8. TOP-HEAVY MINIMUM CONTRIBUTIONS The Top-Heavy Plan requirements under Code Section 416 shall be satisfied by: [ ] (a) this Plan. [ ] (b) ---------------------------------------------------------------------- (Name of other qualified plan of the Employer). - -------------------------------------------------------------------------------- 9. SPONSOR CONTACT Employers should direct questions concerning the language contained in and qualification of the prototype to: A I M Distributors, Inc. Retirement Plans Department 11 Greenway Plaza, Suite 1919 P.O. Box 4333 Houston, Texas 77210-4739 (800) 998-4246 Ext. 5612 In the event that the Sponsor amends, discontinues or abandons this prototype Plan, notification will be provided to the Employer's address provided on the first page of this Agreement. - -------------------------------------------------------------------------------- 10. SIGNATURES (a) This Agreement was signed by the Employer the day of 19 . ------ --------- -- Signed for the Employer by -------------------------------------------------- Title ----------------------------------------------------------------------- Signature ------------------------------------------------------------------- (b) This Agreement was signed by AIM Distributors, Inc. the day of 19 . ---- --- - Signed for the Sponsor by -------------------------------------------------- Title ----------------------------------------------------------------------- Signature ------------------------------------------------------------------- [AIM LOGO APPEARS HERE] AIM Distributors, Inc. 43101-10/95 16 3 SEP AND SARSEP IRA PLAN DOCUMENT [AIM LOGO APPEARS HERE] AIM Distributors, Inc. hereby establishes a Prototype Plan for use, in conjunction with an Internal Revenue Service approved IRA, by Employers who wish to establish a qualified Simplified Employee Pension Plan (SEP) and/or a Salary Reduction Simplified Employee Pension Plan, sometimes called a SARSEP. If the Employer executes an Adoption Agreement which is accepted by AIM Distributors, Inc. and which incorporates this document by reference, the Boston Safe Deposit & Trust will act as custodian or trustee of the IRA plans established by Employees eligible to receive contributions under the terms of this Plan. The salary reduction feature of this prototype SEP and SARSEP may not be used by an Employer who: 1) at any time during the prior Plan Year had more than 25 Employees who would have been eligible to participate; 2) has any leased employees within the meaning of Code Section 414(n)(2); 3) is a governmental or tax-exempt entity; 4) has eligible Employees whose taxable year is not the calendar year; 5) has less than 50% of the Employees that are eligible to make Elective Deferrals elect to have Elective Deferrals made to the Plan. No part of this prototype document may be used if the Employer currently maintains or has ever maintained a defined benefit pension plan which is now terminated. The Employer's SARSEP shall contain the following terms and conditions: ARTICLE I DEFINITIONS 1.1 ADOPTION AGREEMENT The document attached hereto by which the Employer elects to establish a qualified Salary Reduction Simplified Employee Pension Plan under the terms of this Prototype Plan. 1.2 CODE The Internal Revenue Code of 1986, including any amendment thereto. 1.3 COMPENSATION The total wages, salaries, fees (for professional services) and other taxable remuneration (without regard to whether or not an amount is paid in cash) paid to a Participant from the Employer which are includible in the Participant's gross income for the taxable year, as defined within the meaning of Code Section 415(c)(3). Compensation does not include: (a) Contributions to this plan or any other plan of deferred compensation; and (b) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock becomes freely transferable or is no longer subject to a substantial risk of forfeiture; and (c) Amounts realized from the disposition of stock acquired under a qualified stock option; and (d) Amounts received as a pension or annuity. When applicable to a Self-Employed Individual, Compensation shall mean Earned Income. With respect to any Plan Year, Compensation will be limited to the first $150,000 of Compensation [or such higher amount determined in accordance with Code Section 408(k)(3)(C)]. If a Plan determines Compensation on a period of time that contains fewer than 12 calendar months, then the annual compensation limit is an amount equal to the annual compensation limit for the calendar year in which the Compensation period begins multiplied by the ratio obtained by dividing the number of full months in the period by 12. 1.4 CUSTODIAN BOSTON SAFE DEPOSIT & TRUST or any successor thereto. 1.5 DEFERRAL PERCENTAGE LIMITATION Deferral Percentage Limitation is the maximum amount of Elective Deferrals, expressed as a percentage of Compensation, that can be contributed on behalf of any Highly Compensated Employee for a particular Plan Year. This limitation equals the product of the average of the Elective Deferrals (expressed as a percentage of each such Employee's Compensation) made on behalf of each non-highly compensated employee for the same Plan Year, multiplied by 1.25. In calculating this average, the percentage for an eligible non-highly compensated Employee who chooses not to have Elective Deferrals made on his or her behalf for a Plan Year, is zero. The determination of the deferral percentage for any Employee is to be made in accordance with Code Section 408(k)(6) and such other requirements as may be provided by the Secretary of the Treasury. In addition, for purposes of determining the deferral percentage of a Highly Compensated Employee, the Elective Deferrals and Compensation of the Employee will also include the Elective Deferrals and Compensation of any Family Member. This special rule applies, however, only if the Highly Compensated Employee owns more than 5% of the Employer or is one of the ten most highly-paid employees. The Elective Deferrals and Compensation of Family Members used in this special rule do not count in computing the average of the deferral percentages of non-highly compensated Employees. 1.6 EARNED INCOME Net earnings from self-employment in the trade or business with respect to which the Plan is established, determined without regard to items not included in gross income and the deductions allocable to such items, provided that personal services of the individual are a material income producing factor. Earned Income shall be reduced by contributions made by an Employer to a qualified plan, including this Plan, to the extent deductible under Code Section 404. Earned Income shall also be reduced by one-half of the self employed's social security taxes. 1.7 EFFECTIVE DATE The date on which the Employer's Plan commences or an amendment becomes effective. The Effective Date of the Elective Deferral provisions shall be designated by the Employer in the Adoption Agreement. 1.8 ELECTIVE DEFERRAL(s) Employer contributions made to the Plan at the election of the Participant, in lieu of cash Compensation, pursuant to a Salary Savings Agreement or other deferral mechanism, such as a cash option contribution. With respect to any taxable year, a Participant's Elective Deferral is the sum of all Employer contributions made on behalf of such Participant pursuant to an election to defer under any of the following: a qualified cash or deferred arrangement as described in Code Section 401(k); this Plan or any other simplified employee pension cash or deferred arrangement described in Code Section 402(h)(1)(B); an eligible deferred compensation plan under Code Section 457; and a plan described in Code Section 501(c)(18). Also included are any Employer contributions made on the behalf of Participant for the purchase of an annuity contract under Code Section 403(b) pursuant to a Salary Savings Agreement. 1.9 EMPLOYEE Any person employed by the Employer (including Self-Employed Individuals and partners), all Employees of a member of an affiliated service group [as defined in Code Section 414(m)], Employees of a controlled group of corporations [as defined in Code Section 414(b)], Employees of any incorporated or unincorporated trade or business which is under common control [as defined in Code Section 414(c)], and all leased Employees who are not Employees of the Employer but are required to be treated as Employees of the Employer under section 414(n), and all Employees required to be aggregated under section 414(o) of the Code. All such Employees shall be treated as employed by a single Employer. 1.10 EMPLOYER Any corporation, partnership, or proprietorship which adopts this prototype plan, including any entity which succeeds the Employer and adopts this Plan. 1.11 FAMILY MEMBER An Employee who is related to a Highly Compensated Employee as a spouse, or as a lineal ascendant (such as a parent or grandparent) or descendant (such as a child or grandchild) or spouse of either of those, in accordance with Code Section 414(q) and the regulations thereunder. Family membership is only applicable to Highly Compensated Employees who either own more than 5% of the Employer or are one of the ten most highly compensated Employees. 1.12 HIGHLY COMPENSATED EMPLOYEE An individual described in Code Section 414(q) who, during the current or preceding Plan Year: (a) Was a 5% owner as defined in Code Section 416(i)(1)(B)(i); (b) Received Compensation in excess of $50,000, as adjusted pursuant to Code Section 415(d), and was in the top-paid group (the top 20% of Employees ranked by Compensation); (c) Received Compensation in excess of $75,000, as adjusted pursuant to Code Section 415(d); or (d) Was an officer as defined in Code Section 416(i)(1)(A) and received Compensation in excess of 50% of the dollar limit on annual benefits payable under Code Section 415 for defined benefit plans. 1.13 INDIVIDUAL RETIREMENT ACCOUNT AIM Distributors, Inc. Individual Retirement Account which meets the requirements of Code Section 408(a) established in conjunction with the Employer's Plan (IRA), as the recipient of the Employer's contributions for the benefit of a participating Employee. 1.14 KEY EMPLOYEE Any Employee or former Employee [and the beneficiaries of these Employees] who, at any time during the current Plan Year and the four preceding Plan Years, was: (a) An officer of the Employer [if the Employee's Compensation exceeds 50% of the limit under Code Section 415(b)(1)(A)]; (b) An owner of one of the ten largest interests in the Employer [if the Employee's Compensation exceeds 100% of the limit under Code Section 415(c)(1)(A) and the ownership interest exceeds 1/2% of the Employer]; (c) A 5% owner of the Employer as defined in Code Section 416(i)(1)(B)(i)]; or (d) A 1% owner of the Employer [if the Employee has Compensation in excess of $150,000]. 1.15 OWNER-EMPLOYEE A sole proprietor or partner owning more than 10% of either the capital or profits interest of the partnership. 17 4 1.16 PARTICIPANT Any Employee of the Employer who is participating in the Plan. 1.17 PLAN The Simplified Employee Pension Plan with salary reduction provisions as embodied herein. 1.18 PLAN ADMINISTRATOR The Employer is the Plan's named fiduciary and Plan Administrator. 1.19 PLAN YEAR The 12-consecutive month period designated by the Employer in the Adoption Agreement. 1.20 SALARY SAVINGS AGREEMENT A written agreement between the Employer and a participating Employee where the Employee authorizes the Employer to withhold a specified percentage of his or her Compensation for deposit to the Plan on behalf of such Employee. 1.21 SARSEP A Simplified Employee Pension Plan (SEP) in which a participating Employee may make an election through a Salary Savings Agreement to have a portion of his or her salary deferred and have the Employer contribute the entire amount of deferred salary to an IRA on his or her behalf. 1.22 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the taxable year from the trade or business for which the Plan is established including an individual who would have had Earned Income but for the fact that the trade or business had no net profits for the taxable year. 1.23 SEP-IRA The Individual Retirement Account established to receive the Employer's contributions for the benefit of each participating Employee. 1.24 SPONSOR The institution whose name appears on the cover hereof. 1.25 TAXABLE WAGE BASE The maximum amount of earnings which may be considered wages at the beginning of the Plan Year under Section 230 of the Social Security Act. 1.26 TAXABLE YEAR The taxable year of an Employer for Federal income tax purposes. ARTICLE II ELIGIBILITY REQUIREMENTS 2.1 PARTICIPATION Each Employee of the Employer shall automatically become a Participant under the Plan as of the first day of the Plan Year during which such Employee meets the eligibility requirements selected by the Employer in the Adoption Agreement. Employees shall not be permitted to authorize Elective Deferrals until the individual satisfies the Plan's eligibility requirements. In the event an Employee who is not a member of the eligible class of Employees becomes a member of the eligible class, such Employee shall participate immediately if such Employee has satisfied the minimum age and service requirements and would have become a Participant had he or she been in the eligible class. A former Participant shall again become a Participant immediately upon returning to the employ of the Employer. 2.2 MAXIMUM AGE The Plan shall not exclude Employees who have attained age 70 1/2, provided such Employees meet the eligibility requirements in the Adoption Agreement. 2.3 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a Participant any employment rights, nor shall it interfere with the Employer's right to terminate the employment of any Employee at any time. 2.4 WITHDRAWAL OF CONTRIBUTIONS Participation in the Plan shall not be terminated, suspended, or in any way affected, if a Participant withdraws all or any part of his or her IRA. This Plan shall not impose any prohibition on a Participant's right to make withdrawals from his or her IRA. ARTICLE III EMPLOYER CONTRIBUTIONS 3.1 AMOUNT Prior to the close of each Plan Year, the Employer shall determine in writing the amount of its contribution for such Plan Year. This is in addition to any amount contributed pursuant to Salary Savings Agreements with the Participants. The Employer's contribution shall be discretionary and the Employer shall be under no obligation to contribute each year. The Employer may make a contribution even if no Elective Deferrals are contributed for such year. Contributions to the SEP are deductible by the Employer for the Taxable Year with or within which the Plan Year of the SEP ends. Contributions made for a particular Taxable Year and contributed by the due date of the Employer's income tax return, including extensions, are deemed made in that Taxable Year. 3.2 LIMITATIONS ON ALLOCATIONS The Employer's contribution (including Salary Savings Agreement amounts) when allocated to eligible Participants for any Plan Year shall not exceed the lesser of 15% of each Participant's Compensation or $30,000 [as indexed under Code Section 415]. In addition, the Employer's contribution shall also bear a uniform relationship to the total Compensation of each Participant. For purposes of the preceding sentence, the Employer's contribution to the Old Age, Survivors and Disability Insurance program may be considered as part of the Employer's contribution. Employer contributions to the Old Age, Survivors and Disability Insurance Program may not be considered under this Plan if it is considered under any other plan of the Employer. 3.3 ALLOCATION FORMULAS The Employer's contribution shall be allocated among eligible Participants in accordance with one of the formulas provided below. Employees and former Employees employed by the Employer at any time during the Plan Year, who met the eligibility requirements at any time during the Plan Year, shall share in the Employer's contribution for such Plan Year, even though no longer employed. The Employer's contribution shall automatically be allocated in accordance with paragraph (a) unless paragraph (b) is selected in the Adoption Agreement. (a) PROPORTIONATE ALLOCATION The Employer's contribution for each Plan Year shall be allocated to the IRA of each eligible Employee in the same portion as such Employee's Compensation [not in excess of $150,000 as adjusted for inflation under Code Section 401(a)(17)] for such Plan Year bears to all eligible Employees' Compensation for that year. (b) INTEGRATED ALLOCATION The Employer's contribution for the Plan Year shall be allocated to each eligible Participant (using his or her Compensation earned during the Plan Year) as follows: (i) First, to the extent contributions are sufficient, all Participants will receive an allocation equal to 3% of their Compensation. (ii) Next, any remaining Employer Contributions will be allocated to Participants who have Compensation in excess of the Taxable Wage Base (excess Compensation) as in effect at the beginning of the Plan Year. Each such Participant will receive an allocation in the ratio that his or her excess Compensation bears to the excess Compensation of all Participants. Participants may only receive an allocation of 3% of excess Compensation. (iii) Next, any remaining Employer contributions will be allocated to all Participants in the ratio that their Compensation plus excess Compensation bears to the total Compensation plus excess Compensation of all Participants. Participants may only receive an allocation of up to 2.7% of their Compensation plus excess Compensation, under this allocation method. NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or benefit is provided under another Plan [see Section 8 of the Adoption Agreement] covering the same Employees, sub-paragraphs (i) and (ii) above may be disregarded and 5.7% may be substituted for 2.7% where it appears in (iii) above. (iv) Next, any remaining Employer contributions will be allocated to all Participants in the ratio that each Participant's Compensation bears to all Participants' Compensation. 3.4 RESPONSIBILITY FOR CONTRIBUTIONS The Sponsor shall not be required to determine if the Employer has made a contribution or if the amount contributed is in accordance with the Adoption Agreement or the Code. The Employer shall have sole responsibility in this regard. ARTICLE IV EMPLOYEE ELECTIVE DEFERRALS 4.1 ELECTIVE DEFERRAL REQUIREMENTS Elective Deferrals shall only be permitted for Plan Years in which: (a) Not less than 50% of the Participants elect to make Elective Deferrals to the SEP-IRA on their behalf; and (b) The Employer had no more than 25 Employees at all times during the prior Plan Year who were eligible to participate in the Plan. 4.2 SALARY SAVINGS AGREEMENT An Employee may elect to have Elective Deferrals made under this Plan through either a lump sum or continuing Elective Deferrals, or both, pursuant to his or her Salary Savings Agreement. The amount of Elective Deferrals may not exceed the percentage or dollar amount specified in the Employer's Adoption Agreement. Under no circumstances may an Employee's Elective Deferrals in any calendar year exceed the lesser of: (a) Fifteen percent of the Employee's Compensation determined without including the SEP-IRA contributions, (13.0435% of Compensation plus Elective Deferrals), or (b) $7,000 as adjusted for inflation at the beginning of such taxable year. This amount may be reduced if a Participant contributes pre-tax contributions to qualified plans of this or other Employers. 4.3 TIMING OF ELECTIVE DEFERRALS Elective Deferrals may not be based on Compensation an Employee has received, or had a right to receive, prior to the execution of the Employee's Salary Savings Agreement. A Participant may amend his or her Salary Savings Agreement to increase, decrease or terminate the Elective Deferral percentage upon written notice to the Employer. Such increase, decrease or termination shall be effective as soon as reasonably possible, but in any event within 90 days of written notice. If a Participant terminates his or her Elective Deferrals, such Participant shall not be permitted to put a new Salary Savings Agreement into effect until after 90 days. The Employer may also amend or terminate said agreement on written notice to the Participant to insure the Plan's qualified status. If a Participant has not authorized the Employer to withhold at the maximum rate and desires to increase the total withheld for a Plan Year, such Participant may authorize the Employer to withhold a supplemental amount up to 100% of his or her Compensation for one or more pay periods. In no event may the sum of the amounts withheld under the Salary 18 5 Savings Agreement plus the supplemental withholding exceed 15% of a Participant's Compensation for a Plan Year (net of the Elective Deferrals). The Employer agrees to deposit Elective Deferrals with the Sponsor for credit to Participant IRAs within 30 days after being withheld from the Participant's Compensation. 4.4 CASH BONUS OPTION If permitted by the Employer in the Adoption Agreement, an Employee may base Elective Deferrals on cash bonuses during the year that, at the Employee's election, may be contributed to the SEP-IRA or received by the Employee in cash. 4.5 DISALLOWED ELECTIVE DEFERRALS If the 50% requirement in paragraph 4.1(a) is not satisfied as of the end of any Plan Year, all the Elective Deferrals made by Employees for that Plan Year shall be considered disallowed Elective Deferrals. 4.6 NOTIFICATION OF DISALLOWED ELECTIVE DEFERRALS The Employer shall notify each affected Participant, within 2 1/2 months after the end of the Plan Year to which the disallowed Elective Deferrals relate, that the deferrals are no longer considered SARSEP contributions. Such notification shall specify the amount of the disallowed Elective Deferrals and the Participant's calendar year in which they are includible in income. Additionally, the notice must provide an explanation of the applicable penalties if the disallowed Elective Deferrals are not withdrawn in a timely fashion. The notice to each affected Participant shall state the following: (a) The amount of the disallowed Elective Deferral; (b) That the disallowed Elective Deferrals are includible in the Participant's gross income for the calendar year or years in which the amounts deferred would have been received by the Participant in cash had she or he not made the election to defer, and that the income allocable to such disallowed Elective Deferrals is includible in the Participant's gross income in the year withdrawn from the SEP-IRA; and (c) That the Participant must withdraw the disallowed Elective Deferrals and allocable income from the SEP-IRA by the April 15 following the calendar year of notification by the Employer. Disallowed Elective Deferrals not withdrawn by the April 15 following the calendar year of notification will be subject to the IRA contribution limitations of Code Section 219 and Section 408 and may be considered excess contributions to the Participant's IRA. Disallowed Elective Deferrals may be subject to the six percent tax on excess contributions under Code Section 4973. If income allocable to a disallowed Elective Deferral is not withdrawn by April 15 following the year of notification by the Employer, the income may be subject to the ten percent tax on early distributions under Code Section 72(t) when withdrawn. 4.7 REPORTING Disallowed Elective Deferrals are reported for tax purposes in the same manner as excess SEP contributions. ARTICLE V ACCOUNTS OF PARTICIPANTS 5.1 INDIVIDUAL RETIREMENT ACCOUNT Each Employee, upon becoming a Participant under the Plan, shall establish an IRA with the Sponsor. The Employee or Sponsor shall furnish an account number to the Employer certifying the existence of such account. 5.2 DETERMINATION OF DEPOSIT When making a contribution to the Plan, the Employer shall calculate each Participant's proportionate share of the Employer's contribution as determined in the Adoption Agreement. The Employer shall then deliver the contribution to the Sponsor indicating the amount to be credited to each Participant's SEP-IRA. 5.3 CONTROL OF ACCOUNT All contributions made under the Plan by the Employer shall be irrevocable. After allocation to a Participant's SEP-IRA, the Employer shall have no further control of such contribution and the terms of the Participant's IRA shall be fully effective. 5.4 ALLOCATION OF ELECTIVE DEFERRALS The Employer shall contribute to each Employee's SEP-IRA the amount of the Elective Deferrals designated in his or her Salary Savings Agreement. ARTICLE VI LIMITATIONS ON CONTRIBUTIONS 6.1 LIMITATIONS ON ELECTIVE DEFERRALS A Participant's Elective Deferrals may be limited to the extent necessary to satisfy the maximum contribution limitations under Code Section 415(c)(1)(A) if the Employer maintains any other SEP or any qualified plan to which contributions are made for such Plan Year. 6.2 OVERALL LIMITATIONS ON CONTRIBUTIONS In addition to the dollar limitation of Code Section 415(c)(1)(A) ($30,000 in 1991), contributions to this Plan, when aggregated with contributions to all other SEPs and contributions plus forfeitures under other qualified defined contribution plans of the Employer, generally may not exceed 25% of Compensation for any Employee. If these limits are exceeded on behalf of any Employee for a particular Plan Year, that Employee's Elective Deferrals for that year must be reduced to the extent of the excess. 6.3 LIMITATIONS FOR HIGHLY COMPENSATED EMPLOYEES Elective Deferrals by a Highly Compensated Employee must satisfy the Deferral Percentage Limitation under Code Section 408(k)(6) and paragraph 1.4 herein. Amounts in excess of the Deferral Percentage Limitation will be deemed excess SEP contributions on behalf of the affected Highly Compensated Employee. 6.4 NOTIFICATION OF EXCESS SEP CONTRIBUTIONS The Employer shall notify each affected Participant, within 2 1/2 months following the end of the Plan Year to which the excess SEP contributions relate, of any excess SEP contributions to the Participant's SEP-IRA for the applicable year. Such notification shall specify the amount of the excess SEP contributions and the calendar year in which the contributions are includible in income and must provide an explanation of applicable penalties if the excess contributions are not withdrawn in a timely fashion. 6.5 NOTIFICATION REQUIREMENTS The notification to each affected Participant of excess SEP contributions must specifically state in a manner calculated to be understood by the average Employee: (a) The amount of the excess SEP contributions attributable to the Participant's Elective Deferrals; (b) The calendar year in which the excess SEP contributions are includible in gross income; and (c) That the Participant must withdraw the excess SEP contributions (and allocable income) from the SEP-IRA by April 15 following the year of notification by the Employer. Those excess contributions not withdrawn by April 15 following the year of notification will be subject to the IRA contribution limitations of Code Section 219 and Section 408 for the preceding calendar year and thus may be considered an excess contribution to the Participant's IRA. Such excess contributions may be subject to the six percent tax on excess contributions under Code Section 4973. If income allocable to an excess SEP contribution is not withdrawn by April 15 following the year of notification by the Employer, the income may be subject to the ten percent tax on early distributions under Code Section 72(t) when withdrawn. 6.6 EXCESS SEP CONTRIBUTIONS INCLUDIBLE IN INCOME Excess SEP contributions are includible in the participating Employee's gross income on the earliest dates any Elective Deferrals made on behalf of the Employee during the Plan Year would have been received by the Employee had he or she originally elected to receive the amounts in cash. However, if the excess SEP contributions (not including allocable income) total less than $100, then the excess contributions are includible in the Employee's gross income in the year of notification. Income allocable to the excess SEP contributions is includible in the year of withdrawal from the IRA. 6.7 EXCISE TAXES AND PENALTIES If the Employer fails to notify any of the affected Employees within 2 1/2 months following the end of the Plan Year of an excess SEP contribution, the Employer must pay a tax equal to 10% of the excess SEP contribution. If the Employer fails to notify employees by the end of the Plan Year following the Plan Year in which the excess SEP contributions arose, the SEP no longer will be considered to meet the requirements of Code Section 408(k)(6) and contributions in the Employee's IRA will be subject to the IRA contribution limitations and thus may be considered excess contributions to the Employee's IRA. 6.8 WITHDRAWAL RESTRICTIONS The Employer shall notify each Participant who makes an Elective Deferral for a Plan Year that, notwithstanding the prohibition on withdrawal restrictions contained elsewhere in this Plan, any amount attributable to such Elective Deferrals which is withdrawn or transferred before the earlier of 2 1/2 months after the end of the particular Plan Year or the date the Employer notifies its Employees that the Deferral Percentage Limitations have been calculated, will be includible in income and possibly subject to an early penalty tax. ARTICLE VII TOP-HEAVY RULES 7.1 TOP-HEAVY MINIMUM CONTRIBUTION Each Plan Year for which the Plan is Top Heavy under Code Section 416, each non-key Employee shall receive an allocation of Employer contributions equal to the lesser of 3% of Compensation or the percentage of Compensation allocated to the Key Employee receiving the highest percentage allocation. The Top-Heavy minimum contribution shall be satisfied under this Plan unless the Employer designates another plan in the Adoption Agreement. 7.2 CONTRIBUTIONS COUNTED TOWARDS MINIMUM For purposes of satisfying the minimum contribution requirement under Code Section 416, only Employer contributions shall be taken into account. Employee Elective Deferrals shall not be considered. 7.3 TOP-HEAVY DETERMINATION This Plan is Top-Heavy for a Plan Year if, as of the last day of the previous Plan Year (or current Plan Year if this is the first year of the Plan) the total of elective and non-elective contributions made on behalf of Key Employees for all years this Plan has been in existence exceeds 60% of such contributions for all Employees who were eligible to participate. If the Employer maintains (or maintained within the prior five years) any other SEP or defined contribution plan in which a Key Employee participates (or participated), the contributions or account balances, whichever is applicable, must be aggregated with the contributions made to this Plan. The contributions (and 19 6 account balances, if applicable) of an Employee who ceases to be a Key Employee or of an individual who has not been in the employ of the Employer for the previous five years shall be disregarded. The identification of Key Employees and the Top-Heavy calculation shall be determined in accordance with Code Section 416 and the regulations thereunder. ARTICLE VIII ADMINISTRATION 8.1 PLAN ADMINISTRATOR The Employer shall be the Plan's named fiduciary and shall serve as Plan Administrator. As Plan Administrator, the Employer shall: (a) Carry out the provisions of the Plan including determining eligibility of Employees, allocating contributions, and interpreting the Plan when necessary, (b) Deliver all contributions to the Sponsor showing the amount to be allocated to each Participant's IRA, (c) Communicate with Employees regarding their participation and benefits under the Plan, (d) Advise Employees in writing of all contributions to their IRAs, and (e) Perform any other duties required of the Plan Administrator. 8.2 SPONSOR The Sponsor shall be depository for individual IRAs established by Plan Participants. As depository, the Sponsor shall: (a) Accept for deposit contributions transmitted by the Employer. The Sponsor need not verify the amount of the contributions received or the amounts allocated to individual IRAs provided that no contribution for an individual IRA exceeds the lesser of $30,000 as indexed or 15% of the individual's Compensation for the Plan Year, and (b) Administer each individual IRA in accordance with the provisions of the Sponsor's IRA document. ARTICLE IX AMENDMENT AND TERMINATION 9.1 AMENDMENT BY SPONSOR The Sponsor may amend or terminate any or all provisions of this prototype plan at any time without obtaining the approval or consent of any Employer or Participant, provided that no amendment shall authorize or permit any part of an Employer's contribution to be used for or diverted to purposes other than for the exclusive benefit of Participants. The Sponsor will inform each adopting Employer of any amendments to or termination of the prototype SARSEP. 9.2 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Plan will meet the requirements of Code Section 408(k)(6) and the regulations thereunder as a qualified Salary Reduction Simplified Employee Pension Plan. Should the Commissioner of Internal Revenue or any delegate of the Commissioner at any time determine that the Plan fails to meet the requirements of said Code Section 408(k)(6), the Sponsor will amend the Plan so as to maintain its qualified status. 9.3 AMENDMENT BY EMPLOYER The Employer may amend any option elected in the Adoption Agreement provided that no amendment shall authorize or permit any part of the Employer's contribution to be used for or diverted to purposes other than for the exclusive benefit of Participants. If the Employer amends the Adoption Agreement other than within the available options, the Employer may no longer participate in this Plan. 9.4 TERMINATION The Employer may terminate its Plan at any time by filing written notice with the Sponsor. In such event, the Sponsor shall continue to administer each Participant's IRA as provided under the IRA agreement. The Sponsor may also terminate the prototype upon written notice to the Employer. ARTICLE X GOVERNING LAW Construction, validity and administration of the prototype plan, and any Employer Plan as embodied in the prototype document and accompanying Adoption Agreement, shall be governed by Federal law to the extent applicable and, to the extent not applicable, by the laws of the State/Commonwealth in which the principal office of the Sponsor is located. INTERNAL REVENUE SERVICE Department of the Treasury Prototype SEP with Salary Reduction Feature 002 FFN: 50441601900-002 Case: 9580093 EIN: 74-1894784 Washington, D.C. 20224 Letter Serial No. C410671b AIM DISTRIBUTORS INC. Person to Contact: Ms. Arrington 11 GREENWAY PLAZA SUITE 1919 Telephone Number: (202) 622-8173 HOUSTON, TEXAS 77046 Refer Reply to: CP:E:EP:T1 Date: 11-13-95
Dear Applicant: In our opinion, the amendment to the form of your Simplified Employee Pension (SEP) arrangement does not adversely affect its acceptability under section 408(k) of the Internal Revenue Code. This SEP arrangement is approved for use only in conjunction with an Individual Retirement Arrangement (IRA) which meets the requirements of Code section 408 and has received a favorable opinion letter, or a model IRA (Forms 5308 and 5305-A). Employers who adopt this approved plan will be considered to have a retirement savings program that satisfies the requirements of Code section 408 provided that it is used in conjunction with an approved IRA. Please provide a copy of this letter to each adopting employer. Code section 408(l) and related regulations require that employers who adopt this SEP arrangement furnish employees in writing certain information about this SEP arrangement and annual reports of savings program transactions. Your program may have to be amended to include or revise provisions in order to comply with future changes in the law or regulations. If you have any questions concerning IRS processing of this case, call us at the above telephone number. Please refer to the Letter Serial Number and File Folder Number shown in the heading of this letter. Please provide those adopting this plan with your phone number, and advise them to contact your office if they have any questions about the operation of this plan. You should keep this letter as a permanent record. Please notify us if you terminate the term of this plan. Sincerely yours, /s/ [ILLEGIBLE] ----------------------------------------- Chief, Employee Plans Technical Branch 1 20 7 [AIM LOGO APPEARS HERE] Form 5305-A (Rev. October 1992) Department of the Treasury Internal Revenue Service INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT (under Section 408(a) of the Internal Revenue Code) A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT ARTICLE I The Custodian may accept additional cash contributions on behalf of the Depositor for a tax year of the Depositor. The total cash contributions are limited to $2,000 for the tax year unless the contribution is a rollover contribution described in section 402(c) (but only after December 31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified employee pension plan as described in section 408(k). Rollover contributions before January 1, 1993, include rollovers described in section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified employee pension plan as described in section 408(k). ARTICLE II The Depositor's interest in the balance in the custodial account is nonforfeitable. ARTICLE III 1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance contracts, nor may the assets of the custodial account be commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5)). 2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within the meaning of section 408(m)) except as otherwise permitted by section 408(m)(3) which provides an exception for certain gold and silver coins and coins issued under the laws of any state. ARTICLE IV 1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the distribution of the Depositor's interest in the custodial account shall be made in accordance with the following requirements and shall otherwise comply with section 408(a)(6) and Proposed Regulations section 1.408-8, including the incidental death benefit provisions of Proposed Regulations section 1.401(a) (9)-2, the provisions of which are incorporated by reference. 2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin to the Depositor under paragraph 3, or to the surviving spouse under paragraph 4, other than in the case of a life annuity, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Depositor and the surviving spouse and shall apply to all subsequent years. The life expectancy of a nonspouse beneficiary may not be recalculated. 3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or begin to be, distributed by the Depositor's required beginning date (April 1 following the calendar year end in which the Depositor reaches age 70 1/2. By that date, the Depositor may elect, in a manner acceptable to the Custodian, to have the balance in the custodial account distributed in: (a) A single-sum payment. (b) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the life of the Depositor. (c) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the joint and last survivor lives of the Depositor and his or her designated beneficiary. (d) Equal or substantially equal annual payments over a specified period that may not be longer than the Depositor's life expectancy. (e) Equal or substantially equal annual payments over a specified period that may not be longer than the joint life and last survivor expectancy of the Depositor and his or her designated beneficiary. 4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to him or her, the entire remaining interest will be distributed as follows: (a) If the Depositor dies on or after distribution of his or her interest has begun, distribution must continue to be made in accordance with paragraph 3. (b) If the Depositor dies before distribution of his or her interest has begun, the entire remaining interest will, at the election of the Depositor or, if the Depositor has not so elected, at the election of the beneficiary or beneficiaries, either (i) Be distributed by the December 31 of the year containing the fifth anniversary of the Depositor's death, or (ii) Be distributed in equal or substantially equal payments over the life expectancy of the designated beneficiary or beneficiaries starting by December 31, of the year following the year of the Depositor's death. If, however, the beneficiary is the Depositor's surviving spouse, then this distribution is not required to begin before December 31 of the year in which the Depositor would have turned age 70 1/2. (c) Except where distribution in the form of an annuity meeting the requirements of section 408(b)(3) and its related regulations has irrevocably commenced distributions are treated as having begun on the Depositor's required beginning date, even though payments may actually have been made before that date. (d) If the Depositor dies before his or her entire interest has been distributed and if the beneficiary is other than the surviving spouse, no additional cash contributions or rollover contributions may be accepted in the account. 5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or substantially equal annual payments, to determine the minimum annual payment for each year, divide the Depositor's entire interest in the Custodial account as of the close of business on December 31 of the preceding year by the life expectancy of the Depositor (or the joint life and last survivor expectancy of the Depositor and the Depositor's designated beneficiary, or the life expectancy of the designated beneficiary, whichever applies). In the case of distributions under paragraph 3, determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the Depositor and designated beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2. In the case of distribution in accordance with paragraph 4(b)(ii), determine life expectancy using the attained age of the designated beneficiary as of the beneficiary's birthday in the year distributions are required to commence. 6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the minimum distribution requirements described above. This method permits an individual to satisfy these requirements by taking from one individual retirement account the amount required to satisfy the requirement for another. ARTICLE V 1. THE DEPOSITOR AGREES to provide the Custodian with information necessary for the Custodian to prepare any reports required under section 408(i) and Regulations sections 1.408-5 and 1.408.6. 2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service and the Depositor prescribed by the Internal Revenue Service. ARTICLE VI Notwithstanding any other articles which may be added or incorporated, the provisions of Articles I through III and this sentence will be controlling. Any additional articles that are not consistent with section 408(a) and the related regulations will be invalid. ARTICLE VII This agreement will be amended from time to time to comply with the provisions of the Code and related regulations. Other amendments may be made with the consent of the persons whose signatures appear below. ARTICLE VIII 1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual Retirement Custodial Account Agreement and the related IRA Account Application (referred to herein as the "IRA Adoption Agreement") (such Agreements being collectively referred to herein as the "Agreement"), the Depositor directs the Custodian to invest all custodial account funds after deductions for sales charges and Custodian fees, in shares issued by the investment company or companies selected by the Depositor on the related IRA Adoption Agreement, until the Depositor hereafter gives the Custodian contrary instructions pursuant to Article XIII below. The investment companies from which the Depositor may select are enumerated on the applicable list prepared by A I M Distributors, Inc. (the 21 8 "Distributor"), a copy of which accompanies the Adoption Agreement. Such investment companies are part of "The AIM Family of Funds," which are managed or advised by subsidiaries of A I M Management Group Inc., and any such investment company will hereafter be referred to as "Investment Company." 2. (i) ANNUAL CASH CONTRIBUTIONS: The Depositor may make annual cash contributions to the account within the limits specified in Article I. All contributions shall be hand delivered or mailed to the Custodian by the Depositor, with an indication of the taxable year to which such contribution relates. Additionally, if the Depositor's employer maintains a qualified simplified employee pension (SEP), such employer may contribute on behalf of the Depositor, the lesser of 15% of the Depositor's compensation from such employer or $30,000. (ii) ROLLOVER CONTRIBUTIONS: In addition to any annual contributions referred to in Paragraph (i) above, but subject to this Paragraph (ii), the Depositor may contribute to the account, at any time, a rollover contribution of such cash or other property as shall constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the account all rollover contributions which consist of cash, and it may, but shall be under no obligation to, accept any other rollover contribution. In the case of rollover contributions composed of assets other than cash, the prospective Depositor shall provide the Custodian with a description of such assets and such other information as the Custodian may reasonably require. The Custodian may accept all or any part of such a rollover contribution if it determines that the assets of which such contribution consists are either in a medium proper for investment hereunder or that the assets can be promptly liquidated for cash. The Depositor warrants that any rollover contribution to the account consists of cash, the same property received in the distribution or, in the case of amounts distributed to the Depositor from a qualified employer's plan or annuity, the proceeds from the sale of the same property received in the distribution. The Depositor also warrants that in the case of a rollover into the account of amounts distributed to the Depositor from a qualified employer's plan or annuity, only amounts in excess of the amounts considered to be the Depositor's employee contributions included in such distribution constitute the contribution to this account. Additionally, the Depositor affirms that the contribution to the account does not consist of amounts received from an inherited individual retirement account or annuity. An individual retirement account or annuity shall be treated as inherited if it was acquired by reason of the death of an individual other than the Depositor's spouse. The Depositor also affirms that in the case of a rollover into the account of amounts distributed from an individual retirement account or annuity or retirement bond, he has not during the one year period ending on the date of the distribution received any other distribution from an individual retirement account or annuity or retirement bond which constituted a rollover contribution (as described in section 408(d)(3) of the Code). 3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes, interest and penalties which might accrue or be assessed by reason of any excess deposit, and interest, if any, earned thereon. Any contributions made by or on behalf of the Depositor in respect of a taxable year of the Depositor shall be made by or on behalf of the Depositor to the Custodian for deposit in the custodial account within the time period for claiming any income tax deduction for such taxable year. It shall be the sole responsibility of the Depositor to determine the amount of the contributions made hereunder. The Depositor shall execute such forms as the Custodian may require in connection with any contribution hereunder. ARTICLE IX 1. THE CUSTODIAN SHALL from time to time, subject to the provisions of Articles IV and V, make distributions out of the custodial account to the Depositor, in such manner and amounts as may be specified in written instructions of the Depositor. All such instructions shall be deemed to constitute a certification by the Depositor that the distribution so directed is one that the Depositor is permitted to receive. A declaration of the Depositor's intention as to the disposition of an amount distributed pursuant to Article V hereof shall be in writing and given to the Custodian. The Custodian shall have no liability with respect to any contribution to the custodial account, any investment of assets in the custodial account or any distribution therefrom pursuant to instructions received from the Depositor or pursuant to this Agreement, or for any consequences to the Depositor arising from such contributions, investments or distributions including, but not limited to, excise and other taxes and penalties which might accrue or be assessed by reason thereof, nor shall the Custodian be under any duty to make any inquiry or investigation with respect thereto. 2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code), all or a portion of the balance in the custodial account may be distributed to him/her as soon as practicable after the Custodian receives written notice of the Depositor's disability and a written request for distribution. The Custodian may require such proof of disability as it deems necessary prior to the time that amounts are distributed to the Depositor due to such disability. 3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and penalties which might accrue or be assessed for having failed to make the annual minimum withdrawal required in any year. ARTICLE X A Depositor shall have the right to designate a beneficiary or beneficiaries to receive any amounts remaining in his account in the event of his death. Any prior beneficiary designation may be changed or revoked at any time by a Depositor by written designation signed by the Depositor on a form acceptable to, and filed with, the Custodian; provided, however, that such designation, or change or revocation of a prior designation shall not become effective until it has been received by the Custodian, nor shall it be effective unless received by the Custodian no later than thirty days before the death of the Depositor, and provided further that the last such designation of beneficiary or change or revocation of beneficiary executed by the Depositor, if received by the Custodian within the time specified, shall control. Unless otherwise provided in the beneficiary designation, amounts payable by reason of the Depositor's death will be paid in equal shares only to the primary beneficiary or beneficiaries who survive the Depositor, or, if no primary beneficiary survives the Depositor, to the contingent beneficiary or beneficiaries who survive the Depositor. If the Depositor had not, by the date of his death, properly designated a beneficiary in accordance with the preceding sentences, or if no designated beneficiary survives the Depositor, then the Depositor's beneficiary shall be the Depositor's surviving spouse, or if there is no surviving spouse, the Depositor's estate. ARTICLE XI 1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for performing duties pursuant to this Agreement shall be in such amount as shall be established from time to time. The Depositor agrees to pay the Custodian the fees specified in its current fee schedule and authorizes the Custodian to charge the Depositor's custodian account for the amount of such fees. 2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new fee schedule. The Custodian's fees, any income, gift, estate and inheritance taxes and other taxes of any kind whatsoever, including transfer taxes incurred in connection with the investment or reinvestment of the assets of the custodial account, that may be levied or assessed in respect of such assets, and all other administrative expenses incurred by the Custodian in the performance of its duties including fees for legal services rendered to the Custodian, may be charged to the custodial account with the right to liquidate Investment Company shares for this purpose, or at the Custodian's option, shall be billed to the Depositor directly. ARTICLE XII 1. THIS AGREEMENT SHALL take effect only when accepted and signed by the Custodian. As directed, the Custodian shall then open and maintain a separate custodial account for Depositor and invest the initial contribution hereunder in shares of the Investment Company. Where the IRA Adoption Agreement is checked for spousal accounts, separate custodial accounts will be opened and maintained in each spouse's name. The amounts specified in the IRA Adoption Agreement shall be credited to each spouse's separate custodial account except that no more than $2,000 shall be credited to either custodial account. 2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any such written instructions are not received as required however, or if received, are in the opinion of the Custodian unclear, or if the accompanying contribution exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the Custodian may hold or return all or a portion of the contribution uninvested without liability for loss of income or appreciation, and without liability for interest, pending receipt of written instructions or clarification. 3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on Investment Company shares held in the custodial account shall (unless received in additional such shares) be reinvested in shares of the Investment Company, which shall be credited to the custodial account. If any distribution on such shares may be received at the election of the Depositor in additional such shares or in cash or other property, the Custodian shall elect to receive it in additional Investment Company shares. 4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall be registered in the name of the Custodian (with or without identifying the Depositor) or of its nominees. The Custodian shall deliver, or cause to be executed and delivered, to the Depositor all notices, prospectuses, financial statements, proxies and proxy solicitation materials relating to such Investment Company shares held in the custodial account. The Custodian shall not vote any Investment Company shares except in accordance with the written instructions received from the Depositor. ARTICLE XIII 1. THE CUSTODIAN SHALL keep adequate records of transactions it is required to perform hereunder. Not later than six months after the close of each calendar year or after the Custodian's registration or removal pursuant to Article XV below, 22 9 the Custodian shall render to the Depositor or the Depositor's legal representative a written report or reports reflecting the transactions effected by it during such period and the assets and liabilities of the custodial account at the close of the period. Sixty days after rendering such report(s), the Custodian shall (to the extent permitted by law) be forever released and discharged from all liability and accountability to anyone with respect to its acts and transactions shown in or reflected by such report(s), except with respect to those as to which the Depositor or the Depositor's legal representative shall have filed written objections with the Custodian within the latter such sixty-day period. 2. THE CUSTODIAN SHALL receive and invest contributions as directed by the Depositor, hold and distribute such investments, and keep adequate records and reports thereon, all in accordance with this Agreement. The parties do not intend to confer any other fiduciary duties of the Custodian, and none shall be implied. The Custodian shall not be liable (and assumes no responsibility) for the collection of contributions, the deductibility or propriety of any contribution under this Agreement, or the purposes or propriety of any distribution from the account, which matters are the responsibility of the Depositor or the Depositor's legal representative. 3. THE DEPOSITOR, to the extent permitted by law, shall always fully indemnify the Custodian and save it harmless from any and all liability whatsoever which may arise in connection with this Agreement and matters which it contemplates, except that which arises due to the Custodian's negligence and willful misconduct. The Custodian shall not be obligated or expected to commence or defend any legal action or preceding in connection with this Agreement or such matters unless agreed upon by the Custodian and Depositor or said legal representative, and unless fully indemnified for so doing to the Custodian's satisfaction. 4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting upon any written order from the Depositor or the Depositor's legal representative or any other notice, request, consent, certificate or other instruments or paper believed by it to be genuine and to have been properly executed, and as long as it acts in good faith in taking or omitting to take any other action in reliance thereon. ARTICLE XIV 1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing to the Depositor, and may be removed by the Depositor at any time upon thirty days' notice in writing to the Custodian. Upon such resignation or removal, the Depositor shall appoint a successor custodian to serve under this Agreement. Upon receipt by the Custodian of written acceptance of such appointment by the successor custodian, the Custodian shall transfer to such successor the assets of the custodial account and all necessary records (or copies thereof) pertaining thereto, provided that (at the Custodian's request) any successor custodian shall agree not to dispose of any such records without the Custodian's consent. The Custodian is authorized, however, to reserve such assets as it may deem advisable for payment of any other liabilities constituting a charge on or against the assets of the custodial account or on or against the Custodian, with any balance of such reserve remaining after the payment of all such items to be paid over to the successor custodian. 2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such successor custodian. 3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under this Agreement, must be a bank (as defined in Section 408(n) of the Code) or such other person who qualifies with the Internal Revenue Service to serve in the manner prescribed by Code section 408(a)(2) and satisfies the Custodian, upon request, as to such qualification. 4. AFTER THE CUSTODIAN HAS transferred the custodial account assets (including any reserve balance as contemplated above) to the successor custodian, the Custodian shall be relieved of all further liability with respect to this Agreement, the custodial account and the assets thereof. ARTICLE XV 1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds of the account to the depositor if within thirty days after the resignation or removal of the Custodian pursuant to Article XV above, the Depositor has not appointed a successor custodian which has accepted such appointment unless within that time the Distributor appoints such successor and gives written notice thereof to the Depositor and the Custodian. The Distributor shall have the right, but not the duty, to appoint such a successor. Termination of the custodial account shall be effected by distributing all of the assets therein in cash or in kind to the Depositor in a lump sum, subject to the Custodian's right to reserve funds as provided in said Article XV. 2. UPON TERMINATION of the custodial account in any manner provided for in this Article XVI, this Agreement shall terminate and have no further force and effect, and the Custodian shall be relieved from all further liability with respect to this Agreement, the custodial account and all assets thereof so distributed. ARTICLE XVI 1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this Agreement shall be effective when mailed if sent by first class mail to the Depositor at the Depositor's last known address as shown on the Custodian's records. Any notice required or permitted to be given to the Custodian, shall become effective upon actual receipt by the Custodian at such address as the Custodian shall provide the Depositor from time to time in writing. 2. THIS AGREEMENT is accepted by the Custodian and shall be construed and administered in accordance with the laws of The Commonwealth of Massachusetts. The Custodian and the Depositor hereby waive and agree to waive right to trial by jury in an action or proceeding instituted in respect to this custodial account. The Depositor further agrees that the venue of any litigation between him and the Custodian with respect to the custodial account shall be in the County of Suffolk, The Commonwealth of Massachusetts. 3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an Individual Retirement Account and to entitle the Depositor to any retirement savings deduction which he may qualify for under section 219 of the Code, and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with that intent. 4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to regulations promulgated thereunder. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. 5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it specifically agrees to in writing, and no implied covenants or obligations shall be read into this Agreement against the Custodian. The Custodian shall not be liable under this Agreement, except for its own bad faith, gross negligence or willful misconduct. 6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or any payment therefrom shall be assignable, transferable, or subject to sale, mortgage, pledge, hypothecation, communication, anticipation, garnishment, attachment, execution, or levy of any kind and the Custodian shall not recognize any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or anticipate the same, except as required by law. 7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this Agreement from time to time as it deems appropriate, and hereby consents to all such amendments, provided, however, that all such amendments are in compliance with the provisions of the Code and the regulations promulgated thereunder. All such amendments shall be effective as of the date specified in a written notice of amendment which will be sent to the Depositor. INSTRUCTIONS (Section references are to the Internal Revenue Code unless otherwise noted.) PURPOSE OF FORM This model custodial account agreement may be used by an individual who wishes to adopt an individual retirement account under section 408(a). When fully executed by the Depositor and the Custodian not later than the time prescribed by law for filing the Federal income tax return for the Depositor's tax year (not including any extensions thereof), a Depositor will have an individual retirement account (IRA) custodial account which meets the requirements of section 408(a). This account must be created in the United States for the exclusive benefit of the Depositor or his/her beneficiaries. DEFINITIONS CUSTODIAN. -- The Custodian must be a bank or savings and loan association, as defined in section 408(n), or other person who has the approval of the Internal Revenue Service to act as custodian. DEPOSITOR. -- The Depositor is the person who establishes the custodial account. IRA FOR NON-WORKING SPOUSES Contributions to an IRA custodial account for a non-working spouse must be made to a separate IRA custodial account established by the non-working spouse. This form may be used to establish the IRA custodial account for the non-working spouse. An employee's social security number will serve as the identification number of his or her individual retirement account. An employer identification number is only required for each participant-directed individual retirement account. An employer identification number is required for a common fund created for individual retirement accounts. For more information, obtain a copy of the required disclosure statement from your custodian or get Publication 590, Individual Retirement Arrangements. (IRAs). 23 10 SPECIFIC INSTRUCTIONS ARTICLE IV -- Distribution made under this Article may be made in a single sum, periodic payment, or a combination of both. The distribution option should be reviewed in the year the Depositor reaches age 70 1/2 to make sure the requirements of section 408(a)(6) have been met. ARTICLE IX -- This article and any that follow it may incorporate additional provisions that are agreed upon by the Depositor and the Custodian to complete the agreement. These may include, for example: definitions, investment powers, voting rights, exculpatory provisions, amendment and termination, removal of Custodian, Custodian's fees, state law requirements, beginning date of distributions, accepting only cash, treatment of excess contributions, prohibited transactions with the Depositor, etc. Use additional pages if necessary and attach them to this form. Note: This form may be reproduced and reduced in size for adoption to passbook or card purposes. THE AIM FAMILY OF FUNDS --Registered Trademark-- INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT DISCLOSURE STATEMENT Under applicable federal regulations, a custodian of an individual retirement account is required to furnish each depositor who has established or is establishing an individual retirement account with a statement which discloses certain information regarding the account. Boston Safe Deposit and Trust Company (hereinafter referred to as the "Custodian") is providing this Disclosure Statement to you in accordance with that requirement, and this Disclosure Statement contains general information about the The AIM Family of Funds --Registered Trademark-- Individual Retirement Custodial Account (hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed in conjunction with both the Individual Retirement Custodial Account agreement (From 5305-A and any attachments thereto, hereinafter referred to as the "Custodial Agreement") and the Adoption Agreement for your IRA. You should review this Disclosure Statement and the IRA documents with your attorney or tax advisor. The Custodian cannot give tax advice or determine whether or not the IRA is appropriate for you. A. SEVEN DAY RIGHT TO REVOKE YOUR IRA. You may revoke your IRA at any time within seven business days after the date the IRA is established, by giving proper notice. For purposes of revocation, it will be assumed that you received the Disclosure Statement no later than the date of your check with which you opened your IRA. Written notice must be hand delivered or sent by first class mail, in which case, the revocation will be effective as of the date the notice is postmarked (or if sent by certified or registered mail, the date of certification or registration). Notice of revocation should be made to: A I M Distributors, Inc., Eleven Greenway Plaza, Suite 1919, P.O. Box 4739, Houston, Texas 77210-4739, Attention: Shareholder Services Department, area code (800) 959-4246. If you revoke your IRA, you are entitled to a refund of your entire contribution to the IRA, without adjustment for such items as sales commissions, administrative expenses or fluctuation in market value. If you do not revoke within seven business days after the establishment of the IRA, you will be deemed to have accepted the terms and conditions of the IRA and cannot later revoke the IRA without certain potential penalties. B. STATUTORY REQUIREMENTS. An IRA is a trust or custodial account created or organized in the United States for your exclusive benefit or that of your beneficiaries. It must be created by a written governing instrument that meets the following requirements: (1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union, savings and loan association or another person eligible to act as trustee or custodian; (2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no contribution will be accepted unless it is in cash or cash equivalent, including, but not by way of limitation, personal checks, cashier's checks, and wire transfers; (3) EXCEPT FOR ROLLOVERS, simplified employee pension ("SEP") contributions, and spousal IRA contributions described below, contributions of more than $2,000 for any tax year may not be made; (4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT; (5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life insurance contracts, nor may the assets be commingled with other property except in a common trust fund or common investment fund. Furthermore, as provided in section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"), your IRA may not be invested in "collectibles," such as art works, antiques, metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and silver coins), and certain other types of tangible personal property. An investment in a collectible would be treated as a distribution from your IRA which would be includible in your gross income, and, if you had not attained the age of 59 1/2, the distribution would also be subject to the premature distribution penalty as discussed in Part E(4) below; (6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed on or before April 1 of the calendar year following the calendar year in which you reach age 70 1/2. The distribution may be made in a single sum, or you may receive periodic distributions, so long as your entire interest is distributed in equal or substantially equal payments over any of the following periods: (a) your life; (b) the lives of you and your designated beneficiary; (c) a period certain not extending beyond your life expectancy; (d) a period certain not extending beyond the life expectancy of you and your designated beneficiary. If the distributions from your IRA are to be made over one of the foregoing periods, the amount distributed each year must meet the minimum distribution requirements set forth in your IRA Custodial Agreement, or you will incur a penalty as described in Part E(8) below; (7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire interest has been distributed to you, payments must continue at least as rapidly as under the method of distribution in effect, at your death. If you die before distributions have commenced, generally your entire interest must be distributed within five years of your death. However, if your interest is payable to a designated beneficiary, payments may be made over the life or a period not exceeding the life expectancy of the beneficiary; provided, however, that such payments must commence within one year of your death unless your designated beneficiary is your surviving spouse, in which case payments need not commence until the date on which you would have attained age 70 1/2. You should advise the Custodian as to your beneficiary and the method of distribution desired. C. INVESTMENT OF YOUR IRA. Under the terms of the Custodial Agreement, your contributions will be invested by the Custodian in full and fractional shares of the investment company or companies that you select. As provided in the Custodial Agreement, you may only invest your IRA Funds in shares of investment companies which are part of "The AIM Family of Funds --Registered Trademark--," which are managed or advised by subsidiaries of A I M Management Group Inc. You will be provided with a list of the investment companies from which you may choose to invest. Subject to the foregoing and to any additional restrictions described in the Custodial Agreement, you have complete control over the investment of your IRA Funds. The Custodian will not provide any form of investment advice or make investment recommendations of any type, so you will make all investment decisions on the basis of information you obtain from other sources. When you make a decision on how you wish to invest Funds held in your IRA, you should provide the Custodian with specific instructions, detailing your investment decision so that the Custodian can effectuate such investments as provided in your IRA Custodial Agreement. If you fail to direct the Custodian as to the Investment of all or any portion of your IRA account, the Custodian shall hold such uninvested amount in your account and shall incur no liability for interest or earnings thereon. All dividends and capital gain distributions received on shares of an investment company held in your IRA will be reinvested in shares of that investment company, if available, which shall be credited to the Custodian account. Detailed information about the shares of the AIM fund(s) you select must be furnished to you in the form of prospectuses governed by rules of the Securities and Exchange Commission. D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS. Except in the case of rollover contributions (see Part F below), generally you may contribute up to the lesser of $2,000 or 100% of your compensation (earned income) to your IRA for any taxable year. A non-working spouse may contribute up to $2,000 to a separate IRA. Section 219 of the Code contains special provisions governing whether amounts contributed to your IRA will be deductible from gross income for federal income tax purposes. To the extent you are not eligible or elect not to make deductible IRA contributions, you may make nondeductible IRA contributions within the aforementioned limits which are reduced by the amount of any deductible contributions. The following is a summary of the rules regarding the deductibility of contributions to your IRA. You should consult your tax advisor to determine the specific application of such rules to your IRA contributions for any particular taxable year. (1) IF NEITHER YOU, NOR YOUR SPOUSE, IS an "active participant" (as determined under section 219(g) of the Code and any regulations or rulings thereunder) in a retirement plan during any part of the taxable year, you may take a deduction for contributions to your IRA for such taxable year in an amount equal to the lesser of $2,000 or 100% of your compensation (earned income) for such taxable year. (2) IF EITHER YOU, OR YOUR SPOUSE (unless you file separate income tax returns as noted below), is considered an "active participant" in a retirement 24 11 plan for any part of the taxable year, the extent, if any, to which contributions to your IRA will be deductible depends on the amount of your adjusted gross income ("AGI"). The maximum IRA deduction as specified in Paragraph (1) above will be reduced in the same ratio that the excess of your AGI over $25,000 (for a single individual), $40,000 (for a married couple filing jointly) and zero (for a married couple filing separately) bears to $10,000. Thus, if you are an active participant in a retirement plan, no IRA deduction will be permitted if: (a) You are a single individual with AGI in excess of $35,000, (b) you are married and file a joint return with AGI in excess of $50,000, or (c) you are married, file separate returns and either you or your spouse have AGI in excess of $10,000. (3) IF YOU ARE MARRIED and your spouse has no compensation for the taxable year, or elects to be treated as having no compensation for such year, you are permitted an additional deduction in the amount of $250 for contributions to an IRA for the benefit of your spouse provided that your spouse has not attained age 70 1/2 and you file a joint income tax return for such year, subject to the provisions of (1) or (2) above, whichever is applicable. (see below) You will be considered an "active participant" for any particular taxable year if you are covered by a retirement plan for any part of such year. Generally, you will be considered covered by a retirement plan for a year if your employer or union has a retirement plan under which money is added to your account or you are eligible to earn retirement credits for such year. For example, if you are covered under a profit-sharing plan, certain government plans, a salary reduction arrangement (such as a tax-sheltered annuity arrangement or a 401(k) plan), a SEP or a plan which promises you a retirement benefit which is based upon the number of years of service you have with the employer, you are likely to be an active participant. Your Form W-2 for the year should indicate your participation status. You are an active participant for a year even if you are not yet vested in your retirement benefit. Also, if you make required contributions or voluntary employee contributions to a retirement plan, you are an active participant. In certain plans you may be an active participant even if you were only with the employer for part of the year. You should note that if you are married but file a separate tax return, and you did not live with your spouse at any time during the taxable year, your spouse's active participation does not affect your ability to make deductible contributions. No deduction will be allowed under (1) or (2) above for any contribution which is made for the taxable year during which you attain age 70 1/2 or for any subsequent year. You are permitted to contribute and deduct up to $4,000 for contributions to your IRA and a spousal IRA, subject to the provisions of (1) and (2) above. However, in no event shall the contribution to either IRA exceed $2,000. It should be noted that if both you and your spouse work, each may contribute up to $2,000 of compensation (earned income) to his or her own IRA. If your employer maintains a SEP, your employer may contribute to your IRA up to the lesser of 15% of your compensation from such employer or $30,000. Since SEP contributions are excluded from your gross income, such contributions are not deductible for federal income tax purposes. If contributions to your IRA are deductible as outlined above, you may claim such deduction even if you do not itemize your deductions on your federal income tax return. You must make contributions to your IRA during the taxable year for which you claim the deduction or by the deadline for filing your federal income tax return for such year (without regard to any filing deadline extension). For example, if you are a calendar-year taxpayer, you must make contributions no later than April 15th in order to take a deduction for the previous year. If any portion of a contribution to your IRA is nondeductible as outlined above, you must so designate on your federal income tax return, as required under section 408(o)(4) of the Code and file From 8606 with your tax return. E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS. (1) IN GENERAL. Except as described below, your IRA and earnings thereon are exempt from federal income tax until distributions are made from the IRA. (2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other than rollover contributions) have been deductible for federal income tax purposes then all distributions from your IRA will be taxable as ordinary income. However, if you have made any nondeductible IRA contributions, distributions from your IRA will be treated as partially a return of deductible contributions, if any, (taxable), partially a return of nondeductible contributions (nontaxable) and partially a distribution of earnings (taxable). The portion of an IRA distribution which will be excludable from income will be determined by multiplying the total amount distributed by a fraction, the numerator of which is the aggregate of all your nondeductible IRA contributions, and the denominator of which is the aggregate balance of all of your IRAs (including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of your IRAs will be treated as a single IRA, (b) all distributions during a taxable year will be treated as a single distribution and (c) the aggregate balance of your IRAs will be determined as of the end of the calendar year with or within which your taxable year ends, after adding back any distributions for such year. Distributions from your IRA are not eligible for any special tax treatment such as five-or ten-year averaging or capital gains treatment. (3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the limits stated in Part D above, you will be assessed a 6% nondeductible excise tax on such excess amounts. This tax is payable for each year the excess is permitted to remain in your IRA. However, if the excess contribution has not been taken as a deduction, and if the excess and all earnings thereon are returned before the due date for filing your income tax return for the year in which the excess contribution was made, the 6% excise tax will not be assessed. The earnings on such excess contribution that are returned to you will be taxable as ordinary income and will be deemed to have been earned and taxable in the tax year during which the excess contribution was made. In addition, if you are not disabled or have not reached age 59 1/2, the earnings will be subject to the 10% premature withdrawal penalty discussed below. The 6% excess contribution tax may be eliminated for future tax years by withdrawing the excess contribution from your IRA before the due date for filing your tax return for that year or by under-contributing for a subsequent year by an amount equal to the excess contribution. If the total contributions for the year to your IRA are $2,250 or less, and there are no employer contributions for the year, you may withdraw any excess contributions after the due date for filing your tax return, including extensions, and not include the amount withdrawn in your gross income. This applies only to the part of the excess that you did not take a deduction for. It is not necessary to withdraw the interest or other income earned on the excess. You will have to pay the 6% tax on the excess amount for each year the excess contribution was in the IRA. If the contributions to your IRA for any year are more than $2,250, you must include in your gross income any excess over $2,250, unless it is an excess rollover contribution attributable to erroneous information. You may also have to pay a 10% tax on premature distributions on the amount you withdraw, unless you are age 59 1/2 or disabled. If less than the maximum amount of contributions has been made in years before the year you make an excess contribution, the prior year's difference may not be used to reduce the excess contribution. Qualified rollover contributions, as described in Part F below, are not considered excess contributions. (4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may be payable, distributions from your IRA that occur before you reach age 59 1/2 (except in the event of disability, death, rollover, medical expenses in excess of 7.5% of adjusted gross income, medical insurance premiums in the event of unemployment or as a qualifying distribution of an excess contribution), will be assessed a 10% additional income tax on the amount distributed which is includible in your gross income. However, the additional 10% income tax will not be imposed if the distribution is one of a scheduled series of level payments to be made over your life or life expectancy or over the joint lives or joint life expectancies of you and your beneficiary. Amounts treated as distributions from the IRA because of pledging the IRA as described below, or prohibited transactions as described below, will also be considered premature distributions if they occur before you reach age 59 1/2 (assuming you are not disabled). (5) EXCESS DISTRIBUTIONS If the aggregate of your distributions from qualified plans and individual retirement accounts exceed a certain limit for any calendar year, a 15% excise tax will be imposed on such excess distributions. Generally, the limit is the greater of $150,000 (available only if a special grandfather provision is not elected on a return filed for a pre-1989 tax year) or $112,500 as adjusted for cost-of-living increases. For any such excess distributions prior to your attainment of age 59 1/2, the 15% excise tax will be offset by the 10% additional income tax on early distributions. (6) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the portion so pledged is treated as being distributed to you in that year. In addition to any regular income tax that may be payable on the distribution, the premature distribution penalty as discussed above may also be applicable. (7) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a prohibited transaction, as described in section 4975 of the Code with respect to your IRA, your IRA will lose its exemption from tax and you must include the fair market value of your IRA in your gross income for the year during which the prohibited transaction occurred. In addition to any regular income tax that may be payable, the premature distribution penalty as discussed above may also be applicable. (8) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income tax that may be payable on distributions from your IRA, you will be assessed penalties on certain accumulations if funds in your IRA are not distributed in accordance with the rules described in Part B above. If the amount distributed from your IRA during the year is less than the minimum amount required to be distributed during such year, an excise tax will be imposed. The tax imposed is equal to 50% of the amount by which the minimum required distribution exceeds the amount actually distributed during the year. (9) ESTATE AND GIFT TAX STATUS OR DISTRIBUTIONS. Generally, for estate tax purposes, the value of your IRA will be fully includible in your gross estate in the event of your death. For gift tax purposes, beneficiary designations will not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who has no earned income or elects to be treated as having no earned income will qualify for 25 12 the annual present interest gift exclusion. You should consult your tax advisor with respect to the application of community property laws on estate and gift tax issues relating to your IRA. (10) INHERITED IRAs. Your IRA will be treated as an inherited IRA if, upon your death, it is acquired by a beneficiary other than your surviving spouse. An inherited IRA may not be rolled over to a qualified plan or to another IRA, nor may an inherited IRA accept any regular or rollover deposits. Only a beneficiary who is your surviving spouse will be allowed to roll over the IRA funds into his or her own IRA. (11) FEDERAL INCOME TAX WITHOLDING. The taxable portion of distributions from your IRA is subject to federal income tax withholding unless you elect not to have withholding applied. If you elect not to have withholding applied to taxable distributions from your IRA, or if insufficient federal income tax is withheld from any distribution, you may be responsible for payment of estimated taxes, as well as for penalties under the estimated tax rules, if withholding and estimated tax payments were not sufficient. Additional information regarding withholding and the necessary election forms will be provided no later than at the time a distribution is requested. F. ROLLOVER CONTRIBUTIONS. A rollover is a tax-free distribution of cash or other assets from one retirement program to another. There are two kinds of rollover contributions to an IRA. In one, you contribute amounts distributed to you from one IRA to another IRA. With the other, you contribute amounts distributed to you from your employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable IRA contribution which is not subject to the limits on regular contributions discussed in Part D above. However, you may not deduct a rollover contribution to your IRA on your tax return. If you receive a distribution from the qualified plan of your employer or former employer, the distribution must be an "eligible rollover distribution" in order for you to be able to roll all or part of the distribution over to your IRA. The portion you contribute to your IRA will not be taxable to you until you withdraw it from the IRA. Your employer or former employer will give you the opportunity to roll over the distribution directly from the plan to the IRA. If you elect, instead, to receive the distribution, you must deposit it into the IRA within 60 days after you receive it. An "eligible rollover distribution" is any distribution from a qualified plan that would be taxable other than (1) a distribution that is one of a series of periodic payments for an employee's life or over a period of 10 years or more, (2) a required distribution after you attain age 70 1/2 and (3) certain corrective distributions. If the entire amount in your IRA has been contributed in a tax-free rollover from your employer's or former employer's qualified plan or 403(b) plan, you may later roll over the IRA to a new employer's plan if such plan permits rollovers. Your IRA would then serve as a conduit for those assets. However, you may later roll those IRA funds into a new employer's plan only if you make no further contributions to that IRA, or commingle the IRA rollover funds with existing IRA assets. G. AMENDMENTS. The Custodian of your IRA may amend the agreements establishing your IRA at any time. The Custodian will comply with the amendment procedures set forth in your Custodial Agreement. H. FINANCIAL DISCLOSURE. Because the value of assets held in your IRA is subject to market fluctuation, the value of your IRA can neither be guaranteed nor projected. There is no assurance of growth in the value of your IRA or guarantee of investment results. You will, however, be provided with periodic statements of your IRA, including current market values of investments. Certain fees will be charged by the Custodian in connection with your IRA. Such fees are disclosed on the Custodian's fee schedule, a copy of which has been provided to you. Upon thirty days' prior written notice, the Custodian may substitute a new fee schedule. Any fees or other expenses incurred in connection with your IRA will be deducted from your IRA (with liquidation of Fund Shares, if necessary), or at the Custodian's option, such fees or expenses may be billed to you directly. For its services to the various funds, in The AIM Family of Funds--Registered trademark--, Boston Safe Deposit and Trust Company receives a custodian fee. This fee is in addition to fees it receives for acting as Custodian under the IRA. Boston Safe Deposit and Trust Company and A I M Distributors, Inc. also will receive additional fees for performing specific services with respect to the various funds in the AIM Family of Funds. Any such fees will be fully disclosed to you. Potential investors should obtain a copy of the current Prospectus relating to the fund(s) selected for investment prior to making an investment. Also, copies of the Statement of Additional Information relating to such fund(s) will be provided upon your request to A I M Distributors, Inc. I. MISCELLANEOUS. Each year you will be provided a statement(s) of account which will give the amount of contributions to the IRA, the year to which each contribution relates, and the total value of the IRA as of the end of the year. Information relating to contributions and distributions must be reported annually to the Internal Revenue Service and to you. You must also file Form 5329 (Return for Individual Retirement Savings Arrangement) with the Internal Revenue Service for each taxable year during which you are assessed any penalty or tax as discussed in Part E above. Your IRA has been approved by the Internal Revenue Service. Such approval is a determination as to the form of the IRA, and does not represent a determination of the IRA's merits as an investment. Further information about IRAs can be obtained from any district office of the Internal Revenue Service or from the Custodian. All provisions in this Disclosure Statement are subject to the Code and to the regulations promulgated thereunder. This Disclosure Statement constitutes a nontechnical restatement and summary of certain provisions of the Code which may affect your IRA. This is not a legal document. Your legal rights and obligations are governed by the federal tax laws and regulations and your Custodial Agreement and Adoption Agreement with the Custodian. 26 13 SEP AND SARSEP IRA APPLICATION [AIM LOGO APPEARS HERE] - -------------------------------------------------------------------------------- 1. INVESTOR INFORMATION (Please print or type.) Name Birth Date / / --------------------------------------------------- -- -- -- First Name Middle Last Name Month Day Year Address --------------------------------------------------------------------- Street City State Zip Code Social Security Number --------------------- Daytime Telephone Evening Telephone -------------------------- ---------------- - -------------------------------------------------------------------------------- 2. TYPE OF ACCOUNT [ ] SEP - Employer contributions only. [ ] SARSEP - Employee salary-reduction SEP. [ ] Combined SEP/SARSEP - Employer and Employee contributions. Name of Employer Telephone -------------------------------- ------------------ - -------------------------------------------------------------------------------- 3. FUND INVESTMENT Indicate Fund(s) and contribution amount(s). Make check payable to Boston Safe Deposit and Trust Company. Minimum $25 per fund per contribution submission.
Fund $ or % of Assets Class of Shares (check one) [ ] AIM Balanced Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Charter Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Constellation Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Global Growth Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Global Income Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Growth Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Global Utilities Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM High Yield Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Income Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Intermediate Government Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM International Equity Fund $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Limited Maturity Treasury Shares $ [ ] Class A [ ] Class B ---------------------------- [ ] AIM Money Market Fund $ [ ] Class A ---------------------------- [ ] AIM Value Fund $ [ ] Class A [ ] Class B [ ] Class C ---------------------------- [ ] AIM Weingarten Fund $ [ ] Class A [ ] Class B ---------------------------- Total $ [ ] Class A [ ] Class B ----------------------------
If no class of shares is selected, Class A shares will be purchased. All dividends and capital gains will be reinvested in the fund(s) automatically. - -------------------------------------------------------------------------------- 4. TELEPHONE EXCHANGE Telephone Exchange Privilege. Unless indicated below, I authorize the Transfer Agent to accept instructions from any person to exchange shares in my account(s) by telephone in accordance with the procedures and conditions set forth in the Fund's current prospectus. [ ] I do not want the Telephone Exchange Privilege. 27 14 - -------------------------------------------------------------------------------- 5. BENEFICIARY INFORMATION I hereby designate the following beneficiary to receive the balance in my IRA custodial account upon my death. To be effective, the designation of beneficiary and any subsequent change in designation of beneficiary must be filed with the Custodian prior to my death. If no beneficiary is designated or no designated beneficiary or contingent beneficiary survives me, the balance in my IRA will be distributed to the legal representatives of my estate. This designation revokes any prior designations. I retain the right to revoke this designation. In the event that I die and no primary beneficiary listed below (or such beneficiary's heirs, if applicable) is alive, distribute all Fund accounts in my IRA to the following contingent beneficiary, or contingent beneficiary's heirs, if applicable. PRIMARY BENEFICIARY(IES) Name % Relationship ------------------------------------ ---- -------------- Beneficiary's Social Security Number Birth Date / / ------------- -- -- -- Name % Relationship ------------------------------------ ---- -------------- Beneficiary's Social Security Number Birth Date / / ------------- -- -- -- CONTINGENT BENEFICIARY Name % Relationship ------------------------------------ ---- -------------- Social Security Number Birth Date / / --------------------------- -- -- -- - -------------------------------------------------------------------------------- 6. AUTHORIZATION AND SIGNATURE I hereby adopt the A I M Distributors, Inc. Individual Retirement Account appointing Boston Safe Deposit and Trust Company as Custodian. I have received and read the current prospectus of the investment company(ies) selected in this agreement and have read and understand the IRA custodial agreement and disclosure statement and consent to the custodial account fees as specified. I understand that a $10 annual AIM Fund IRA Maintenance Fee will be deducted in early December from my AIM IRA account. Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is required to have the following certification. Under the penalties of perjury, I certify that (i) the number shown in Section 1 is my correct Social Security/Taxpayer Identification Number and (ii) I am not subject to backup withholding because the Internal Revenue Service (a) has not notified me that I am subject to backup withholding as a result of failure to report all interest or dividends, or (b) has notified me that I am no longer subject to backup withholding. Please refer to the Fund prospectus for complete instructions regarding backup withholding. Your Signature Date / / ---------------------------------------------- -- -- -- - -------------------------------------------------------------------------------- 7. DEALER INFORMATION (To be completed by securities dealer.) Name of Broker/Dealer Firm Branch # ----------------------- ------------------ Home Office ----------------------------------------------------------------- Address --------------------------------------------------------------------- Rep. Name Rep. # ----------------------------------------- -------------------- Authorized Signature Telephone ------------------------------ ----------------- Branch Address ------------------------------------------------ Street City State Zip Code [ ] Authorized for NAV purchase 28 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43102-10/95 15 SARSEP IRA ENROLLMENT AND SALARY [ AIM LOGO APPEARS HERE] SAVINGS AGREEMENT - -------------------------------------------------------------------------------- 8. INVESTOR INFORMATION (Please print or type.) Name Date / / ---------------------------------------------------- -- -- -- First Name Middle Last Name Month Day Year Address --------------------------------------------------------------------- Street City State Zip Code Birth Date / / Hire Date / / --- --- --- --- --- --- Month Day Year Month Day Year - ------------------------------------------------------------------------------- Social Security Number ------------------------------------------------------ [ ] I HEREBY ELECT TO BECOME A PARTICIPANT IN THE SARSEP. As a Participant, I hereby authorize the Company to deduct ______% of my Compensation or a flat dollar amount of $ __________ per pay period which I understand will be contributed by the Employer to my IRA. I understand that my annual SARSEP contribution cannot exceed the lesser of 15% of my compensation or $9,240, or an amount as limited by IRS regulations. The minimum contribution is $25 PER FUND PER CONTRIBUTION SUBMISSION. [ ] I AM PRESENTLY A PARTICIPANT IN THE SARSEP. As a Participant, I hereby authorize the Company to change the amount it deducts from my Compensation from _______% to _______% or if a dollar amount has been specified, from $_______________ per pay period to $_______________ per pay period. I understand that this change will be effective 30 days from the first day of the month following receipt of this notice. [ ] I HEREBY WITHDRAW MY AUTHORIZATION TO CONTINUE PAYROLL DEDUCTIONS UNDER THE SARSEP. I understand this directive will be effective 30 days from delivery of this notice to the Employer. I further understand that I may not again authorize payroll deductions for a period of 90 days from the date of this notice. [ ] CASH BONUS ELECTION (IF APPLICABLE) I hereby authorize the Company to deduct ________% from my cash bonus as an additional contribution to my IRA. I understand that my total annual contribution cannot exceed the lesser of 15% of my compensation or $9,240, or an amount as limited by IRS regulations. -------------------------------------- Participant's Signature 29 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43103-10/95 16 30 17 SEP AND SARSEP TOP-HEAVY TEST [AIM LOGO APPEARS HERE] Plan Year End -------------------------- - -------------------------------------------------------------------------------- 1. A Top-Heavy Test must be performed at the end of each plan year. A Plan becomes top heavy when 60% of the Plan's aggregate SEP and/or SARSEP contributions or 60% of the aggregate market value of the Plan as of the last day of the Plan year is allocated to key employees. You may test using either market values or contributions, but you may find it easier to test based on contributions.
Key Employees' Names Contributions Market Value (SEP and SARSEP) 12/31 or Fiscal Year End $ $ - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- (A) Total $ $ --------------------- -------------------------------
Non-Key Employees' Names Contributions Market Value (SEP and SARSEP) 12/31 or Fiscal Year End $ $ - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- - --------------------------------------- --------------------- ------------------------------- (B) Total S $ --------------------- ------------------------------- (C) Plan Totals (line A + line B) $ $ --------------------- ------------------------------- (D) Top-Heavy Percentage (line A divided by line C) --------------------- ------------------------------- (If greater than 60%, plan is "top heavy")
Note: If you have additional key or non-key employees, please attach additional pages as necessary. If the Plan is top heavy, the employer must make a minimum contribution on behalf of all non-key eligible employees. The contribution must equal the highest percentage deferred by a key employee, up to a maximum of 3%, based on the non-key employee's compensation. These contributions can be made to any qualified retirement plan (SEP or SARSEP IRA), as indicated in the adoption agreement. Key employees may also receive the top-heavy contribution. 31 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43104-10/95 18 32 19 SARSEP IRA ACTUAL DEFERRAL [AIM LOGO APPEARS HERE] PERCENTAGE (ADP) TEST Plan Year End ---------------------- - -------------------------------------------------------------------------------- 1. THE ACTUAL DEFERRAL PERCENTAGE (ADP) TEST The Actual Deferral Percentage (ADP) Test is an annual test which restricts the amount that Highly Compensated Employees may contribute through salary deferral to their SARSEP accounts. Each Highly Compensated Employee may defer no more than 125% of the deferral percentage of the Non-Highly Compensated (NHC) group of employees. The test must be performed annually as of the last day of the plan year. - -------------------------------------------------------------------------------- 2. INSTRUCTIONS (1) Separate eligible employees into two groups: Highly Compensated and Non-Highly Compensated. The definition of Highly Compensated is provided in the Question and Answer Section on page 13. (2) List each ELIGIBLE employee in their respective group indicating their compensation and salary deferral. IMPORTANT: You must also include all eligible employees who elect not to make salary deferral contributions. Indicate their deferral amount ($) in Column 4 as zero. (3) Compute each eligible employees' deferral percentage in Column 4. (4) Add up the deferred percentage of each employee in the Highly Compensated group and the Non-Highly Compensated group separately. Divide by the number of eligible employees in each group. (5) Compare the two groups' average deferral percentages. Each Highly Compensated participant cannot defer more than 125% of the average deferral percentage of the Non-Highly Compensated group. - -------------------------------------------------------------------------------- 3. DEFINITIONS (1) EMPLOYEE: For the purposes of this worksheet we are listing only employees eligible for this SARSEP. An employee who was eligible at any time during the Plan Year, but who terminates prior to the end of the Plan Year is included for this test. Additionally, an eligible employee who elects not to make Elective Deferrals shall be treated as having a 0% Deferral Percentage. (a) HIGHLY COMPENSATED EMPLOYEE An Employee (and certain family members) who meet the criteria listed in Sections 1.11 and 1.12 of the SEP and SARSEP IRA Plan Document. (Also see Question and Answer Section on page 13.) (b) NON-HIGHLY COMPENSATED EMPLOYEE: An Employee who doesn't meet the definition of Highly Compensated. (2) ELECTIVE DEFERRALS: All contributions made to the SARSEP at the election of an eligible employee (Participant) in lieu of cash compensation or bonuses pursuant to a salary savings agreement or cash option election. (3) COMPENSATION: Total wages, salaries, fees, bonuses or other taxable remuneration paid to Participant from the Employer during the period in which the individual actually participated in the Plan. Compensation shall be limited to $160,000 (or any higher limit announced by the IRS). The Compensation limit must be adjusted proportionately for Plan Years of less than 12 months. 33 20 - -------------------------------------------------------------------------------- 4. ELIGIBLE NON-HIGHLY COMPENSATED (NHC) EMPLOYEES NOTE: Please read the Definitions before completing worksheet.
(1) (2) (3) (4) Deferral Employee Name Elective Deferrals Compensation Percentage column 2 divided by column 3 $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- -----------------
(5) Total of all Deferral Percentages (column 4) --------------- (6) Number of eligible Non-Highly Compensated Employees (column 1) ------------- (7) Average Deferral Percentage for Non-Highly Compensated Employees (line 5 divided by line 6) -------------------- - -------------------------------------------------------------------------------- 5. ELIGIBLE HIGHLY COMPENSATED (HC) EMPLOYEES NOTE: Please read the Definitions before completing worksheet.
(1) (2) (3) (4) Deferral Employee Name Elective Deferrals Compensation Percentage column 2 divided by column 3 $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- ----------------- $ $ % - --------------------------------------- ---------------------------- ------------------- -----------------
(A) Total of all Deferral Percentages (column 4) ------------------ (B) Number of eligible Highly Compensated Employees (column 1) ---------------- (C) Average Deferral Percentage for Highly Compensated Employees (line A divided by line B) -------------------- (D) EACH HIGHLY COMPENSATED PARTICIPANT MAY NOT DEFER MORE THAN 125% X LINE 7, SECTION 4 125% X _________________ = ______________ ADP FOR EACH HIGHLY COMPENSATED PARTICIPANT 34 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43105-3/96 21 SEP/SARSEP TRANSMITTAL FORM [AIM LOGO APPEARS HERE] - -------------------------------------------------------------------------------- 1. EMPLOYER INFORMATION (Please print or type.) Name of Employer ------------------------------------------------------------ Address --------------------------------------------------------------------- City State Zip Code ------------------------------ --------------- -------------- - -------------------------------------------------------------------------------- 2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer representative) We hereby authorize Boston Safe Deposit and Trust Company to invest contributions in accordance with the instructions below. Date / / - ------------------------------------------------------------ -- -- -- Month Day Year
(1) (2) (3) (4) Name of Social Security Selected Contribution per Fund** Participant Number AIM Funds* (Minimum $25 per Fund) SEP SARSEP 1 $ $ ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 2 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 3 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 4 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 5 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 6 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------
*Indicate funds used by each participant. **Indicate dollar($) amount contributed per fund. 35 22
(1) (2) (3) (4) Name of Social Security Selected Contribution per Fund** Participant Number AIM Funds* (Minimum $25 per Fund) SEP SARSEP 7 $ $ ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 8 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 9 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 10 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ 11 ----------------------------- ------------------------- ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ ------------------------ ------------ ------------ Total Employer Contributions $ ------------ Total Employee Salary Deferral Contributions $ ----------- Total Employer and Employee Contributions $ -----------
If a contribution for a participant is to be invested in more than one fund, $25 or more must be invested in each fund selected. Attach form, check (payable to Boston Safe Deposit and Trust) and SEP and SARSEP applications and mail to: AIM Fund Services, Inc. Attn: Retirement Plans Operations P.O. Box 2646 Houston, Texas 77252-2646 *Indicate funds used by each participant. **Indicate dollar($) amount contributed per fund. 36 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43106-10/95 EX-99.B14.C2 12 REGISTRANT'S MONEY PURCHASE PENSION & PROFIT SHARE 1 EXHIBIT 14(c)(2) AIM PROFIT SHARING/MONEY PURCHASE PENSION PLAN ENROLLMENT & BENEFICIARY DESIGNATION FORM [AIM LOGO APPEARS HERE] - -------------------------------------------------------------------------------- 1. EMPLOYEE INFORMATION (Please Print) Company Name Trust Tax ID # ------------------------------ --------------- Last Name First Middle ------------- ------------ ----------------------- Social Security Number ---------------------------------------------------- Address ------------------------------------------------------------------- Home Phone Work Phone --------------------------- ------------------------ - -------------------------------------------------------------------------------- 2. INVESTMENT SELECTION I elect to have my Employer contributions invested as indicated below. If any existing assets are being transferred to AIM, they will be invested the same as your future contributions. (Write in the name of each AIM Fund you choose to invest in as permitted by the Plan.) [ %] AIM -------------------------------- [ %] AIM -------------------------------- [ %] AIM -------------------------------- [ %] AIM -------------------------------- [ %] AIM -------------------------------- [ %] AIM -------------------------------- [ %] AIM -------------------------------- [ %] AIM -------------------------------- 100% Total (Minimum $25 per fund, per payroll deferral) - -------------------------------------------------------------------------------- 3. PRIMARY BENEFICIARY(IES) I name the following person(s) to receive benefits payable from my company's retirement plan upon my death: Name Relationship Percentage of Benefits ----------------------------------------------- ----------------------------------- [ %] Social Security Number Birthdate / / ----------------------------- ------------ ------------- ----------- Street Address City State Zip Code ----------------------- ----------------- --- ------------------- Name Relationship Percentage of Benefits ----------------------------------------------- ----------------------------------- [ %] Social Security Number Birthdate / / ----------------------------- ------------ ------------- ----------- Percentages must Street Address City State Zip Code total 100% ----------------------- ----------------- --- -------------------
Attach additional sheets if you wish to name more than two primary beneficiaries. - -------------------------------------------------------------------------------- 4. CONTINGENT BENEFICIARY(IES) If my primary beneficiary(ies) is/are deceased at the time of my death, the following person(s) shall receive benefits payable from my Company Retirement Plan upon my death: Name Relationship Percentage of Benefits ----------------------------------------------- ----------------------------------- [ %] Social Security Number Birthdate / / ----------------------------- ------------ ------------- ----------- Street Address City State Zip Code ----------------------- ----------------- --- ------------------- Name Relationship Percentage of Benefits ----------------------------------------------- ----------------------------------- [ %] Social Security Number Birthdate / / ----------------------------- ------------ ------------- ----------- Percentages must Street Address City State Zip Code total 100% ----------------------- ----------------- --- -------------------
Attach additional sheets if you wish to name more than two contingent beneficiaries. - -------------------------------------------------------------------------------- 5. SPOUSAL CONSENT (This section must be completed only if you are married and selecting a primary beneficiary other than your spouse.) I, the spouse of the above-named employee, consent to my spouse's designation. I understand that if a primary beneficiary other than myself has been named, no benefit will be paid to me from the Plan upon my spouse's death unless I am named also as an additional primary beneficiary or as a contingent beneficiary, and the primary beneficiary(ies) is/are deceased. Spouse's Signature Date / / -------------------------------- ----- ----- ----- Signature of Witness (other than spouse) Date / / ---------- ----- ----- ----- - -------------------------------------------------------------------------------- 6. EMPLOYEE AUTHORIZATION (Please sign and date this form) I understand that my designation becomes effective on the day I submit this form and replaces any earlier beneficiary designation I have made under the Plan. If I am married at the time of my death, my spouse will receive my Plan benefits, regardless of whom I have named as beneficiary, if Section 4 of this form is not complete. Employee Signature Date / / -------------------------------- ----- ----- ----- A I M Distributors, Inc. *40700-12/96 2 PROFIT SHARING/MONEY PURCHASE PLAN APPLICATION [AIM LOGO APPEARS HERE] Complete Sections 1-9. Please print or type. - ------------------------------------------------------------------------------- 1. EMPLOYER INFORMATION Name of Employer/Business --------------------------------------------------- Plan Name ------------------------------------------------------------------- Address ------------------------------------------------------------------- Street City State Zip Code Trust Tax I.D# Daytime Telephone - - ---- -------------- ---- ---- -------- - -------------------------------------------------------------------------------- 2. DEALER INFORMATION: To be completed by securities dealer. Dealer's Name -------------------------------------------------------------- Main Office Address -------------------------------------------------------- Rep. Name and Number -------------------------------------------------------- Branch Rep. Signature ---------------------------- -------------------------- Home Office Address --------------------------------------------------------- Telephone - - ---- ---- --------- - -------------------------------------------------------------------------------- 3. PLAN TRUSTEES Name Plan Adm./Contact Person ------------------------- ---------------------- Name Plan Adm. Telephone - - ------------------------- ----- ----- ----- - -------------------------------------------------------------------------------- 4. TYPE OF CONTRIBUTION Note: If you have paired AIM Profit Sharing and Money Purchase Pension Plans, you must submit separate applications and separate contribution checks. [ ] Profit Sharing Plan [ ] Money Purchase Plan - -------------------------------------------------------------------------------- 5. TYPE OF ACCOUNT ESTABLISHMENT [ ] Establish separate accounts for each participant. (Attach participant listing.) [ ] Establish a pooled account for all participants. (Record keeper is responsible for allocating plan assets to each participant.) - -------------------------------------------------------------------------------- 6. FUND INVESTMENT Indicate fund(s) and contribution amount(s). Make check payable to Boston Safe Deposit and Trust Company.
Class of Shares Class of Shares Fund $ or % of (Check one) Fund $ or % of (Check one) Assets Assets [ ] AIM Balanced Fund $ [ ] A [ ] B [ ] AIM Intermediate Government Fund $ [ ] A [ ] B ----------- ---------- [ ] AIM Blue Chip Fund $ [ ] A [ ] B [ ] AIM Growth Fund $ [ ] A [ ] B ----------- ---------- [ ] AIM Capital Develop- ment Fund $ [ ] A [ ] B [ ] AIM High Yield Fund $ [ ] A [ ] B ----------- ---------- [ ] AIM Charter Fund $ [ ] A [ ] B [ ] AIM Income Fund $ [ ] A [ ] B ----------- ---------- [ ] AIM Constellation Fund $ [ ] A [ ] AIM International Equity Fund $ [ ] A [ ] B ----------- ---------- [ ] AIM Global Aggressive Growth Fund $ [ ] A [ ] B [ ] AIM Limited Maturity Treasury Shares $ [ ] A ----------- ---------- [ ] AIM Global Growth Fund $ [ ] A [ ] B [ ] AIM Money Market Fund $ [ ] A [ ] B [ ] C ----------- ---------- [ ] AIM Global Income Fund $ [ ] A [ ] B [ ] AIM Value Fund $ [ ] A [ ] B ----------- ---------- [ ] AIM Global Utilities Fund $ [ ] A [ ] B [ ] AIM Weingarten Fund $ [ ] A [ ] B ----------- ---------- Total from both columns $ ----------
If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where Class C shares will be purchased. If you are funding your retirement account through a transfer, please indicate the contribution amounts both in this section and in Section 3 of the Asset-Transfer Form. 3 - ------------------------------------------------------------------------------- 7. TELEPHONE EXCHANGE PRIVILEGE Unless indicated below, the plan authorizes the Transfer Agent to accept instructions from any person to exchange shares in its plan account(s) by telephone, in accordance with the procedures and conditions set forth in the Fund's current prospectus. [ ] The plan DOES NOT want the telephone exchange privilege. - -------------------------------------------------------------------------------- 8. REDUCED SALES CHARGE (optional) RIGHT OF ACCUMULATION The plan applies for Right of Accumulation reduced sales charges based on the following accounts in The AIM Family of Funds--Registered Trademark--. Fund(s) Account No(s). ----------------------- ------------------------------- LETTER OF INTENT The plan agrees to the Letter of Intent provisions as stated in Fund's prospectus(es). The plan agrees to invest during a 13-month period a dollar amount of at least: [ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000 - -------------------------------------------------------------------------------- 9. DUPLICATE ACCOUNT STATEMENT Name ------------------------------------------------------------------------ Address --------------------------------------------------------------------- (AIM will only send one duplicate statement. Check one of the following boxes.) [ ]Plan Administrator [ ]Record Keeper [ ]Benefit Consultant [ ]Trustee - -------------------------------------------------------------------------------- 10. AUTHORIZATION AND SIGNATURE The trustee(s) hereby adopts the AIM Distributors, Inc. Money Purchase/Profit Sharing Plan appointing Boston Safe Deposit and Trust Company as Custodian. The trustee(s) has received and read the current prospectus of the investment company(ies) selected in this agreement. The trustee(s) understands that a $10 annual maintenance fee for each participant in the AIM Money Purchase/Profit Sharing Plan will be deducted in early December. The trustee(s) acknowledges reading and completing the AIM Funds Money Purchase/Profit Sharing Plan Adoption Agreement(s) and Trust Agreement. Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is required to have the following certification. Please refer to the Fund prospectus for complete instructions regarding backup withholding. Under the penalties of perjury, the trustee(s) certifies that (i) the number shown in Section 1 is its correct Taxpayer Identification Number and (ii) the plan is not subject to backup withholding because the Internal Revenue Service (a) has not notified the plan that it is subject to backup withholding as a result of failure to report all interest or dividends, or (b) has notified the plan that it is no longer subject to backup withholding (does not apply to real estate transactions, mortgage interest paid, the acquisition or abandonment of secured property, contributions to an individual retirement arrangement (IRA), and payments other than interest and dividends). Certification Instructions - You must cross out item(b) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting of interest or dividends on your tax return. [ ] Exempt from Backup Withholding (i.e. exempt entity as described in Application Instructions) Signature of Plan Trustee Date / / ----------------------------- ---- ---- ------ Signature of Plan Trustee Date / / ----------------------------- ---- ----- ------- Signature of Plan Trustee Date / / ----------------------------- ---- ----- ------- - -------------------------------------------------------------------------------- 11. INSTRUCTIONS Make check payable to Boston Safe Deposit and Trust Company. Return completed application and check to A I M Distributors, Inc., P.O. Box 4739, Houston, TX 77210-4739. [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 42600-12/96 4 [AIM LOGO APPEARS HERE] AIM FAMILY OF FUNDS PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLANS MONEY PURCHASE PENSION AND PROFIT SHARING PLAN DOCUMENT, TRUST AGREEMENT, ADOPTION AGREEMENTS, SUMMARY PLAN DESCRIPTIONS AND APPLICATIONS AIM DISTRIBUTORS, INC. 5 AIM DISTRIBUTORS, INC. PROTOTYPE PAIRED DEFINED CONTRIBUTION PLANS PROFIT SHARING/MONEY PURCHASE PENSION PLANS TABLE OF CONTENTS I. Adopting the AIM Profit Sharing Plan: Adoption Agreement #001 II. Adopting the AIM Money Purchase Pension Plan: Adoption Agreement #002 III. Money Purchase Pension and Profit Sharing Plan Basic Document #01 IV. Determination Letters V. Trust Agreement VI. Employee Notices - Model Summary Plan Description for Profit Sharing Plan - Model Summary Plan Description for Money Purchase Plan VII. Forms - Money Purchase Pension and Profit Sharing Plan Account Application - Participant Enrollment & Beneficiary Designation - Asset Transfer Form - Contribution Transmittal Form 1 6 ESTABLISHING YOUR PROTOTYPE DEFINED CONTRIBUTION PLANS PROFIT SHARING AND MONEY PURCHASE PENSION PLANS The Prototype Paired Defined Contribution Plans sponsored by AIM Distributors, Inc. are a Profit Sharing Plan and a Money Purchase Pension Plan. Both of these plans are provided under one plan document with separate adoption agreements. An employer can adopt either one or both of these plans. AIM Distributors, Inc. will not act as trustee, plan administrator, nor record keeper. Before establishing a qualified plan, you should consult with a tax advisor or attorney. Failure to properly complete these documents could result in plan disqualification. To establish the AIM Prototype Profit Sharing and/or Money Purchase Pension Plan the following forms need to be completed: 1. PLAN ADOPTION AGREEMENT(S). (Section I & II.) You must complete the appropriate adoption agreement, Profit Sharing Agreement #001, or Money Purchase Pension Agreement #002, and all other documents stated in the plan set up instructions. To establish both a Money Purchase Pension and a Profit Sharing Plan (Paired Plans), you must complete both the Profit Sharing Adoption Agreement (Agreement #001) and the Money Purchase Adoption Agreement (Agreement #002) found in Sections I & II. 2. FIDELITY BOND REQUIREMENT: All qualified plans are required to be covered by a Fidelity Bond equal to at least 10% of the asset value of the plan, and not less than $1,000 nor greater than $500,000. Fidelity bonds can be obtained through your business insurance agent. 3. TRUST AGREEMENT DOCUMENT (Section III.) Complete and sign pages 77 and 78 of the Trust Document. 4. AIM PROFIT SHARING/MONEY PURCHASE PLAN ACCOUNT APPLICATION (Section VII.) Complete a separate application for each plan established: Profit Sharing and/or Money Purchase Pension Plan. 5. PARTICIPANT ENROLLMENT AND DESIGNATION OF BENEFICIARY FORM (Section VII Employer retains) Each eligible employee must complete an enrollment and beneficiary form and return it to the plan administrator to be retained with plan records. A copy of the employee's enrollment form should be forwarded to AIM only if you are requesting that individual mutual fund accounts be established for each employee. 2 7 Do not return the employee enrollment forms if you are establishing "pooled" investment accounts for the plan. AIM will only establish "individual" mutual fund participant accounts for plans with less than 50 participants. 6. TO TRANSFER ASSETS FROM AN EXISTING PLAN: Complete the Asset Transfer Form in Section V as well as the documents indicated on the previous page. 7. FEES: There is an annual custodial account fee of $10.00 for each participant account or each "pooled" account establish at AIM. After completion, return only the AIM Money Purchase Pension and Profit Sharing Account Application and a copy of the participant enrollment forms (individual mutual fund accounts only) with your contribution to establish the plan. Do not return participant enrollment forms if establishing "pooled" AIM Fund investment accounts. Enclose your initial contribution check payable to: Boston Safe Deposit & Trust Company. DO NOT return the Adoption Agreement(s), Summary Plan Description(s), Beneficiary Form, or Trust Agreement to AIM. These documents must be retained with your permanent plan records. Return to: AIM Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 DEADLINE: New Plans must execute all plan documents prior to the last day of the plan year (fiscal or calendar year). The plans contribution must be made by the due date of the business tax return including extensions for the contribution to be tax deductible. NOTICE TO EMPLOYEES Once you have adopted the AIM Money Purchase Pension and/or Profit Sharing Plan you will need to communicate the adoption and principal provisions of the plan to employees. This is done by providing the following information to employees: 1. SUMMARY PLAN DESCRIPTION The employer must give each eligible employee a Summary Plan Description (SPD) of the plan and file the Summary Plan Description with the Department of Labor within 120 days of establishing the plan. You must complete the SPD to indicate the plan features you have designated in the adoption agreement. AIM has partially completed the SPD in accordance with the features we pre-marked. Any future amendments to the adoption agreement must also be made to the SPD. There is a sample letter provided for filing the SPD with the Department of Labor. These notices are provided in Section VII. 3 8 ADOPTING THE AIM PROFIT SHARING PLAN ADOPTION AGREEMENT #001 4 9 ADOPTING THE AIM PROFIT SHARING PLAN ADOPTION AGREEMENT #001 TO ADOPT THE AIM SPONSORED PROFIT SHARING PLAN YOU WILL NEED TO COMPLETE THE FOLLOWING FORMS: - The Profit Sharing Adoption Agreement and Summary Plan Description (SPD) and Trust Agreement - A Profit Sharing Plan Account Application - An Enrollment and Beneficiary Designation Form for each participant. PLAN STRUCTURE: If you are establishing "pooled" investment accounts, utilizing a third party administrator for record keeping: - Submit only the AIM Profit Sharing and/or Money Purchase Pension Plan Account Application indicating all the AIM Funds permitted as investment options by the Plan and the investment amount for each fund. You must identify the Plan's trustees. If you are not making your full contribution at this time, we require a minimum $1,000 initial contribution. If you want AIM to establish separate mutual fund accounts for each plan participant: - Submit the AIM Profit Sharing Account Applications with the participant enrollment forms (Section VII). - Identify each participant's name, mailing address, SS # and their AIM Fund'(s) investment election on the enrollment form. - The plan administrator must submit all contributions with a breakdown identifying each participant and their total contribution allocated to the funds the participant has chosen. - The minimum contribution per participant is $25 per fund, per contribution submission. - The maximum number of individual, participants accounts AIM will establish is 50, utilizing no more than 6 AIM Funds. - Duplicate statements will be issued to your recordkeeper or administrator, if requested. RETURN TO: AIM Fund Services P.O. Box 4739 Houston, TX 71210-4739 ADOPTION AGREEMENT To make it easy for you, the Profit Sharing Plan Adoption Agreement has been partially completed to reflect the features most frequently chosen. Please review the completed plan adoption agreement with your legal or tax advisor to ensure that the plan provisions are appropriate. NOTE: If desired, you may change any of the prechecked elections by making the appropriate change and placing your initials and date next to the section being changed. [X] PRE-CHECKED SECTIONS: The key sections in this Adoption Agreement which have been completed are as follows: 5 10 - - All employees who are Age 21 and have fulfilled one year of service are eligible to share in plan for contributions. (Years of service cannot exceed 2 years: all contributions are then 100% vested.) - - An employee who completes 1,000 hours of service within 12 consecutive months of their date of hire is credited with a year of service for initial eligibility. Only 500 hours of service are required in any year thereafter for a participant to be eligible for a plan contribution. There is no requirement that a participant be employed on the last day of the plan year to receive a contribution in the year they separate from service. - - After fulfilling age and service eligibility requirements, employees may enter the plan on the first day of a plan year on the first day of the seventh month of the plan year. (Calendar Year = January 1 & July 1 entry dates) - - All union and non U.S. resident alien employees are excluded from participation. Please note that all other employees of the plan sponsors, as well as employees of certain companies related to the plan sponsor, are eligible to participate. - - Please note that all other employees of the plan sponsors, as well as employees of certain companies related to the plan sponsor, are eligible to participate. - - The employees annual contribution will be discretionary. - - The plan is not integrated with Social Security. If you choose to integrate your contribution, AIM will not compute the integration allocation. - - Normal retirement age of 65. - - No Loans and No Hardship Distributions are permitted. - - No Life Insurance may be purchased by the plan. - - The Employer is the Plan Administrator responsible for administration of the Plan. (If you appoint another entity as the Plan Administrator, that entity must sign Section XV of the Adoption Agreement to accept the responsibility of Plan Administrator. [X] SECTIONS TO BE COMPLETED BY EMPLOYER The following sections of the Adoption Agreement must be completed by the employer. Section II: Employer Data (Page 1 & 2) - Complete A through G. If applicable, Complete H and I. (Name, address, TIN, etc.) Section IX: Vesting - Choose the vesting schedule desired. SECTION XIV: Allocation Limitation - complete this section. Section XVI: Self Trusteed Plan - You must designate a trustee or trustees of this plan. The trustee(s) must sign the Adoption Agreement. NEITHER AIM NOR BOSTON SAFE DEPOSIT & TRUST COMPANY WILL ACT AS THE PLAN TRUSTEE. The trustees must sign the Adoption Agreement on page 12. Section XVII: Employer Signature - Read the employer acknowledgment and execute this section. 6 11 Fidelity Bond - Contact your insurance company regarding the purchase of a fidelity bond which will cover the plan administrator and plan fiduciaries. The bond must be for at least $1,000 or an amount equal to 10% of the plan's assets not to exceed $500,000. FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL). PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTORS, NOR AIM FUND SERVICES WILL ACT AS THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, CALCULATE CONTRIBUTION ALLOCATIONS, PROVIDE RECORD KEEPING SERVICES, PERFORM DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED THIRD PARTY. 7 12 PROFIT SHARING ADOPTION AGREEMENT FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN #001 SPONSORED BY AIM DISTRIBUTORS, INC. ADOPTION AGREEMENT #001 This is the Adoption Agreement for paired defined contribution plan #001 of basic plan document #001, which is a combined prototype profit sharing/money purchase pension plan. This Adoption Agreement may be adopted either singly or in combination with paired defined contribution plan #002, a prototype money purchase pension plan. NOTE: Before executing this Adoption Agreement, the Employer should consult with a tax advisor or attorney. Failure to properly complete this Adoption Agreement may result in Plan disqualification. - ----------------------------------- The Employer hereby establishes a profit sharing plan and a trust upon the respective terms and conditions contained in the prototype paired defined contribution plan (the "Plan") and the Trust Agreement annexed hereto and appoints as Trustee of such trust the person(s) who have executed this Adoption Agreement evidencing their acceptance of such appointment. The Plan and, the Trust Agreement, if applicable, shall be supplemented and modified by the terms and conditions contained in this Adoption Agreement and shall be effective on the Effective Date. The Sponsor will inform the Employer of any amendments made to the Plan or the discontinuance or abandonment of the Plan. - ----------------------------------- 1. SPONSOR DATA ------------ A. AIM DISTRIBUTORS, INC. Name of Sponsor (or authorized representative) B. 11 GREENWAY PLAZA- SUITE 1919 Address HOUSTON, TX 77046 C. (713) 347-1919 Telephone Number - ----------------------------------- II. EMPLOYER DATA A. ___________________________________________________ Name of Employer and Employer Identification Number B. ___________________________________________________ Address C. (_____)____________________________________________ Telephone Number D. ___________________________________________________ Employers Taxable Year End E. ___________________________________________________ Plan Year End F. The Employer is: [ ] A corporate entity [ ] A non corporate entity [ ] A corporation electing to be taxed under Subchapter S 8 13 G. ___________________________________________________ Effective Date (should be first day of a Plan Year) H. If this is an amendment of an existing plan, complete the following: ______________________________________________________________________ Effective Date of Amendment (should be first day of a Plan Year) ______________________________________________________________________ Name of Prior Plan ______________________________________________________________________ Effective Date of Prior Plan I. ______________________________________________________________________ Limitation Year, if different from E., above III. ELIGIBILITY A. Employees shall be eligible to participate in the Plan upon completion of the eligibility requirements (complete 1 and 2) (Plan section 3.1): 1. Years of Service. The Employee must complete (check one box): [X] One Year of Service. [ ] ____ Years of Service. (You can require less than or more than one Year of Service, but not more than two (2). If you select more than one Year of Service, the Employee must be 100% vested once he becomes eligible, and you must select vesting schedule B in section X of this Adoption Agreement. If the Year of Service is or includes a fractional year, an Employee will not be required to complete any specified number of Hours of Service (sec IV, A of this Adoption Agreement) to receive credit for such fractional year. 2. Age. The Employee must attain age 21 (not greater than age 21). B. The following Employees will not be eligible to participate in the Plan (Plan section 3.1): [X] Union Employees. Employees included in a unit of employees covered by a collective bargaining agreement between the Employer and Employee representatives (as defined in section 3.1(b)(i) of the Plan), if retirement benefits were the subject of good faith bargaining. [X] Nonresident Aliens. Employees who are nonresident aliens and who receive no earned income from the Employer which constitutes income from sources within the United States. For purposes of this section III, the term "Employee" includes all employees of this Employer or any employer aggregated with this Employer under sections 414(b), (c) or (m) or (o) of the Code and individuals who are Leased Employees required to be considered Employees of any such employer under section 414(n) or (o) of the Code. Therefore, all employees of companies in a controlled group of businesses will be eligible to participate in this plan. - ----------------------------------- 9 14 IV. CREDITED SERVICE A. The Plan provides that a Year of Service requires at least 1,000 Hours of service during a Plan Year. If a lower number of hours is desired, state the number here: 1,000 (Plan section 2.42). B. The Plan permits Hours of Service to be determined by the use of service equivalencies under one of the methods selected below (choose one method)(Plan section 2.19): 1. [X] On the basis of actual hours for which an Employee is paid or entitled to payment. 2. [ ] On the basis of days worked. An Employee will be credited with ten (10) Hours of Service if under section 2.19 of the plan such Employee would be credited with at least one (1) Hour of Service during the day. 3. [ ] On the basis of weeks worked. An Employee will be credited with forty-five (45) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the week. 4. [ ] On the basis of semimonthly payroll periods. An Employee will be credited with ninety-five (95) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the semimonthly payroll period. 5. [ ] On the basis of months worked. An Employee will be credited with one hundred ninety (190) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the month. C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3 and 8.5): 1. [X] No credit will be given for service with a predecessor employer. - or - 2. [ ] Credit will be given for service with the following predecessor employer(s): ---------------------------------- NOTE: The Plan provides that if this is a continuation of a predecessor plan, service under the predecessor plan must be counted. - ---------------------------------- V. COMPENSATION A. Compensation (choose 1 or 2)(Plan section 2.7): 1. [ ] shall include - or - 2. [X] shall not include Employer Contributions made pursuant to a salary reduction agreement which are not includable in the gross income of the Employee under sections 125, 402(e)(3), 402(h) or 403(b) of the Code. B. The effective date of the election in A. above shall be ___________________________ (but not earlier than the first day of the first Plan Year beginning after 1986). - ---------------------------------- 10 15 VI. CONTRIBUTIONS A. Profit sharing plan formulas (choose 1 or 2)(Plan section 4.19(b)): 1. [X] Discretionary pursuant to Employer resolution. If no resolution is adopted, then _0_% of Participants' compensation. -or- 2. [ ] ___% of Participants' Compensation, plus discretionary amount, if any, by Employer resolution. NOTE: Each of these formulas is subject to maximum limitations on contributions as provided in the Plan and the Internal Revenue Code. In no event may the Employer Contribution exceed 15% of the aggregate compensation of all Participants for the year, plus up to 10% credit carryover in certain circumstances. Additional limitations are included in the Plan where the Employer also has another qualified retirement plan. The limit on contributions and forfeitures allocated to an individual participant's account, per year is generally the lesser of 25% of compensation or $30,000. - -------------------------------- VII. ALLOCATION OF EMPLOYER CONTRIBUTIONS A. Formula (choose 1 or 2)(Plan section 5.3(b)). NOTE: If you provide for hardship withdrawals you must use Formula 1. 1. [X] Nonintegrated Plan -- Employer contributions shall be allocated to the accounts of all eligible Participants prorated upon compensation. -or- 2. [ ] Integrated Plan -- Employer contributions and forfeitures shall be integrated with Social Security and allocated in accordance with the provisions of Plan section 5.3(b). The Plan's Integration Level shall be (choose (a),(b) or (c))): (a) [ ] Taxable Wage Base. (The maximum amount considered as wages for such year under section 3121(a)(1) of the Internal Revenue Code (the Social Security taxable wage base) as of the beginning of the Plan Year). -or- (b) [ ] $______ (a dollar amount not to exceed the Taxable Wage Base). -or- (c) [ ] _____% of the Taxable Wage Base (not to exceed 100%). NOTE: If you maintain any other plan in addition to this Plan, only one plan may be integrated with Social Security. B. Contribution Eligibility (Plan section 4.1(c)): The Plan provides that all Participants will share in Employer Contributions for the Plan Year, except the following (if elected): [ ] Participants who terminate employment during the Plan year with not more than 500 Hours of Service and who are not Employees as of the last day of the Plan Year (other than Participants who die, retire or become Totally and Permanently Disabled). If a fewer number of hours than 500 is desired, state the number here: _____. 11 16 - -------------------------- VIII. DISTRIBUTIONS. A. Normal Retirement Age is (choose 1 or 2)(Plan section 2.26): 1. [X] The date a Participant reaches age 65 (not more than 65 or less than 55). If no age is indicated, normal retirement age shall be 65. 2. [ ] The later of age ____ (not more than 65) or the ____ (not more than 5th) anniversary of the day the Participant commenced participation in the Plan. The participation commencement date is the first day of the first Plan Year in which the Participant commenced participation in the Plan. B. Early Retirement Date (choose 1 or 2)(Plan section 2.10): 1. [ ] Early Retirement Date is the first day of the month coincident with or next following the date upon which a Participant reaches age 55 (not less than 55) and completes 5 years of service (not more than 15). 2. [X] Early Retirement will not be permitted under the Plan. C. All distributions will be in the form of a lump sum in accordance with the Safe Harbor Rules in Article 9, Section 9.6 of the Plan Document. - -------------------------- IX. OPTIONAL FEATURES A. Hardship withdrawals (choose 1 of 2)(Plan section 12.2): 1. [ ] The Plan permits hardship withdrawals. - or - 2. [X] The Plan does not permit hardship withdrawals. NOTE: The Plan may not provide hardship withdrawals if integration with Social Security is elected in section VII.A.2. B. Loans (choose 1 or 2)(Plan ARTICLE 13): 1. [ ] The Plan permits loans to Participants. - or - 2. [X] The Plan does not permit loans to Participants. NOTE: The Plan may not permit loans to Owner-Employees of noncorporate entities or to Shareholder-Employees of subchapter S corporations. If Plan loans are permitted, the Trustee designated in section XVI of this Adoption Agreement may not be the Sponsor's designated Trustee.] C. Insurance (choose 1 or 2)(Plan ARTICLE 14): 1. [ ] The Plan permits Participants to designate a portion of their Account to purchase life insurance contracts. (MUST NOT be selected if Sponsor's designated trustee is appointed as Trustee). 12 17 The percentage of the Employer Contributions which may be applied to purchase life insurance contracts shall be equal to _____%. -or - 2. [X] The Plan does not permit Participants to designate a portion of their Account to purchase life insurance contracts. NOTE: Section 14.5 of the Plan provides certain limits on the amount of Employer Contributions that can be applied to purchase life insurance contracts.] - ------------------------------ X. VESTING Employer Contributions and earnings will become vested if the Participant terminates employment for any reasons other than retirement at or after Normal Retirement Age or Early Retirement Date, death, or disability pursuant to the following schedule (choose A, B, C or D) (Plan section 8.3):
A. [ ] Years of Service Vested Percentage ------- -------- ---------- 1 year 0% 2 years 20% 3 years 40% 4 years 60% 5 years 80% 6 or more years 100%
B. [ ] 100% vesting immediately after satisfaction of the eligibility requirements. NOTE: If a service requirement greater than one year is chosen for eligibility in section III.A.1. of this Adoption Agreement, vesting schedule B must be chosen. C. [ ] 100% vesting after years of service (not to exceed three). - or -
D. [ ] Years of Service Vested Percentage ------- -------- ---------- 1 year ___% 2 years ___% (not less than 20) 3 years ___% (not less than 40) 4 years ___% (not less than 60) 5 years ___% (not less than 80) 6 years ___% (not less than 100)
- ------------------------------ XI. INVESTMENT CHOICES A. [X] Investment of Trust assets may be selected only from Shares or other investments offered by the Sponsor. (AIM Distributors Inc., AIM Family of Funds) B. [ ] ___% of the Trust assets must be invested in Shares or other investments offered by the Sponsor with the remainder in such other investments as may be acceptable within the discretion of the Trustee. 13 18 C. [ ] 50% of the Trust assets must be invested in Shares or other investments offered by the Sponsor with the remainder in such other investments as may be acceptable within the discretion of the Trustee. D. [ ] 25% of the Trust assets must be invested in Shares or other investments offered by the Sponsor with the remainder in such other investments as may be acceptable within the discretion of the Trustee. The Sponsor may impose additional limitations relating to the type of permissible investments in the Trust (Plan section 7.3). - ------------------------------ XII. INVESTMENT AUTHORITY Contributions to the Plan shall be invested by the Trustee in accordance with instructions of the Employer or Plan Administrator except that (choose A, B or C) (Plan section 7.2): A. [ ] No exceptions; the or Plan Administrator shall make all investment selections. B. [ ] The Employer delegates all investment responsibility to the Trustee. (MAY NOT be selected if Sponsor's designated trustee is appointed as Trustee).] C. [X] Each Participant [ ] may, [X] shall direct that: 1. [X] Amounts voluntarily contributed by such Participant pursuant to section 4.3 of the Plan, rollover contributions pursuant to section 4.4 of the Plan and direct transfers pursuant to section 4.5 of the Plan, if any, - and/or - 2. [X] Employer Contributions on the Participant's behalf, shall be invested in specified investments offered by the Sponsor. Participants may make or change such directions by giving written notice to the Plan Administrator. Reasonable restrictions may be imposed on this privilege by the Plan Administrator or the Sponsor for purposes of administrative convenience. - ------------------------------ XIII. TOP-HEAVY PROVISIONS Participants who are eligible to receive the minimum allocation provided by section 5.2 of the Plan shall receive a minimum allocation of contributions and forfeitures under this Plan equal to 3% of Compensation, or if lesser, the largest percentage of Compensation allocated on behalf of any Key Employee for the Plan Year. NOTE: If the Participant also participates in paired defined contribution plan #002 (the money purchase pension plan), the required minimum allocation must be made under paired defined contribution plan #002 (the money purchase pension plan). - ------------------------------ 14 19 XIV. ALLOCATION LIMITATIONS COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER QUALIFIED PLAN (OTHER THAN PAIRED PLAN #002) IN WHICH ANY PARTICIPANT IN THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(l)(2) OF THE CODE, UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN THIS PLAN. A. If the Participant is covered under another qualified defined contribution plan maintained by the Employer, other than a master or prototype plan (choose either 1 or 2) (Plan section 6.3): 1. [ ] The provision of section 6.2 will apply as if the other plan were a master or prototype plan. - or - 2. [ ] (On an attachment, provide the method under which the plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in a manner that precludes Employer discretion). B. If the Participant is or has ever been a participant in a defined benefit plan maintained by the Employer attach an explanation of the method under which the plan involved will satisfy the 1.0 limitation in a manner that precludes Employer discretion. - ------------------------------ XV. ADMINISTRATION A. The Plan Administrator of the Plan will be (choose 1, 2, 3 or 4) (Plan sections 2.30 and 15.4): 1. [ ] The Trustee - or - 2. [X] The Employer - or - 3. [ ] An individual Plan Administrator designated by the Employer ----------------------------------- Name ----------------------------------- Address ----------------------------------- Signature - or - 15 20 4. [ ] A committee of two or more Employees designated by the Employer: ----------------------------- Name & Title ----------------------------- Signature ----------------------------- Name & Title ----------------------------- Signature ----------------------------- Name & Title ----------------------------- Signature NOTE: If no Plan Administrator has been designated or serving at any time, the Employer will be deemed the Plan Administrator (Plan section 15.4). B. The Plan Administrator (including all members of a committee, if a committee is named) is a Named Fiduciary for the Plan. If other persons are also to be Named Fiduciaries, their names and addresses are: Name: ------------------------------------------- Address: ---------------------------------------- ------------------------------------------------ Signature Name: ------------------------------------------- Address: ---------------------------------------- ------------------------------------------------ Signature Name: ------------------------------------------- Address: ---------------------------------------- ------------------------------------------------ Signature C. The Named Fiduciaries have all of the powers set forth in the Plan. If any powers or duties are to be allocated among them, or delegated to third parties, indicate below what the powers or duties are and to whom they are to be delegated (Plan section 15.3): ------------------------------- ------------------------------- ------------------------------- ------------------------------- 16 21 XVI. THE TRUSTEE A. The Employer hereby appoints the following to serve as Trustee, and the trustee, by signing this Adoption Agreement accepts the appointment (complete either A or B) (Plan section 2.39): Name: -------------------------------- Address: ----------------------------- ----------------------------- Dated: ------------------------------- (Signature of) Trustee Name: -------------------------------- Address: ----------------------------- ----------------------------- Dated: ------------------------------- (Signature of) Trustee B. The Employer hereby appoints the Sponsor's designated trustee(s) to serve as Trustee(s): Name: -------------------------------- Address: ----------------------------- ----------------------------- Dated: ------------------------------- (Signature of) Trustee Name: -------------------------------- Address: ----------------------------- ----------------------------- Dated: ------------------------------- (Signature of) Trustee Name: -------------------------------- Address: ----------------------------- ----------------------------- Dated: ------------------------------- (Signature of) Trustee 17 22 VII. EMPLOYER SIGNATURE The Employer acknowledges receipt of the current prospectus of the investment companies designated by the Employer for its initial investments under the Plan and represents that it has delivered a copy thereof to each Participant in the Plan, and that it will deliver to each Participant making contributions and each new Participant, a copy of the then current prospectus of such investment companies. The Employer further represents that the information in this Adoption Agreement shall become effective only when approved and countersigned by the Trustee. The right to reject this Adoption Agreement for any reason is reserved by the sponsor. This Adoption Agreement must be used only in conjunction with basic plan document #01. NOTE: An Employer who has ever maintained or who later adopts any plan (including, after December 31, 1985, a welfare benefit fund, as defined in section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for Key Employees, as defined in section 419A(d)(3) of the Code, or an individual medical account, as defined in section 415(1)(2) of the Code), in addition to this Plan (other than paired defined contribution plan #002), may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under section 401 of the Internal Revenue Code. If the Employer who adopts or maintains multiple plans wishes to obtain reliance that the plans are qualified, application for a determination letter should be made to the appropriate Key District Director of Internal Revenue. This Adoption Agreement consists of 11 pages. IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed by its duly authorized officers this ___ day of ____. ------------------------------- (Name of Employer) By: ------------------------------- (Name & Title) Date: ------------------ 18 23 ADOPTING THE AIM MONEY PURCHASE PENSION PLAN ADOPTION AGREEMENT #002 19 24 ADOPTING THE AIM MONEY PURCHASE PENSION PLAN ADOPTION AGREEMENT #002 To adopt the AIM Sponsored Money Purchase Pension Plan you will need to complete the following forms: o The Money Purchase Pension Adoption Agreement and Summary Plan Description (SPD) o A Money Purchase Pension Account Application o An Enrollment and Beneficiary Designation Form for each participant. PLAN STRUCTURE: If you are establishing "pooled" investment accounts, utilizing a third party administrator for record keeping: o Submit only the AIM Money Purchase Profit Sharing and/or Profit Sharing Plan Account Application indicating all the AIM Funds permitted as investment options by the Plan. You must identify the Plan's trustees. If you want AIM to establish separate mutual fund accounts for each plan participant, registered in the plan's name: o Submit the AIM Money Purchase Plan Account Application with the participant enrollment forms (Section VII) o Identify each participant's name, mailing address, SS # and their AIM Fund's investment election on the enrollment form. o The plan administrator must submit all contributions with a breakdown identifying each participant, and their total contribution allocated to the funds the participant has chosen. o The minimum contribution per participant is $25 per fund, per contribution submission. o The maximum number of individual participants accounts AIM will establish is 50 utilizing no more than 6 AIM Funds. o Duplicate statements will be issued to your recordkeeper or administrator if requested. Return to: AIM Fund Services P.O. Box 4739 Houston, TX 77210-4739 ADOPTION AGREEMENT To make it easy for you, the Money Purchase Pension Adoption Agreement has been partially completed to reflect the retirement plans provisions most frequently chosen. Please review the completed plan adoption agreement with your legal or tax advisor to ensure that the plan provisions are correct. NOTE: If desired, you may change any of the prechecked elections by making the appropriate change and placing your initials and date next to the section being changed. [X] PRE-CHECKED SECTIONS: The key sections in this Adoption Agreement which have been completed are as follows: o All employees who are Age 21 and have fulfilled one year of service are eligible for contributions. (Years of service cannot exceed 2 years: all contributions are then 100% vested). 20 25 o An employee who completes 1,000 hours of service, within 12 consecutive months of their date of hire, is credited with a year of service for initial eligibility. Only 500 hours of service are required in any year thereafter for a participant to be eligible for a plan contribution. There is no requirement that a participant be employed on the last day of the plan year to receive a contribution in the year they separate from service. o After fulfilling age and service eligibility requirements, employees will enter the plan on the plan anniversary date or the date which is six months subsequent to each plan anniversary date. (Calendar Year = January 1 & July 1) o All union and non-resident alien employees are excluded from participation. o A MONEY PURCHASE PENSION PLAN REQUIRES A FIXED ANNUAL CONTRIBUTION FROM THE EMPLOYER STATED AS A PERCENTAGE OF EACH ELIGIBLE EMPLOYEE'S COMPENSATION (SECTION VI). o The plan is not integrated with Social Security. If you choose to integrate your contribution, AIM will not compute the allocation. o Normal retirement age of 65. o No Loans and No Hardship Distributions are permitted. o No Life Insurance may be purchased by the plan MONEY PURCHASE PENSION PLAN ADOPTION AGREEMENT SECTIONS TO BE COMPLETED BY EMPLOYER The following sections must be completed by the employer. Section II: Employer Data (Page 2) - Complete A through G. If applicable, Complete H and I. (Name, address, TIN, etc.) Section VI: Contributions - Must complete percentage under A(1). Section IX: Vesting - Choose the vesting schedule desired. Section XV: Self Trusteed Plan - You must designate the trustee of this plan. Neither AIM nor Boston Safe Deposit & Trust Company will be the plan's trustee. Section XVI: Employer Signature - Read the employer acknowledgment and execute this section. Fidelity Bond - Contact your insurance company regarding the purchase of a fidelity bond which will cover the plan and plan fiduciaries. The bond must be for at least $1,000 or an amount equal to 10% of the plan's assets not to exceed $500,000. 21 26 FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL). PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTIONS, NOR AIM FUND SERVICES WILL ACT AS THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, COMPUTE CONTRIBUTION ALLOCATION, PROVIDE RECORD KEEPING SERVICES, PERFORM DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED THIRD PARTY. 22 27 MONEY PURCHASE PENSION ADOPTION AGREEMENT FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN #002 SPONSORED BY AIM DISTRIBUTORS, INC. ADOPTION AGREEMENT #002 This is the Adoption Agreement for paired defined contribution plan #002 of basic plan document #01, which is a combined prototype profit sharing/money purchase pension defined contribution plan. This adoption agreement may be adopted either singly or in combination with paired defined contribution plan #001, a prototype profit sharing plan. Note: Before executing this Adoption Agreement, the Employer should consult with a tax advisor or attorney. Failure to properly complete this Adoption Agreement may result in Plan disqualification. - -------------------- The Employer hereby establishes a money purchase pension plan and a trust upon the respective terms and conditions contained in the prototype paired defined contribution plan (the "Plan") and the Trust Agreement annexed hereto and appoints as Trustee of such trust the person(s) who have executed this Adoption Agreement evidencing their acceptance of such appointment. The Plan, the Trust Agreement, and the Custody Agreement, if applicable, shall be supplemented and modified by the terms and conditions contained in this Adoption Agreement and shall be effective on the Effective Date. The Sponsor will inform the Employer of any amendments made to the Plan or the discontinuance or abandonment of the Plan. - -------------------- I. SPONSOR DATA A. AIM DISTRIBUTORS, INC. ---------------------- Name of Sponsor (or authorized representative) B. 11 GREENWAY PLAZA SUITE 1919 ---------------------------- Address HOUSTON, TX 77046 ------------------ City State C. (713) 347-1919 -------------- Telephone Number - -------------------- II. EMPLOYER DATA A. ---------------------------------------------- (Name of Employer and Employer Identification Number B. ---------------------------------------------- Address 2. C. ( ) --- ------------------------------------------ Telephone Number D. ------------------------------- Employer's Taxable Year End E. ------------------------------- Plan Year End 23 28 F. The Employer is: [ ] A corporate entity [ ] A noncorporate entity [ ] A corporation electing to be taxed under Subchapter S G. ----------------------- Effective Date (should be first day of a Plan Year) H. If this is an amendment of an existing plan, complete the following: ----------------------- Effective Date of Amendment (should be first day of a Plan Year) ----------------------- Name of Prior Plan ----------------------- Effective Date of Prior Plan I. ----------------------- Limitation Year, if different from E., above - ---------------------- III. ELIGIBILITY A. Employee shall be eligible to participate in the Plan upon completion of the eligibility requirements (complete 1 and 2)(Plan section 3.1): 1. Years of Service. The Employee must complete (check one box): [X] One Year of Service [ ] ___ Years of Service. (You can require less than or more than one Year of Service, but not more than two (2). If you select more than one Year of Service, the Employee must be 100% vested once he becomes eligible, and you must select vesting schedule B in section IX of this Adoption Agreement. If the Year of Service is or includes a fractional year, an Employee will not be required to complete any specified number of Hours of Service (Section IV, A of this Adoption Agreement) to receive credit for such fractional year. 2. Age. The Employee must attain age 21 (not greater than age 21). B. The following Employees will not be eligible to participate in the Plan (Plan section 3.1): [X] Union Employees. Employees included in a unit of employees covered by a collective bargaining agreement between the Employer and the Employee representatives (as defined in section 3.1(b)(i) of the Plan), if retirement benefits were the subject of good faith bargaining. [X] Nonresident Aliens. Employees who are nonresident aliens and who receive no earned income from the Employer which constitutes income from sources within the United States. For purposes of this section III, the term "Employee" includes all employees of this Employer or any employer aggregated with this Employer under sections 414(b),(c),(m) or (o) of the Code and individuals who are Leased Employees required to be considered Employees of any such employer under section 414 (n) or (o) of the Code. - -------------------- 24 29 IV. CREDITED SERVICE A. The Plan provides that a Year of Service requires at least 1,000 hours during any Plan Year. If a lower number of hours is desired, state the number here: 1,000 (Plan section 2.42). B. The Plan permits Hours of Service to be determined by the use of service equivalencies under one of the methods selected below (choose one method) (Plan section 2.19): 1. [X] On the basis of actual hours of which an Employee is paid or entitled to payment. 2. [ ] On the basis of days worked. An Employee will be credited with ten (10) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the day. 3. [ ] On the basis of weeks worked. An Employee will be credited with forty-five (45) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the week. 4. [ ] On the basis of semimonthly payroll periods. An Employee will be credited with ninety-five (95) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the semimonthly payroll period. - or - 5. [ ] On the basis of months worked. An Employee will be credited with one hundred ninety (190) Hours of Service if under section 2.19 of the Plan such Employee would be credited with at least one (1) Hour of Service during the month. C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3 and 8.5): 1. [X] No credit will be given for service with a predecessor employer. - or - 2. [ ] Credit will be given for service with the following predecessor employer(s): --------------- NOTE: The Plan provides that if this is a continuation of a predecessor plan, service under the predecessor plan must be counted. - -------------------------------- V. COMPENSATION A. Compensation (choose 1 or 2)(Plan section 2.7): 1. [ ] shall include - or - 2. [X] shall not include Employer Contributions made pursuant to a salary reduction agreement which are not includable in the gross income of the Employee under sections 125, 402(a)(8), 402(h) or 403(b) of the Code. B. The effective date of the election in A. above shall be __________ (but not earlier than the first day of the first Plan Year beginning after 1986). 25 30 VI. CONTRIBUTIONS A. Formulas (choose 1 or 2)(Plan section 4.1.(a)): 1. [X] Plan no integrated with Social Security The Employer will contribute ___% of compensation for each Participant (not less than 3% if the profit sharing Adoption Agreement is also adopted and, in any event, not more than 25%). 2. [ ] Integrated Plan - The Employer will contribute an amount equal to ___% (base contribution percentage, not less than 3) of each Participant's Compensation (as defined in section 2.7 of the Plan) for the Plan Year, up to the Integration Level plus ___% (not less than 3% and not to exceed the base contribution percentage by more than the lesser of: (1) the base contribution percentage, or (2) the Maximum Disparity Rate of such Participant's Compensation in excess of the Integration Level. a. [ ] Taxable Wage Base. (The maximum amount considered as wages for such year under section 3121(a)(1) of the Internal Revenue Code (the Social Security taxable wage base) as of the beginning of the Plan Year). -or- b. [ ] $_________(a dollar amount not to exceed the Taxable Wage Base). -or- c. [ ] ______% of the Taxable Wage Base (not to exceed 100%). NOTE: If you maintain any other plan in addition to this Plan, only one plan may be integrated with Social Security. B. Forfeitures for a given Plan Year (choose 1 or 2)(Plan section 5.3(a)): 1. [ ] Shall be applied to reduce the Employer Contribution in that year, or if in excess of the Employer Contribution for such Plan Year, the excess amounts shall be used to reduce the Employer Contribution in the next succeeding Plan Year or Years. -or- 2. [ ] Shall be added to the Employer Contribution and allocated accordingly. C. Contribution Eligibility (Plan section 4.1(c)): The Plan provides that all Participants will share in Employer Contributions for the Plan Year, except the following (if elected): [X] Participants who terminate employment during the Plan Year with not more than 500 Hours of Service and who are not Employees as of the last day of the Plan Year (other than Participants who die, retire or become Totally and Permanently Disabled). If a fewer number of hours than 500 is desired, state the number here:____. 26 31 - ------------------------------ VII. DISTRIBUTIONS A. Normal Retirement Age is (choose 1 or 2 )(Plan section 2.26): 1. [X] The date a Participant reaches age 65 (not more than 65 or less than 55.) If no age is indicated, normal retirement age shall be 65. -or- 2. [] The later of age ______ (not more than 65) or the ______ (not more than 5th) anniversary of the day the Participant commenced participation in the Plan. The participation commencement date is the first day of the first Plan Year in which the Participant commenced participation in the Plan. B. Early Retirement (choose 1 or 2)(Plan section 2.10): 1. [] Early Retirement Date is the first day of the month coincident with or next following the date upon which a Participant reaches age 55 (not less than 55) and completes 5 years of service (not more than 15) -or- 2. [X] Early Retirement will not be permitted under the Plan. - ------------------------------ VIII. OPTIONAL FEATURES A. Loans (choose 1 or 2)(Plan ARTICLE 13): 1. [] The Plan permits loans to Participants. -or- 2. [X] The Plan does not permit loans to Participants. NOTE: The Plan may not permit loans to Owner-Employees of noncorporate entities or to Shareholder-Employees of subchapter S corporations. If Plan loans are permitted, the Trustee designated in section XV of this Adoption Agreement may not be the Sponsor's designated Trustee.] B. Insurance (choose 1 or 2)(Plan ARTICLE 14): 1. [ The Plan permits Participants to designate a portion of their Account to purchase life insurance contracts. (MUST NOT be selected if Sponsor's designated trustee is appointed as Trustee). The percentage of the Employer Contributions which may be applied to purchase life insurance contracts shall be equal to ___%. -or- 2. [X] The Plan does not permit Participants to designate a portion of their Account to purchase life insurance contracts. NOTE: Section 14.5 of the Plan provides certain limits on the amount of Employer contributions that can be applied to purchase life insurance contracts. 27 32 - ------------------------ IX. VESTING Employer Contributions will become vested if the Participant terminates employment for any reasons other than retirement, death, or disability pursuant to the following schedule (chosen A, B, C or D) Plan section 8.3):
A. [ ] Years of Service Vested Percentage ------------------------- 1 year 0% 2 years 20% 3 years 40% 4 years 60% 5 years 80% 6 or more years 100%
B. [ ] 100% vesting immediately after satisfaction of the eligibility requirements. NOTE: If a service requirement greater than one year is chosen for eligibility in section III.A.1. of this Adoption Agreement, vesting schedule B must be chosen). C. [ ] 100% vesting after ____ years of service (not to exceed three). - or -
D. [ ] Years of Service Vested Percentage ------------------------- 1 year ___% 2 years ___%(not less than 20) 3 years ___%(not less than 40) 4 years ___%(not less than 60) 5 years ___%(not less than 80) 6 years ___%(not less than 100)
- ------------------------ X. INVESTMENT CHOICES A. [X] Investment of Trust assets may be selected only from Shares or other investments offered by the Sponsor. B. [ ] ___% of the Trust assets must be invested in Shares or other investments offered by the Sponsor with the remainder in such other investments as may be acceptable within the discretion of the Trustee.] C. [ ] 50% of the Trust assets must be invested in Shares or other investments offered by the Sponsor with the remainder in such other investments as may be acceptable within the discretion of the Trustee.] D. [ ] 25% of the Trust assets must be invested in Shares or other investments offered by the Sponsor with the remainder in such other investments as may be acceptable within the discretion of the Trustee.] The Sponsor may impose additional limitations relating to the type of permissible investments in the Trust (Plan section 7.3). 28 33 - ------------------------------ XI. INVESTMENT AUTHORITY Contributions to the Plan shall be invested by the Trustee in accordance with instructions of the Employer or Plan Administrator except that (choose [A], [B] or [C])] (Plan section 7.2): A. [ ] No exceptions; the Employer or Plan Administrator shall make all investment selections. B. [ ] The Employer delegates all investment responsibility to the Trustee. (MUST NOT be selected if Sponsor's designated trustee is appointed as Trustee.)] -or- C. [X] Each Participant [ ] may, [X] shall direct that: 1. [ ] Amounts voluntarily contributed by such Participant pursuant to section 4.3 of the Plan rollover contributions pursuant to section 4.4 of the Plan, and direct transfers pursuant to section 4.5 of the Plan, if any, -and/or- 2. [X] Employer Contributions on the Participant's behalf shall be invested in specified investments offered by the Sponsor. Participants may make or change such directions by giving written notice to the Plan Administrator. Reasonable restrictions may be imposed on this privilege by the Plan Administrator or the Sponsor for purposes of administrative convenience. - ------------------------------ XII. TOP-HEAVY PROVISIONS Participants who are eligible to receive the minimum allocation provided by section 5.2 of the Plan shall receive a minimum contribution under this Plan equal to 3% of Compensation, or if lesser, the largest percentage of Compensation allocated on behalf of any Key Employee for the Plan Year under this Plan and paired defined contribution plan #001. NOTE: If the Participant also participates in paired defined contribution plan #001 (the profit sharing plan), the required minimum contribution must be made under this Plan, even if the integrated plan combination formula is selected. - ------------------------------ XIII. ALLOCATION LIMITATIONS COMPLETED THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER QUALIFIED PLAN (OTHER THAN PAIRED PLAN #001) IN WHICH ANY PARTICIPANT IN THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(1)(2) OF THE CODE, UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN THIS PLAN. A. If the Participant is covered under another qualified defined contribution plan maintained by the Employer, other than a master or prototype plan (choose either 1 or 2)(Plan section 6.3): 1. [ ] The provisions of section 6.2 will apply as if the other plan were a master or prototype plan. 29 34 -or- 2. [ ] (On an attachment, provide the method under which the plans will limit total annual additions to the permissible amount, and will properly reduce any excess amounts, in a manner that precludes Employer discretion). B. If the Participant is or has ever been a participant in a defined benefit plan maintained by the Employer attach an explanation of the method under which the plan involved will satisfy the 1.0 limitation in a manner that precludes Employer discretion. - ------------------------------ XIV. ADMINISTRATION A. The Plan Administrator of the Plan will be (choose [1], [2], [3] or [4]) (Plan sections 2.30 and 15.4): 1. [ ] The Trustee NOTE: If the Trustee designated in section XV of this Adoption Agreement is the Sponsor's designated Trustee, it may be appointed as Plan Administrator. -or- 2. [X] The Employer -or- 3. [ ] An individual Plan Administrator designated by the Employer -------------------------------------------------- Name -------------------------------------------------- Address -------------------------------------------------- -or- 4. [ ] A committee of two or more Employees designated by the Employer: -------------------------------------------------- Name & Title -------------------------------------------------- Signature -------------------------------------------------- Name & Title -------------------------------------------------- Signature -------------------------------------------------- Name & Title -------------------------------------------------- 30 35 [Signature] NOTE: If no Plan Administrator has been designated or serving at any time, the Employer will be deemed the Plan Administrator (Plan section 15.4). B. The Plan Administrator (including all members of a committee, if a committee is named) is a Named Fiduciary for the Plan. If other persons are also to be Named Fiduciaries, their names and addresses are: Name: ----------------------------------- Address: -------------------------------- ---------------------------------------- Name: ----------------------------------- Address: -------------------------------- ---------------------------------------- Name: ----------------------------------- Address: -------------------------------- ---------------------------------------- C. The Named Fiduciaries have all of the powers set forth in the Plan. If any powers or duties are to be allocated among them, or delegated to third parties, indicate below what the powers or duties are and to whom they are to be delegated (Plan section 15.3): ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- *************************** XV. THE TRUSTEE A. The Employer hereby appoints the following to serve as Trustee (Plan section 2.39): Name: ------------------------------------ Address: ---------------------------------- ---------------------------------------- Dated: ---------------- ---------------------- (Signature of) Trustee Name: ------------------------------ 31 36 Address: ------------------------------------ ------------------------------------------- Dated: -------------- ---------------------- (Signature of) Trustee Name: -------------------------------------- Address: ----------------------------------- ------------------------------------------- Dated: -------------- ---------------------- (Signature of Trustee) B. The Employer hereby appoints the Sponsor's designated trustee(s) to serve as Trustee(s): Name: ------------------------------------- Address: ------------------------------------ ----------------------------------------- Dated: --------------- ----------------------- (Signature of Trustee) Name: ---------------------------------------- Address: -------------------------------------- -------------------------------------------- Dated: --------------- ------------------------ (Signature of Trustee) Name: ---------------------------------------- Address: -------------------------------------- -------------------------------------------- Dated: --------------- ------------------------ (Signature of Trustee) ******************************** 32 37 XVI. EMPLOYER SIGNATURE The Employer acknowledges receipt of the current prospectus of the investment companies designated by the Employer for its initial investments under the Plan and represents that it has delivered a copy thereof to each Participant in the Plan, and that it will deliver to each Participant making contributions and each new Participant, a copy of the then current prospectus of such investment companies. The Employer further represents that the information in this Adoption Agreement shall become effective only when approved and countersigned by the Trustee. The right to reject this Adoption Agreement for any reason is reserved. This Adoption Agreement must be used only in conjunction with basic plan document #01. NOTE: An Employer who has ever maintained or who later adopts any plan (including a welfare benefit fund, as defined in section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for Key Employees, as defined in section 419A(d)(3) of the Code, or an individual medical account as defined in section 415(l)(2) of the Code), in addition to this Plan (other than paired plan #001), may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under section 401 of the Internal Revenue Code. If the Employer who adopts or maintains multiple plans wishes to obtain reliance that the plans are qualified, application for a determination letter should be made to the appropriate Key District Director of Internal Revenue. This Adoption Agreement consists of 17 pages. IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed by its duly authorized officers this _ day of ________________. -------------------------------- (Name of Employer) By: -------------------------------- (Name & Title) Date: ------------------ 33 38 MONEY PURCHASE PENSION AND PROFIT SHARING PLAN BASIC DOCUMENT 34 39 AMENDMENT TO THE INVESTMENT COMPANY INSTITUTE PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN BASIC DOCUMENT #01 FIRST The Plan is hereby amended by the word-for-word adoption of the model language contained in Revenue Procedure 93-12, for distributions made on or after January 1, 1993, as follows: Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this provision, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. Definitions (a) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (b) Eligible Retirement Plan. An Eligible Retirement Plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (c) Distributee. A Distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse. (d) Direct Rollover. A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. 35 40 SECOND The Plan is hereby amended by the word-for-word adoption of the model language contained in Revenue Procedure 94-13 as follows: In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual Compensation of each Employee taken into account under the Plan shall not exceed the OBRA '93 Annual Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as adjusted by the Commissioner for increases in the cost-of-living in accordance with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determine ("Determination Period") beginning in such calendar year. If a Determination Period consists of fewer than 12 months, the OBRA '93 Annual Compensation Limit will be multiplied by a fraction, the numerator of which is the number of months in the Determination period, and the denominator of which is 12. For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA '93 Annual Compensation Limit set forth in this provision. If Compensation for any prior Determination Period is taken into account in determining an Employee's benefits accruing in the current Plan Year, the Compensation for that prior Determination Period is subject to the OBRA '93 Annual Compensation Limit in effect for that prior Determination Period. For this purpose, for Determination Periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93 Annual Compensation Limit is $150,000. 36 41 MONEY PURCHASE PENSION AND PROFIT SHARING PLAN PLAN DOCUMENT 37 42 PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN TABLE OF CONTENTS
Section Page ------- ---- ARTICLE 1 GENERAL 1.1 Purpose ...................................................................... 5 1.2 Trust ........................................................................ 5 ARTICLE 2 DEFINITIONS 2.1 Account ...................................................................... 5 2.2 Adoption Agreement ........................................................... 5 2.3 Affiliated Employers ......................................................... 5 2.4 Beneficiary ................................................................... 5 2.5 Break in Service ............................................................. 5 2.6 Code ......................................................................... 5 2.7 Compensation ................................................................. 5 2.8 Custodian .................................................................... 5 2.9 Determination Date ........................................................... 5 2.10 Early Retirement Date ......................................................... 5 2.11 Earned Income ................................................................ 6 2.12 Effective Date ............................................................... 6 2.13 Eligibility Computation Period ............................................... 6 2.14 Employee ..................................................................... 6 2.15 Employer ..................................................................... 6 2.16 Employer Contributions ....................................................... 6 2.17 Entry Dates .................................................................. 6 2.18 ERISA ........................................................................ 6 2.19 Hour of Service .............................................................. 6 2.20 Integration Level ............................................................ 7 2.21 Key Employee ................................................................. 7 2.22 Leased Employee .............................................................. 7 2.23 Maximum Disparity Rate ....................................................... 8 2.24 Maximum Profit Sharing Disparity Rate ........................................ 8 2.25 Non-Key Employee ............................................................. 8 2.26 Normal Retirement Age ........................................................ 8 2.27 Owner-Employee ............................................................... 8 2.28 Participant .................................................................. 8 2.29 Plan ......................................................................... 8 2.30 Plan Administrator ........................................................... 8 2.31 Plan Year .................................................................... 8 2.32 Self-Employed Individuals .................................................... 8 2.33 Shares ....................................................................... 8 2.34 Sponsor ...................................................................... 9 2.35 Taxable Wage Base ............................................................ 9 2.36 Total and Permanent Disability................................................ 9 2.37 Trust ........................................................................ 9 2.38 Trust Agreement .............................................................. 9 2.39 Trustee ...................................................................... 9 2.40 Valuation Date ............................................................... 9 2.41 Vesting Computation Period ................................................... 9 2.42 Year of Service ............................................................... 9 ARTICLE 3 ELIGIBILITY AND YEARS OF SERVICE 3.1 Eligibility Requirement ...................................................... 9 3.2 Participation and Service Upon Reemployment .................................. 9 3.3 Predecessor Employers ........................................................ 9 ARTICLE 4 CONTRIBUTIONS 4.1 Employer Contributions ....................................................... 9 4.2 Payment ...................................................................... 10 4.3 Nondeductible Voluntary Contributions by Participants......................... 10 4.4 Rollovers..................................................................... 10
38 43 4.5 Direct Transfers ............................................................ 10 ARTICLE 5 ALLOCATIONS 5.1 Individual Accounts ......................................................... 10 5.2 Minimum Allocation .......................................................... 11 5.3 Allocation of Employer Contributions and Forfeitures ........................ 11 5.4 Coordination of Social Security Integration ................................. 12 5.5 Withdrawals and Distributions ............................................... 12 5.6 Determination of Value of Trust Fund and of Net Earnings or Losses .......... 12 5.7 Allocation of Net Earnings or Losses ........................................ 12 5.8 Responsibilities of the Plan Administrator .................................. 13 ARTICLE 6 LIMITATIONS ON ALLOCATIONS 6.1 Employers Who Do Not Maintain Other Qualified Plans ......................... 13 6.2 Employers Who Maintain Other Qualified Master or Prototype Defined Contribution Plans ..................................... 13 6.3 Employers Who, In Addition to This Plan, Maintain Other Qualified Plans Which are Defined Contribution Plans Other Than Master or Prototype Plans ... 14 6.4 Employers, Who In Addition To This Plan, Maintain A Qualified Defined Benefit Plan ................................... 14 6.5 Definitions ................................................................. 14 ARTICLE 7 TRUST FUND 7.1 Receipt of Contributions by Trustee ......................................... 16 7.2 Investment Responsibility ................................................... 16 7.3 Investment Limitations ...................................................... 16 ARTICLE 8 VESTING 8.1 Nondeductible Voluntary Contributions and Earnings .......................... 16 8.2 Rollovers, Transfers and Earnings ........................................... 16 8.3 Employer Contributions and Earnings ......................................... 16 8.4 Amendments to Vesting Schedule .............................................. 17 8.5 Determination of Years of Service ........................................... 17 8.6 Forfeiture of Nonvested Amounts ............................................. 17 8.7 Reinstatement of Benefit..................................................... 18 ARTICLE 9 JOINT AND SURVIVOR ANNUITY REQUIREMENTS 9.1 General...................................................................... 18 9.2 Qualified Joint and Survivor Annuity ........................................ 18 9.3 Qualified Preretirement Survivor Annuity .................................... 18 9.4 Definitions.................................................................. 18 9.5 Notice Requirements ......................................................... 19 9.6 Safe Harbor Rules ........................................................... 19 9.7 Transitional Rules .......................................................... 20 ARTICLE 10 DISTRIBUTION PROVISIONS 10.1 Vesting on Distribution Before Break In Service ............................. 21 10.2 Restrictions on Immediate Distributions ..................................... 21 10.3 Commencement of Benefits .................................................... 21 10.4 Early Retirement With Age and Service Requirement ........................... 22 10.5 Nontransferability of Annuities ............................................. 22 10.6 Conflicts With Annuity Contracts ............................................ 22 ARTICLE 11 TIMING AND MODES OF DISTRIBUTION 11.1 General Rules ............................................................... 22 11.2 Required Beginning Date ..................................................... 22 11.3 Limits on Distribution Periods .............................................. 22 11.4 Determination of Amount to be Distributed Each Year ......................... 22
39 44 11.5 Death Distribution Provisions ............................................... 22 11.6 Designation of Beneficiary ................................................... 23 11.7 Definitions ................................................................. 23 11.8 Transitional Rules .......................................................... 24 11.9 Optional Forms of Benefit ................................................... 25 ARTICLE 12 WITHDRAWALS 12.1 Withdrawal of Nondeductible Voluntary Contributions ......................... 25 12.2 Hardship Withdrawals ........................................................ 25 12.3 Manner of Making Withdrawals ................................................ 25 I2.4 Limitations on Withdrawals .................................................. 26 ARTICLE 13 LOANS 13.1 General Provisions........................................................... 26 13.2 Administration of Loan Program............................................... 26 13.3 Amount of Loan............................................................... 26 13.4 Manner of Making Loans....................................................... 26 13.5 Terms of Loan................................................................ 27 13.6 Security for Loan............................................................ 27 13.7 Segregated Investment........................................................ 27 13.8 Repayment of Loan............................................................ 27 13.9 Default on Loan.............................................................. 27 13.10 Unpaid Amounts............................................................... 27 ARTICLE 14 INSURANCE 14.1 Insurance ................................................................... 27 14.2 Policies .................................................................... 27 14.3 Beneficiary ................................................................. 27 14.4 Payment of Premiums ......................................................... 28 14.5 Limitation on Insurance Premiums ............................................ 28 14.6 Insurance Company ........................................................... 28 14.7 Distribution of Policies .................................................... 28 14.8 Policy Features ............................................................. 29 14.9 Changed Conditions .......................................................... 29 14.10 Conflicts ................................................................... 29 ARTICLE 15 ADMINISTRATION 15.1 Duties and Responsibilities of Fiduciaries; Allocation of Fiduciary Responsibility ...................................... 29 15.2 Powers and Responsibilities of the Plan Administrator ....................... 29 15.3 Allocation of Duties and Responsibilities ................................... 30 15.4 Appointment of the Plan Administrator ....................................... 30 15.5 Expenses .................................................................... 30 15.6 Liabilities ................................................................. 30 15.7 Claims Procedure ............................................................ 30 ARTICLE 16 AMENDMENT, TERMINATION AND MERGER 16.1 Sponsor's Power to Amend..................................................... 31 16.2 Amendment by Adopting Employer............................................... 16.3 Vesting Upon Plan Termination................................................ 31 16.4 Vesting Upon Complete Discontinuance of Contributions........................ 31 16.5 Maintenance of Benefits Upon Merger.......................................... 31 16.6 Special Amendments........................................................... 31 ARTICLE 17 MISCELLANEOUS 17.1 Exclusive Benefit of Participants and Beneficiaries ......................... 31 17.2 Nonguarantee of Employment................................................... 32 17.3 Rights to Trust Assets....................................................... 32 17.4 Nonalienation of Benefits.................................................... 32 17.5 Aggregation Rules............................................................ 32 17.6 Failure of Qualification..................................................... 32 17.7 Applicable Law............................................................... 32
40 45 ARTICLE 1 GENERAL 1.1 PURPOSE. The Employer hereby establishes this Plan to provide retirement, death and disability benefits for eligible employees and their Beneficiaries. This Plan is a standardized prototype paired defined contribution plan and is designed to permit adoption of profit sharing provisions, money purchase pension provisions, or both. The provisions herein and the selections made by the Employer by execution of the money purchase pension or profit sharing Adoption Agreement or Agreements, shall constitute the Plan. It is intended that the Plan and Trust qualify under sections 401 and 501 of the Internal Revenue Code of 1986, as amended and with the provisions of the Employee Retirement Income Security Act of 1974, as amended. 1.2 TRUST. The Employer has simultaneously adopted a Trust authorizing a Trustee to receive, invest, and distribute funds in accordance with the Plan. ARTICLE 2 DEFINITIONS 2.1 ACCOUNT. The aggregate of the individual bookkeeping subaccounts established for each Participant, as provided in section 5.1. 2.2 ADOPTION AGREEMENT. The written agreement or agreements of the Employer and the Trustee by which the Employer establishes this Plan and adopts the Trust Agreement forming a part hereof, as the same may be amended from time to time. The Adoption Agreement contains all the options that may be selected by the Employer. The information set forth in the Adoption Agreement executed by the Employer shall be deemed to be a part of this Plan as if set forth in full herein. 2.3 AFFILIATED EMPLOYERS. The Employer and any corporation which is a member of a controlled group of corporations (as defined in section 414(b) of the Code) which includes the Employer, any trade or business (whether or not incorporated) which is under common control (as defined in section 414(c) of the Code) with the Employer, or any service organization (whether or not incorporated) which is a member of an affiliated service group (as defined in sections 414(m) and (o) of the Code) which includes the Employer. 2.4 BENEFICIARY. The person or persons (natural or otherwise) designated by a Participant in accordance with section 11.6 to receive any undistributed amounts credited to the Participant's Account under the Plan at the time of the Participant's death. 2.5 BREAK IN SERVICE. An Eligibility Computation Period or Vesting Computation Period in which an Employee fails to complete more than five hundred (500) Hours of Service. 2.6 CODE. The Internal Revenue Code of 1986, as amended from time to time, or any successor statute. 2.7 COMPENSATION. (a) Compensation will mean all of each Participant's W-2 earnings. For purposes of determining allocations under Section 5.3, only Compensation while the Employee is a Participant shall be converted. (b) For any self-employed individual covered under the Plan, Compensation will mean Earned Income. (c) Compensation shall include only that Compensation that is actually paid to the Participant during the Plan Year. (d) Notwithstanding the above, if elected by the Employer in the Adoption Agreement, Compensation shall include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includable in the gross income of the Employee under sections 125, 402(e)(3), 402(h) or 403(b) of the Code. The effective date of this subsection shall be elected by the Employer in the Adoption Agreement. (e) The annual Compensation of each Participant taken into account under the Plan for any year shall not exceed one hundred fifty thousand dollars ($150,000), as adjusted by the Secretary at the same time and in the same manner as under section 415(d) of the Code. In determining the Compensation of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the Spouse of the Participant and any lineal descendants of the Participant who have not attained age nineteen (19) before the close of the year. If, as a result of the application of such rules, the limitation is exceeded, then (except for purposes of determining the portion of Compensation up to the Integration Level to the extent this Plan provides for permitted disparity), the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this section prior to the application of this limitation. The effective date of this subsection shall be the first Plan Year beginning on or after January 1, 1989. 2.8 CUSTODIAN. The custodian, if any, designated in the Adoption Agreement. 2.9 DETERMINATION DATE. With respect to any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the last day of that Plan Year. 2.10 EARLY RETIREMENT DATE. The first day of the month coincident with or next following the date upon which the Participant satisfies the early retirement age and service requirements in the Adoption Agreement; provided, however, such requirements may not be less than age fifty-five (55), nor more than fifteen (15) Years of Service. 41 46 2.11 EARNED INCOME. The net earnings from self-employment in the trade or business with respect to which the Plan is established, for which personal services of the individual are a material income-producing factor. Net earnings will be determined without regard to items not included in gross income and the deductions allocable to such items. Net earnings are reduced by contributions to a qualified plan to the extent deductible under section 404 of the Code. Net earnings shall be determined with regard to the deduction allowed to the Employer by section 164(f) of the Code for taxable years beginning after December 31, 1989. 2.12 EFFECTIVE DATE. The first day of the first Plan Year for which the Plan is effective as specified in the Adoption Agreement. 2.13 ELIGIBILITY COMPUTATION PERIOD. For purposes of determining Years of Service and Breaks in Service for eligibility to participate, the initial Eligibility Computation Period shall be the twelve (12) consecutive month period beginning with the day the Employee first performs an Hour of Service for the Employer (employment commencement date). The succeeding twelve (12) consecutive month periods commence with the first and each following anniversary of the Employee's employment commencement date. 2.14 EMPLOYEE. Any person, including a Self-Employed Individual, who is employed by the Employer maintaining the Plan or any other employer required to be aggregated with such Employer under sections 414(b),(c),(m) or (o) of the Code. The term "Employee" shall also include any Leased Employee deemed to be an Employee of any Employer described above as provided in sections 414(n) or (o) of the Code. 2.15 EMPLOYER. The corporation, proprietorship, partnership or other organization that adopts the Plan by execution of an Adoption Agreement. 2.16 EMPLOYER CONTRIBUTIONS. The contribution of the Employer to the Plan and Trust as set forth in section 4.1 and the Adoption Agreement. 2.17 ENTRY DATES. The Effective Date shall be the first Entry Date. Thereafter, the Entry Dates shall be the first day of each Plan Year and the first day of the seventh month of each Plan Year. 2.18 ERISA. The Employee Retirement Income Security Act of 1974, as amended. 2.19 HOUR OF SERVICE. (a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer. These hours shall be credited to the Employee only for the computation period or periods in which the duties are performed; and (b) Each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence. No more than five hundred one (501) Hours of Service shall be credited under this paragraph to an Employee on account of any single, continuous period during which the Employee performs no duties (whether or not such period occurs in a single computation period). Hours under this paragraph will be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor regulations which are incorporated herein by this reference. (c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service shall not be credited both under paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c). These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement, or payment is made. (d) Solely for purposes of determining whether an Employee has a Break in Service, Hours of Service shall also include an uncompensated authorized leave of absence not in excess of two (2) years, or military leave while the Employee's reemployment rights are protected by law or such additional or other periods as granted by the Employer as military leave (credited on the basis of forty (40) Hours of Service per each week or eight (8) Hours of Service per working day), provided the Employee returns to employment at the end of his leave of absence or within ninety (90) days of the end of his military leave, whichever is applicable. (e) Hours of Service will be credited for employment with other members of an affiliated service group (under section 414(m)), a controlled group of corporations (under section 414(b)), or a group of trades or businesses under common control (under section 414(c)) of which the adopting Employer is a member, and any other entity required to be aggregated with the Employer pursuant to section 414(o) and the regulations thereunder. Hours of Service will also be credited for any individual considered an Employee for purposes of this Plan under section 414(n) or section 414(o) and the regulations thereunder. (f) Solely for purposes of determining whether an Employee has a Break in Service, Hours of Service shall also include absence from work for maternity or paternity reasons, if the absence begins on or after the first day of the first Plan Year beginning after 1984. During this absence, the Employee shall be credited with the Hours of Service which would have been credited but for the absence, or, if such hours cannot be determined with eight (8) hours per day. An absence from work for maternity or paternity reasons means an absence: (i) by reason of the pregnancy of an Employee; (ii) by reason of the birth of a child of the Employee; 42 47 (iii) by reason of the placement of a child with the Employee in connection with adoption; or (iv) for purposes of caring for such a child for a period immediately following such birth or placement. These Hours of Service shall be credited in the computation period following the computation period in which the absence begins, except as necessary to prevent a Break in Service in the computation period in which the absence begins. However, no more than five hundred one (501) Hours of Service will be credited for purposes of any such maternity or paternity absence from work. (g) The Employer may elect to compute Hours of Service by the use of one of the service equivalencies in the Adoption Agreement. Only one method may be selected. If selected, the service equivalency must be applied to all Employees covered under the Plan. (h) If the Employer amends the method of crediting service from the elapsed time method described in section 1.410 (a)-7 of the Treasury regulations to the Hours of Service computation method by the adoption of this Plan, or an Employee transfers from a plan under which service is determined on the basis of elapsed time, the following rules shall apply for purposes of determining the Employee's service under this Plan up to the time of amendment or transfer: (i) the Employee shall receive credit, as of the date of amendment or transfer, for a number of Years of Service equal to the number of one (1) year periods of service credited to the Employee as of the date of the amendment or transfer; and (ii) the Employee shall receive credit in the applicable computation period which includes the date of amendment or transfer, for a number of Hours of Service determined by applying the weekly service equivalency specified in paragraph (g) to any fractional part of a year credited to the Employee under this paragraph (h) as of the date of amendment or transfer. The use of the weekly service equivalency shall apply to all Employees who formerly were credited with service under the elapsed time method. 2.20 INTEGRATION LEVEL. The Taxable Wage Base or such lesser amount elected by the Employer in the Adoption Agreement. 2.21 KEY EMPLOYEE. (a) Any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was an officer of the Employer if such individual's annual Compensation exceeds fifty percent (50%) of the dollar limitation under section 415(b)(1)(A) of the Code; an owner (or considered an owner under section 318 of the Code) of one of the ten (10) largest interests in the Employer if such individual's Compensation exceeds one hundred percent (100%) of the dollar limitation under section 415(c)(1)(A) of the Code; a Five Percent (5%) Owner of the Employer; or a one percent (1%) owner of the Employer who has annual Compensation of more than one hundred fifty thousand dollars ($150,000). (b) For purposes of this section, annual Compensation means compensation as defined in section 415(c)(3) of the Code, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code. (c) For purposes of this section, determination period is the Plan Year containing the Determination Date and the four (4) preceding Plan Years. 2.22 LEASED EMPLOYEE. (a) Any person (other than an Employee of any of the Affiliated Employers) who, pursuant to an agreement between any of the Affiliated Employers and any other person ("leasing organization"), has performed service for any of the Affiliated Employers (or for any of the Affiliated Employers and related persons determined in accordance with section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one (1) year and such services are of a type historically performed by employees in the Affiliated Employer's business field. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the Affiliated Employer shall be treated as provided by the Affiliated Employer. (b) A Leased Employee shall not be considered an Employee of an Affiliated Employer if: (i) such employee is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least ten percent (10%) of compensation (as defined in section 415(c)(3) of the Code), but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code; (2) immediate participation; and (3) full and immediate vesting. and (ii) Leased Employee's do not constitute more than twenty percent (20%) of the Affiliated Employees non-Highly-Compensated workforce. (c) The determination of whether a person is a Leased Employee will be made pursuant to section 414(n) of the Code. 43 48 2.23 MAXIMUM DISPARITY RATE. The lesser of. (a) five and seven-tenths percent (5.7%); (b) the applicable percentage determined in accordance with the table below: if the Integration Level is
The Applicable More Than But Not More Than Percentage Is: - --------- ----------------- -------------- $0 X * 5.7% X of TWB 80% Of TWB 4.3% 80% of TWB Y ** 5.4%
* X = the greater of $10,000 or 20% of the Taxable Wage Base. ** Y = any amount more then 80% of the Taxable Wage Base but less than 100% of the Taxable Wage Base. "TWB" means the Taxable Wage Base. If the Integration Level used is equal to the Taxable Wage Base, the applicable percentage is five and seven-tenths percent (5.7%). 2.24 MAXIMUM PROFIT SHARING DISPARITY RATE. The lesser of: (a) two and seven-tenths percent (2.7%); (b) the applicable percentage determined in accordance with the table below: If the Integration Level is
The Applicable More Than But Not More than Percentage Is: - --------- ----------------- -------------- $0 X * 2.7% X of TWB 80% of TWB 1.3% 80% of TWB Y ** 2.4%
* X = the greater of $10,000 or 20% of the Taxable Wage Base. ** Y = any amount more than 80% of the Taxable Wage Base but less than 100 of the Taxable Wage Base. "TWB" means the Taxable Wage Base. If the Integration Level used is equal to the Taxable Wage Base, the applicable percentage is two and seven-tenths percent (2.7%). 2.25 NON-KEY EMPLOYEE. Any Employee or former Employee who is not a Key Employee. In addition, any Beneficiary of a Non-Key Employee shall be treated as a Non-Key Employee. 2.26 NORMAL RETIREMENT AGE. The age selected in the Adoption Agreement, but not less than age fifty-five (55). If the Employer enforces a mandatory retirement age, the Normal Retirement Age is the lesser of that mandatory age or the age specified in the Adoption Agreement. 2.27 OWNER-EMPLOYEE. An individual who is a sole proprietor, or who is a partner owning more than ten percent (10%) of either the capital or profits interest of a partnership. 2.28 PARTICIPANT. A person who has met the eligibility requirements of section 3.1 and whose Account hereunder has been neither completely forfeited nor completely distributed. 2.29 PLAN. The prototype paired defined contribution profit sharing and money purchase pension plan provided under this basic plan document. References to the Plan shall refer to the profit sharing provisions, the money purchase pension provisions, or both, as the context may require. 2.30 PLAN ADMINISTRATOR. The person, persons or entity appointed by the Employer pursuant to ARTICLE 15 to manage and administer the Plan. 2.31 PLAN YEAR. The twelve (12) consecutive month period designated by the Employer in the Adoption Agreement. 2.32 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income for the taxable year from the trade or business for which the Plan is established, or an individual who would have had Earned Income for the taxable year but for the fact that the trade or business had no net profits for the taxable year. 44 49 2.33 SHARES. Shares of stock in any regulated investment company registered under the Investment Company Act of 1940 that are made available for investment purposes as an investment option under this Plan. 2.34 SPONSOR. The sponsor designated in the Adoption Agreement which has made this Plan available to the Employer. 2.35 TAXABLE WAGE BASE. The maximum amount of earnings which may be considered wages for a year under section 3121(a)(1) of the Code in effect as of the beginning of the Plan Year. 2.36 TOTAL AND PERMANENT DISABILITY. The inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, which condition, in the opinion of a physician chosen by the Plan Administrator, can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. 2.37 TRUST. The fund maintained by the Trustee for the investment of Plan assets in accordance with the terms and conditions of the Trust Agreement. 2.38 TRUST AGREEMENT. The agreement between the Employer and the Trustee under which the assets of the Plan are held, administered, and managed. The provisions of the Trust Agreement shall be considered an integral part of this Plan as if set forth fully herein. 2.39 TRUSTEE. The individual or corporate Trustee or Trustees under the Trust Agreement as they may be constituted from time to time. 2.40 VALUATION DATE. The last day of each Plan Year and such other dates as may be determined by the Plan Administrator, as provided in section 5.6 for valuing the Trust assets. 2.41 VESTING COMPUTATION PERIOD. The Plan Year. 2.42 YEAR OF SERVICE. An Eligible Computation Period, Vesting Computation Period, or Plan Year, whichever is applicable, during which an Employee has completed at least one thousand (1,000) Hours of Service (whether or not continuous). The Employer may, in the Adoption Agreement, specify a fewer number of hours. ARTICLE 3 ELIGIBILITY AND YEARS OF SERVICE 3.1 ELIGIBILITY REQUIREMENTS. (a) Each Employee of the Affiliated Employers shall become a Participant in the Plan as of the first Entry Date after the date on which the Employee has satisfied the minimum age and service requirements specified in the Adoption Agreement. (b) The Employer may elect in the Adoption Agreement to exclude from participation: (i) Employees included in a unit of employees covered by a collective bargaining agreement between the Employer and Employee representatives, if retirement benefits were the subject of good faith bargaining. For this purpose, the term "Employee representatives" does not include any organization more than half of whose members are Employees who are owners, officers, or executives of the Employer; and (ii) nonresident aliens who receive no earned income from the Employer which constitutes income from sources within the United States. 3.2 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. Upon the reemployment of any Employee, the following rules shall determine his eligibility to participate in the Plan and his credit for prior service. (a) Participation. If the reemployed Employee was a Participant in the Plan during his prior period of employment, he shall be eligible upon reemployment to resume participation in the Plan. If the reemployed Employee was not a Participant in the Plan, he shall be considered a new Employee and required to meet the requirements of section 3.1 in order to be eligible to participate in the Plan, subject to the reinstatement of credit for prior service under paragraph (b) below. (b) Credit for Prior Service. In the case of any Employee who is reemployed before or after incurring a Break in Service, any Hour of Service and Year of Service credited to the Employee at the and of his prior period of employment shall be reinstated as of the date of his reemployment. 3.3 PREDECESSOR EMPLOYERS. If specified in the Adoption Agreement, Years of Service with a predecessor employer will be treated as service for the Employer for eligibility purposes; provided, however, If the Employer maintains the plan of a predecessor employer, Years of Service with such employer will be treated as service with the Employer without regard to any election. ARTICLE 4 CONTRIBUTIONS 4.1 EMPLOYER CONTRIBUTIONS. (a) Money Purchase Pension Contributions. For each Plan Year, the Employer shall contribute to the Trust an amount equal to such uniform percentage of Compensation of each eligible Participant as may be determined by the Employer in accordance with the money purchase pension contribution formula specified in the Adoption Agreement. Subject to the limitations of section 5.4, the money purchase pension contribution formula may be integrated with Social Security, as set forth in the Adoption Agreement. 45 50 (b) Profit Sharing Contribution. For each Plan Year, the Employer shall contribute to the Trust an amount as may be determined by the Employer in accordance with the profit sharing formula set forth in the Adoption Agreement. (c) Eligible Participants. Subject to the Minimum Allocation rules of section 5.2 and the exclusions specified in this section, each Participant shall be eligible to share in the Employer Contribution. An Employer may elect in the Adoption Agreement that Participants who terminate employment during the Plan Year with not more than five hundred (500) Hours of Service and who are not Employees as of the last day of the Plan Year (other than Participants who die, retire or become totally and Permanently Disabled during the Plan Year) shall not be eligible to share in the Employer Contribution. An Employer may further elect in the Adoption Agreement to allocate a contribution on behalf of a Participant who completes fewer than five hundred (500) Hours of Service and is otherwise ineligible to share in the Employer Contribution. If the Employer fails to specify in the Adoption Agreement the number of Hours of Service required to share in the Employer Contribution, the number shall be five hundred (500) Hours of Service. (d) Contribution Limitation. In no event shall any Employer Contribution exceed the maximum amount deductible from the Employer's income under section 404 of the Code, or the maximum limitations under section 415 of the Code provided in ARTICLE 6. 4.2 PAYMENT. All Employer Contributions to the Trust for any Plan Year shall be made either in one lump-sum or in installments in U.S. currency, by check, or in Shares within the time prescribed by law, including extensions granted by the Internal Revenue Service, for filing the Employer's federal income tax return for the taxable year with or within which such Plan Year ends. All Employer Contributions to the Trust for a money purchase pension plan for any Plan Year shall be made within the time prescribed by regulations under section 412(c)(10) of the Code. 4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS. (a) This Plan will not accept nondeductible Employee contributions for Plan Years beginning after the Plan Year in which this Plan is adopted by the Employer. Employee contributions made with respect to Plan years beginning after December 31, 1986 will be limited so as to meet the nondiscrimination test of section 401(m). (b) A separate account shall be maintained by the Trustee for the nondeductible Employee contributions of each Participant. (c) Employee contributions and earnings thereon shall be fully vested and nonforfeitable at all times. (d) The provisions of this section shall apply to Employee contributions made prior to the first Plan Year after the Plan Year in which the Employer adopts this Plan. 4.4 ROLLOVERS. (a) Subject to the approval of the Plan Administrator, a participant who has participated in any other qualified plan described in section 401(a) of the Code or in a qualified annuity plan described in section 403(a) of the Code shall be permitted to make a rollover contribution in the form of cash to the Trustee of an amount received by the Participant that is attributable to participation in such other plan (reduced by any nondeductible voluntary contributions he made to the plan). provided that the rollover contribution complies with all requirements of sections 402(c) or 403(a)(4) of the Code, whichever is applicable. (b) Before approving such a Participant rollover, the Plan Administrator may request from the Participant or the Employer any documents which the Plan Administrator, in its discretion, deems necessary for such rollover. (c) Any rollover contribution to the Trust shall be credited to the Participants rollover subaccount established under section 5.1 and separately accounted for. 4.5 DIRECT TRANSFER. (a) The Plan shall accept a transfer of assets directly from another plan qualified under sections 401(a) or 403(a) of the Code only if the Plan Administrator, in its sole discretion, agrees to accept such a transfer. In determining whether to accept such a transfer the Plan Administrator shall consider the administrative inconvenience engendered by such a transfer and any risks to the continued qualification of the Plan under section 401(a) of the Code. Acceptance of any such transfer shall not preclude the Plan Administrator from refusing any subsequent such transfers. (b) Any transfer of assets accepted under this section shall be credited to the Participant's direct transfer subaccount and shall be separately accounted for at all times and shall remain subject to the provisions of the transferor plan (as it existed at the time of such transfer) to the extent required by section 411(d)(6) of the Code (including, but not limited to, any rights to Qualified Joint and Survivor Annuities and qualified preretirement survivor annuities) as if such provisions were pan of the Plan. In all other respects, however, such transferred assets will be subject to the provisions of the Plan. (c) Assets accepted under this section shall be fully vested and nonforfeitable. (d) Before approving such a direct transfer, the Plan Administrator may request from the Participant or the Employer (or the prior employer) any documents the Plan Administrator, in its discretion, deems necessary for such direct transfer. 46 51 ARTICLE 5 ALLOCATIONS 5.1 INDIVIDUAL ACCOUNTS. The Plan Administrator shall establish and maintain an Account in the name of each Participant. The Account shall contain the following subaccounts: (a) A money purchase pension contribution subaccount to which shall be credited each such Participant's share of (i) Employer Contributions under section 4.1 (a); (ii) the net comings or net losses on the investment of the assets of the Trust; (iii) distributions; and (iv) dividends, capital gain distributions and other earnings received on any Shares credited to the Participant's subaccount; (b) A profit sharing contribution subaccount to which shall be credited each such Participant's share of (i) Employer Contributions under section 4.1 (b); (ii) forfeitures; (iii) the net earnings or net losses on the investment of the assets of the mat; (iv) distributions; and (v) dividends, capital gain distributions and other earnings received on any Shares credited to the Participant's subaccount; (c) A nondeductible voluntary contribution subaccount to which shall be credited (i) nondeductible voluntary contributions by the Participant under section 4.3; (ii) the net earnings or net losses on the investment of the assets of the Trust; (iii) distributions; and (iv) dividends, capital gain distributions and other earnings received on any Shares credited to the Participant's subaccount; (d) A direct transfer subaccount to which shall be credited (i) contributions to the Trust accepted under section 4.5(a); (ii) the not earnings or net losses on the investment of the assets of the Trust; (iii) distributions; and (iv) dividends, capital gain distributions and other earnings received on any Shares credited to the Participant's subaccount; (e) A rollover subaccount to which shall be credited (i) contributions to the Trust accepted under section 4.4(a); (ii) the net earnings or net losses on the investment of the assets of the Trust; (iii) distributions; and (iv) dividends, capital gain distributions and other earnings received on any Shares credited to the Participant's subaccount. 5.2 MINIMUM ALLOCATION. (a) Except as otherwise provided in this section, the Employer Contributions and forfeitures allocated on behalf of any Participant who is not a Key Employee shall not be less than the lesser of three percent (3%) of such Participant's Compensation or in the case where the Employer has no defined benefit plan which designates this Plan to satisfy section 401 of the Code, the largest percentage of Employer Contributions and forfeitures, as a percentage of the first one hundred and fifty thousand dollars ($150,000) of the Key Employee's Compensation, allocated on behalf of any Key Employee for that year. The minimum allocation is determined without regard to any Social Security contribution. This minimum allocation shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the year because of (i) the Participant's failure to complete one thousand (1,000) Hours of Service (or any equivalent provided in the Plan); or (ii) the Participant's failure to make mandatory Employee contributions to the Plan; or (iii) Compensation less than a stated amount. For purposes of this subsection, all defined contribution plans required to be included in an aggregation group under section 416(g)(2)(A)(i) shall be treated as a single plan. (b) For purposes of computing the minimum allocation, Compensation shall mean Compensation as defined in section 6.5(b) of the Plan. (c) The provision in subsection (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. (d) The provision in subsection (a) above shall not apply to any Participant to the extent the Participant is covered under any other plan or plans of the Employer and the Employer has provided in the Adoption Agreement that the minimum allocation or benefit requirement applicable to top-heavy plans will be met in the other plan or plans. (e) The minimum allocation required (to the extent required to be nonforfeitable under section 416(b)) may not be forfeited under section 411 (a)(3)(B) or 411(a)(3)(D). 5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES. (a) All money purchase pension contributions for a given Plan Year shall be allocated to the Account of the Participant for whom such contribution was made. Any forfeiture from a Participant's money purchase pension contribution subaccount arising under the Plan for a given Plan Year shall be applied as specified In the Adoption Agreement, either (i) to reduce the Employer Contribution in that year, or if in excess of the Employer Contribution for such Plan Year, the excess amounts shall be used to reduce the Employer Contribution in the next succeeding Plan Year or Years or (ii) to be added to the Employer Contributions and allocated accordingly. (b) All profit sharing contributions and forfeitures from a Participant's profit sharing contribution subaccount will be allocated to the Account of each Participant in the ratio that such Participant's Compensation bears to the Compensation of all Participants. However, if the profit sharing contribution formula selected in the Adoption Agreement is integrated with Social Security, profit sharing contributions for the Plan Year plus any forfeitures will be allocated to Participants' Accounts as follows: (i) Step One. Contributions and forfeitures will be allocated to each Participant's Account in the ratio that each Participant's total Compensation bears to all Participants' total Compensation, but not in excess of three percent (3%) of each Participant's Compensation. (Step One is not applicable if the Employer enters into the money purchase pension Adoption Agreement). 47 52 (ii) Step Two. Any contributions and forfeitures remaining after the allocation in Step One (if any) will be allocated to each Participant's Account in the ratio that each Participant's Compensation for the Plan Year in excess of the Integration Level bears to the excess Compensation of all Participants, but not in excess of three percent (3%). (Step Two is not applicable if the Employer enters into the money purchase pension Adoption Agreement). (iii) Step Three. Any contributions and forfeitures remaining after the allocation in Step Two (if any) will be allocated to each Participant's Account in the ratio that the sum of each Participant's total Compensation and Compensation in excess of the Integration Level bears to the sum of all Participants' total Compensation and Compensation in excess of the Integration Level, but not in excess of whichever of the following is applicable: (1) if the Employer has not adopted the money purchase pension Adoption Agreement, then the Maximum Profit Sharing Disparity Rate; or (2) If the Employer has adopted the money purchase pension Adoption Agreement, then the lesser of: (A) the percentage of each Participant's Compensation for the Plan Year up to the Integration Level determined by dividing the allocation by such Compensation (the base contribution percentage); or (B) the Maximum Disparity Rate. (iv) Step Four. Any remaining contributions or forfeitures will be allocated to each Participant's Account in the ratio that each Participant's total Compensation for the Plan Year bears to all Participants' total Compensation for that year. (c) Notwithstanding anything in (a) or (b) above to the contrary, forfeitures arising under a Participant's money purchase pension contribution subaccount will only be used to reduce the contributions of the Participant's Employer who adopted this Plan, and forfeitures arising under a Participant's profit sharing contribution subaccount will be reallocated only for the benefit of Employees of the Participant's Employer who adopted this Plan. 5.4 COORDINATION OF SOCIAL SECURITY INTEGRATION. If the Employer maintains plans involving integration with Social Security other than this Plan, and if any Participant is eligible to participate in more than one of such plans, all such plans will be considered to be integrated if the extent of the integration of all such plans does not exceed one hundred percent (100%). For purposes of the preceding sentence, the extent of integration of a plan is the ratio (expressed as a percentage) which the actual benefits, benefit rate, offset rate, or Employer Contribution rate under the plan bears to the integration limitation applicable to such plan. If the Employer enters into both the money purchase pension Adoption Agreement and the profit sharing Adoption Agreement under this Plan, integration with Social Security may only be selected in one Adoption. Agreement. 5.5 WITHDRAWALS AND DISTRIBUTIONS. Any distribution to a Participant or his Beneficiary, any amount transferred from a Participant's Account directly to the Trustee of any other qualified plan described in section 401(a) of the Code or to a qualified annuity plan described in section 403(a) of the Code, or any withdrawal by a Participant shall be charged to the appropriate subaccount(s) of the Participant as of the date of the distribution or the withdrawal. 5.6 DETERMINATION OF VALUE OF TRUST FUND AND OF NET EARNINGS OR LOSSES. As of each Valuation Date the Trustee shall determine for the period then ended the sum of the net earnings or losses of the Trust (excluding with respect to Shares and other assets specifically allocated to a specific Participant's subaccount, (i) dividends and capital gain distributions from Shares, (ii) receipts or income attributable to insurance policies, (iii) income gains and/or losses attributable to a Participant's loans made pursuant to ARTICLE 13 or to any other Assets) which shall reflect accrued but unpaid interest, dividends, gains, or losses realized from the sale, exchange or collection of assets, other income received, appreciation in the fair market value of assets, depreciation in the fair market value of assets, administration expenses, and taxes and other expenses paid. Gains or losses realized and adjustments for appreciation or depreciation in fair market value shall be computed with respect to the difference between such value as of the preceding Valuation Date or date of purchase, whichever is applicable, and the value as of the date of disposition or the current Valuation Date, whichever is applicable. 5.7 ALLOCATION OF NET EARNINGS OR LOSSES. (a) As of each Valuation Date the net earnings or losses of the Trust (excluding with respect to Shares and other assets specifically allocated to a specific Participant's subaccount, (i) dividends and capital gain distributions from Shares, (ii) dividends or credits attributable to insurance policies, (iii) income gains and/or losses attributable to a Participant's loans made pursuant to ARTICLE 13 or to any other assets, all of which shall be allocated to such Participant's subaccount) for the valuation period then ending shall be allocated to the Accounts of all Participants (or Beneficiaries) having credits in the fund both on such date and at the beginning of such valuation period. Such allocation shall be made by the application of a fraction, the numerator of which is the value of the Account of a specific Participant (or Beneficiary) as of the immediately preceding Valuation Date, reduced by any distributions therefrom since such preceding Valuation Date, and the denominator of which is the total value of all such Accounts as of the preceding Valuation Date, reduced by any distributions therefrom since such preceding Valuation Date. (b) To the extent that Shares and other assets are specifically allocated to a specific Participant's subaccount: (i) dividends and capital gain distributions from Shares; (ii) dividends or credits attributable to insurance policies; and (iii) income gains and/or losses attributable to a Participant's loans made pursuant to ARTICLE 13 or to any other assets, all shall be allocated to such Participant's subaccount. 48 53 5.8 RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. The Plan Administrator shall maintain accurate records with respect to the contributions made by or on behalf of Participants under the Plan, and shall furnish the Trustee with written instructions directing the Trustee to allocate all Plan contributions to the Trust among the separate Accounts of Participants in accordance with section 5.1 above, In making any such allocation, the Trustee shall be fully entitled to rely on the instructions furnished by the Plan Administrator, and shall be under no duty to make any inquiry or investigation with respect there to. ARTICLE 6 LIMITATIONS ON ALLOCATIONS 6.1 EMPLOYERS WHO DO NOT MAINTAIN OTHER QUALIFIED PLANS. (a) If the Participant does not participate in, and has never participated in another qualified plan or a welfare benefit fund, as defined in section 419(e) of the Code, maintained by the Employer, or an individual medical account, as defined in section. 415(1)(2) of the Code, maintained by the Employer, which provides in Annual Addition as defined in section 6.5(a), the amount of Annual Additions that may be credited to the Participant's Account for any Limitation Year will not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. If the Employer Contribution that would otherwise be contributed or allocated to the Participant's Account would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, the amount contributed or allocated will be reduced so that the Annual Additions for the Limitation Year will equal the Maximum Permissible Amount. (b) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant on the basis of a reasonable estimation of the Participant's Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. (d) If, pursuant to subsection (c) or as a result of the allocation of forfeitures, there is an Excess Amount the excess will be disposed of as follows: (i) Any nondeductible voluntary Employee contributions, to the extent they would reduce the Excess Amount, will be returned to the Participant; (ii) If after the application of paragraph (i) an Excess Amount still exists, and the Participant is covered by the Plan at the and of the Limitation Year, the Excess Amount in the Participant's Account will be used to reduce Employer Contributions (including any allocation of forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary; (iii) if after the application of paragraph (i) an Excess Amount still exists, and the Participant is not covered by the Plan at the end of the Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer Contributions (including allocation of any forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary; (iv) if a suspense account is in existence at any time during the Limitation Year pursuant to this section, it will not participate in the allocation of the Trust's investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' Accounts before any Employer or any Employee contributions may be made to the Plan for that Limitation Year. Excess accounts may not be distributed to Participants or former Participants. 6.2 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE DEFINED CONTRIBUTION PLANS. (a) This section applies if, in addition to this Plan, the Participant is covered under another qualified master or prototype defined contribution plan maintained by the Employer, a welfare benefit fund, as defined in section 419(e) of the Code maintained by the Employer or an individual medical account, a defined in section 415(1)(2) of the Code, maintained by the Employer which provides an Annual Addition as defined in section 6.5(a), during any Limitation Year. The Annual Additions that may be credited to a Participant's Account under this Plan for any such Limitation Year will not exceed the Maximum Permissible Amount reduced by the Annual Additions credited to a Participant's Account under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by the Employer are less than the Maximum Permissible Amount and the Employer Contribution that would otherwise be contributed or allocated to the Participant's Account under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated will be reduced so that the Annual Additions under all such plans and funds for the Limitation Year will equal the Maximum Permissible Amount. If the Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Permissible Amount, no amount will be contributed or allocated to the Participant's Account under this Plan for the Limitation Year. (b) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant in the manner described in section 6.1 (b). (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. 49 54 (d) If, pursuant to section 6.2(c), or as a result of the allocation of forfeitures, a Participants Annual Additions under this Plan and such other plans would result in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. (e) If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of (i) the total Excess Amount allocated as of such date, times (ii) the ratio of (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified master or prototype defined contribution plans. (f) Any Excess Amount attributed to this Plan will be disposed of in the manner described in section 6.1 (d). 6.3 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN OTHER QUALIFIED PLANS WHICH ARE DEFINED CONTRIBUTION PLANS OTHER THAN MASTER OR PROTOTYPE PLANS. If the Participant is covered under another qualified defined contribution plan maintained by the Employer which is not a Master or Prototype Plan, Annual Additions which may be credited to the Participant's Account under this Plan for any Limitation Year will be limited in accordance with section 6.2 as though the other plan were a Master or Prototype Plan unless the Employer provides other limitations in the Adoption Agreement. 6.4 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN A QUALIFIED DEFINED BENEFIT PLAN. If the Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Fraction and Defined Contribution Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Account under this Plan for any Limitation Year will be limited in accordance with the Adoption Agreement. 6.5 DEFINITIONS. Unless otherwise expressly provided herein, for purposes of this ARTICLE only, the following definitions and rules of interpretation shall apply: (a) Annual Additions. The sum of the following amounts credited to a Participant's Account for the Limitation Year: (i) Employer Contributions; (ii) Employee contributions; (iii) forfeitures; and (iv) amounts allocated after March 31, 1984 to an individual medical account; as defined in section 415(l)(2) of the Code, which is part of a pension or annuity plan maintained by the Employer, are treated as Annual Additions to a defined contribution plan. Also, amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in section 419(e) of the Code, maintained by the Employer, are treated as Annual Additions to a defined contribution plan. For this purpose, any Excess Amount applied under sections 6.1 (d) or 6.2(f) in the Limitation Year to reduce Employer Contributions will be considered Annual Additions for such Limitation Year. (b) Compensation. A Participant's earned income, wages, salaries, and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses), and excluding the following: (i) Employer contributions to a plan of deferred compensation which are not includable in the Employee's gross income for the taxable year in which contributed, or Employer Contributions under a simplified employee pension plan to the extent such contributions are excluded from the Employee's gross income, or any distributions from a plan of deferred compensation; (ii) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (iii) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (iv) Other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity described in section 403(b) of the Code (whether or not the amounts are actually excludable from the gross income of the Employee). For purposes of applying the limitations of this ARTICLE, Compensation for a Limitation Year is the Compensation actually paid or includable in gross income during such year. Notwithstanding the preceding sentence, Compensation for a Participant in a defined contribution plan who is Totally and Permanently Disabled (as defined in section 22(e)(3) of the Code) is the Compensation such Participant would have received for the Limitation Year if the Participant had been paid at the rate of Compensation paid Immediately before becoming permanently and totally disabled; such imputed Compensation for the disabled Participant may 50 55 be taken into account only if the Participant is not a Highly-Compensated Employee (as defined in section 414(q) of the Code), and contributions made on behalf of such Participant are nonforfeitable when made. (c) DEFINED BENEFIT FRACTION. A fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of one hundred percent (100%) of the dollar limitation determined for the Limitation Year under sections 415(b) and (d) of the Code or one hundred forty percent (140%) of highest average compensation, including any adjustments under section 415(b) of the Code. Notwithstanding the above, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than one hundred twenty-five percent (125%) of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987 disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of section 415 of the Code for all Limitation Years beginning before January 1, 1987. (d) DEFINED CONTRIBUTION DOLLAR LIMITATION. Thirty thousand dollars ($30,000) or, if greater, one-fourth (1/4) of the defined benefit dollar limitation set forth in section 415(b)(1) of the Code as in effect for the Limitation Year. (e) DEFINED CONTRIBUTION FRACTION. A fraction, the numerator of which is the sum of the Annual Additions to the Participant's Account under all the defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible voluntary contributions to all defined benefit plans, whether or not terminated, maintained by the Employer, and the Annual Additions attributable to all welfare benefit funds, as defined in section 419(e) of the Code and individual medical accounts, as defined in section 415(1)(2) of the Code, maintained by the Employer), and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior Limitation Years of service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any Limitation Year is the lesser of one hundred percent (100%) of the dollar limitation in effect under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of the Participant's Compensation for such year. If the Participant was a Participant as of the end of the first day of the first Limitation Yew beginning after December 31, 1986, in one or mom defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan made after May 5, 1986, but using the section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. the Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee contributions as Annual Additions. (f) EMPLOYER. For purposes of this ARTICLE, Employer shall mean the employer that adopts this Plan, and all members of a controlled group of corporations (as defined in section 414(b) of the Code as modified by section 415(h) of the Code), all commonly controlled trades or businesses (as defined in section 414(c) of the Code as modified by section 415(h) of the Code), or affiliated service groups (as defined in section 414(m) of the Code) of which the adopting Employer is a part and any other entity required to be aggregated with the Employer pursuant to regulations under section 414(o) of the Code. (g) EXCESS AMOUNT. The excess of the Participant's Annual Addition for the Limitation Year over the Maximum Permissible Amount. (h) HIGHEST AVERAGE COMPENSATION. The average compensation for the three consecutive Plan Years that produce the highest average. (i) LIMITATION YEAR. A Plan Year, or the twelve (12) consecutive month period elected by the Employer in the Adoption Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different twelve (12) consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (j) MASTER OR PROTOTYPE PLAN. A plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service. (k) MAXIMUM PERMISSIBLE AMOUNT. The maximum Annual Addition that may be contributed or allocated to a Participant's Account under the Plan for any Limitation Year shall not exceed the lesser of: (i) the Defined Contribution Dollar Limitation; or (ii) twenty-five percent (25%) of the Participant's Compensation for the Limitation Year. 51 56 The Compensation limitation referred to in subsection (b) shall not apply to any contribution for medical benefits (within the meaning of section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition under section 415(l)(1) or section 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different twelve (12) consecutive month period, the Maximum Permissible Amount will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction: Number of Months in the Short Limitation Year 12 (l) PROJECTED ANNUAL BENEFIT. The annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or Qualified Joint and Survivor Annuity) to which the Participant would be entitled under the terms of the Plan assuming: (i) the Participant will continue employment until Normal Retirement Age under the Plan (or current age, if later), and (ii) the Participant's Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the Plan will remain constant for all future Limitation Years. ARTICLE 7 TRUST FUND 7.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE. All contributions to the Trust that we received by the Trustee, together with any earnings thereon, shall be held, managed and administered by the Trustee named in the Adoption Agreement in accordance with the terms and conditions of the Trust Agreement and the Plan. The Trustee may use a Custodian designated by the Sponsor to perform recordkeeping and custodial functions. The Trustee shall be subject to the proper directions of the Employer or the Plan Administrator made in accordance with the terms of the Plan and ERISA. 7.2 INVESTMENT RESPONSIBILITY. (a) If the Employer elects in the Adoption Agreement to exercise investment authority and responsibility, the selection of the investments in which assets of the Trust are invested shall be the responsibility of the Plan Administrator and each Participant will have a ratable interest in all assets of the Trust. (b) If the Adoption Agreement so provides and the Employer elects to permit each Participant or Beneficiary to select the investments in his Account, no person, including the Trustee and the Plan Administrator, shall be liable for any loss or for any breach of fiduciary duty which results from such Participant's or Beneficiary's exercise of control. (c) If the Adoption Agreement so provides and the Employer elects to permit each Participant or Beneficiary to select the investments in his Account, the Employer or the Plan Administrator must complete a schedule of Participant designations. (d) If Participants and Beneficiaries are permitted to select the investment in their Accounts, all investment related expenses, including administrative fees charged by brokerage houses, will be charged against the Accounts of the Participants. (e) The Plan Administrator may at any time change the selection of investments in which the assets of the Trust are invested, or subject to such reasonable restrictions as may be imposed by the Sponsor for administrative convenience, may submit an amended schedule of Participant designations. Such amended documents may provide for a variance in the percentages of contributions to any particular investment or a request that Shares in the Trust be reinvested in whole or in part in other Shares. 7.3 INVESTMENT LIMITATIONS. The Sponsor may impose reasonable investment limitations an the Employer and the Plan Administrator relating to the type of permissible investments in the Trust or the minimum percentage of Trust assets to be invested in Shares. ARTICLE 8 VESTING 8.1 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS AND EARNINGS. The Participant's nondeductible voluntary contribution subaccount shall be fully vested and nonforfeitable at all times and no forfeitures will occur as a result of an Employee's withdrawal of nondeductible voluntary contributions. 8.2 ROLLOVERS, TRANSFERS AND EARNINGS. The Participant's rollover subaccount and direct transfer subaccount shall be fully vested and nonforfeitable at all times. 8.3 EMPLOYER CONTRIBUTIONS AND EARNINGS. Notwithstanding the vesting schedule elected by the Employer in the Adoption Agreement, the Participant's money purchase pension contribution subaccount and profit sharing contribution subaccount shall be fully vested and nonforfeitable upon the Participant's death, disability, attainment of Normal Retirement Age, or, if the Adoption Agreement provides for an Early Retirement Date, attainment of the required age and completion of the required service, In the absence of any of the preceding events, the Participant's money purchase contribution subaccount and his profit sharing contribution subaccount shall vest in accordance with a minimum vesting 52 57 schedule specified in the Adoption Agreement. The schedule must be at least as favorable to Participants as either schedule (a) or (b) below. (a) Graduated vesting according to the following schedule: Years of Service Vested Percentage ---------------- ----------------- Less than 2 0% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60% 5 but less than 6 80% 6 or more 100% (b) Full one hundred percent (100%) vesting after three (3) Years of Service. 8.4 AMENDMENTS TO VESTING SCHEDULE. (a) If the Plan's vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of the Participant's nonforfeitable percentage or if the Plan is deemed amended by an automatic change to or from a top-heavy vesting schedule, each Participant with at least three (3) Years of Service with the Employer may elect, within a reasonable period after the adoption of the amendment or change, to have the nonforfeitable percentage computed under the Plan without regard to such amendment or change. For any Participants who do not have at least one (1) Hour of Service in any Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "five (5) Years of Service" for "three (3) Years of Service" where such language appears. (b) The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of: (i) sixty (60) days after the amendment is adopted; (ii) sixty (60) days after the amendment becomes effective; or (iii) sixty (60) days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator. (c) No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's accrued benefit. Notwithstanding the preceding sentence, a Participant's Account balance may be reduced to the extent permitted under section 412(c)(8) of the Code. For purposes of this paragraph, a Plan amendment which has the effect of decreasing a Participant's Account balance or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Furthermore, if the vesting schedule of a Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee's right to his Employer-derived accrued benefit will not be less than his percentage computed under the Plan without regard to such amendment. 8.5 DETERMINATION OF YEARS OF SERVICE. For purposes of determining the vested and nonforfeitable percentage of the Participant's Employer Contribution subaccounts, all of the Participant's Years of Service with the Employer or an Affiliated Employer shall be taken into account. If specified in the Adoption Agreement, Years of Service with a predecessor employer will be treated as service for the Employer; provided, however, if the Employer maintains the plan of a predecessor employer, Years of Service with such predecessor employer will be treated as service with the Employer without regard to any election. 8.6 FORFEITURE OF NONVESTED AMOUNTS. (a) For Plan Years beginning before 1985, any portion of a Participant's Account that is not vested shall be forfeited by him as of the last day of the Plan Year in which a Break in Service occurs. For Plan Years beginning after 1984, any portion of a Participant's Account that is not vested shall be forfeited by him as of the last day of the Plan Year in which his fifth consecutive Break in Service occurs. Any amounts thus forfeited shall be reallocated as provided in ARTICLE 5 and shall not be considered part of a Participant's Account in computing his vested interest. The remaining portion of the Participant's Account will be nonforfeitable. (b) If a distribution is made at a time when a Participant has a vested right to less than one hundred percent (100%) of the value of the Participant's Account attributable to Employer Contributions and forfeitures, as determined in accordance with the provisions of section 8.3, and the nonvested portion of the Participant's Account has not yet been forfeited in accordance with paragraph (a) above: (i) a separate remainder subaccount shall be established for the Participant's interest in the Plan as of the time of the distribution, and (ii) at any relevant time the Participant's vested portion of the separate remainder subaccount shall be equal to an amount ("X") determined by the following formula: 53 58 X = P(AB + (R x D)) - (R x D) For purposes of applying the formula: P is the vested percentage at the relevant time; AB is the Account balance at the relevant time; D is the amount of the distribution; and R is the ratio of the Account balance at the relevant time to the Account balance after distribution. 8.7 REINSTATEMENT OF BENEFIT. If a benefit is forfeited because a Participant or Beneficiary cannot be found, such benefit will be reinstated if a claim is made by the Participant or Beneficiary. ARTICLE 9 JOINT AND SURVIVOR ANNUITY REQUIREMENTS 9.1 GENERAL. The provisions of this ARTICLE shall apply to any Participant who is credited with at least one (1) Hour of Service with the Employer on or after August 23, 1984, and such other Participants as provided in section 9.7. 9.2 QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of benefit is selected pursuant to a Qualified Election within the ninety (90) day period ending on the Annuity Starting Date, a married Participant's Vested Account Balance will be paid in the form of a Qualified Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance will be paid in the form of a life annuity. The Participant may elect to have such annuity distributed upon attainment of the Earliest Retirement Age under the Plan. 9.3 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of benefit has been selected within the Election Period pursuant to a Qualified Election, if a Participant dies before the Annuity Starting Date, then the Participant's Vested Account Balance shall be applied toward the purchase of an annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to have such annuity distributed within a reasonable period after the Participant's death. 9.4 DEFINITIONS. (a) Election Period. (i) The period which begins on the first day of the Plan Year in which the Participant attains age thirty-five (35) and ends on the date of the Participant's death. If a Participant separates from service prior to the first day of the Plan Year in which age thirty-five (35) is attained, with respect to the Account balance as of the date of separation, the Election Period shall begin on the date of separation. (ii) A Participant who has not yet attained age thirty-five (35) as of the end of any current Plan Year may make a special Qualified Election to waive the qualified preretirement survivor annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age thirty-five (35). Such election shall not be valid unless the Participant receives a written explanation of the qualified preretirement survivor annuity in such terms as are comparable to the explanation required under section 9.5. Qualified preretirement survivor annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age thirty-five (35). Any new waiver on or after such date shall be subject to the full requirements of this ARTICLE. (b) Earliest Retirement Age. The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits. (c) Qualified Election. (i) A waiver of a Qualified Joint and Survivor Annuity or a qualified preretirement survivor annuity. Any waiver of a Qualified Joint and Survivor Annuity or a qualified preretirement survivor annuity shall not be effective unless: (1) the Participant's Spouse consents in writing to the election; (2) the election designates a specific Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent); (3) the Spouse's consent acknowledges the effect of the election; and (4) the Spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the participant without any further spousal consent). If it is established to the satisfaction of a Plan representative that there is no Spouse or that the Spouse cannot be located, a waiver will be deemed a Qualified Election. (ii) Any consent by a Spouse obtained under this provision (or establishment that the consent of Spouse may not be obtained) shall be effective only with respect to such Spouse. A consent that permits designations by the Participant without any requirement of further consent by such Spouse must acknowledge that the Spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the Spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in section 9.5. (d) Qualified Joint And Survivor Annuity. An immediate annuity for the life of the Participant with a survivor annuity for the life of the Spouse which equals fifty percent (50%) of the amount of the annuity which is payable 54 59 during the joint lives of the Participant and the Spouse and which is the amount of benefit which can be purchased with the Participant's Vested Account Balance. (e) Spouse(Surviving Spouse). The Spouse or Surviving Spouse of the Participant, provided that a former spouse will be treated as the Spouse or Surviving Spouse and a current Spouse will not be treated as the Spouse or Surviving Spouse to the extent provided under a qualified domestic relations order as described in section 414(p) of the Code. (f) Annuity Starting Date. The first day of the first period for which an amount is paid as an annuity or any other form. (g) Vested Account Balance. The aggregate value of the Participant's Vested Account Balances derived from Employer and Employee contributions (including rollovers and direct transfers), whether vested before upon death, including the proceeds of insurance contracts if any, on the Participant's life, The provisions of this ARTICLE shall apply to a Participant who is vested in amounts attributable to Employer Contributions, Employee contributions (or both) at the time of death or distribution. 9.5 Notice Requirements (a) In the case of a Qualified Joint and Survivor Annuity, the Plan Administrator shall no less than thirty (30) days and no more than ninety (90) days prior to the Annuity Starting Date, provide each Participant a written explanation of: (i) the terms and conditions of a Qualified Joint and Survivor Annuity; (ii) the Participant's right to make and the effect of an election to waive the Qualified Joint and Survivor Annuity form of benefit; (iii) the rights of a Participant's Spouse; and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity. (b) In the case of a qualified preretirement survivor annuity as described in section 9.3, the Plan Administrator shall provide each Participant within the applicable period for such Participant a written explanation of the qualified preretirement survivor annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of subsection (a) applicable to a Qualified Joint and Survivor Annuity. (c) The applicable period for a Participant is whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age thirty-two (32) and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age thirty-five (35); (ii) a reasonable period ending after the individual becomes a Participant; (iii) a reasonable period ending after subsection (e) ceases to apply to the Participant; (iv) a reasonable period ending after this ARTICLE first applies to the Participant. Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation form service in the case of a participant who separates from service before attaining age thirty-five (35). (d) For purposes of applying subsection (c), a reasonable period ending after the enumerated events described above in subsections (ii), (iii) and (iv) is the end of the two-year period beginning one (1) year prior to the date the applicable event occurs, and ending on (1) year after that date. In the case of a Participant who separates from service before the Plan year in which age thirty-five (35) is attained, notice shall be provided within the two (2) year period beginning one (1) year prior to separation and ending one (1) year after separation. If such a participant thereafter returns to employment with the Employer, the applicable period for such Participant shall be redetermined. (e) Notwithstanding the other requirements of this section, the respective notices prescribed by this section need not be given to a Participant if: (i) the Plan "fully subsidizes" the cost of a Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity; and (ii) the Plan does not allow the Participant to waive the Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity and does not allow a married Participant to designate a nonspouse Beneficiary. For purposes of this subsection, plan fully subsidizes the costs of a benefit if no increase in cost, or decrease in benefits to the Participant may result from the Participant's failure to elect another benefit. 9.6 Safe Harbor Rules (a) This section shall apply to a Participant in a profit sharing plan, and to any distribution, made on or after the first day of the first Plan year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible Employee contributions, as defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money purchase pension plan (including a target benefit plan) if the following conditions are satisfied: (i) the Participant does not or cannot elect payments in the form of a life annuity; and (ii) on the death of a Participant, the Participant's Vested Account Balance will be paid to the Participant's Surviving Spouse, but if there is no Surviving Spouse, or if the Surviving Spouse has consented in a manner conforming to a Qualified Election, then to the Participant's Designated Beneficiary. 55 60 (b) The Surviving Spouse may elect to have distribution of the Vested Account Balance commence within the ninety (90) day period following the date of the Participant's death. The Account balance shall be adjusted for gains or losses occurring after the Participant's death in accordance with the provisions of the Plan governing the adjustment of Account balances for other types of distributions. (c) This section shall not be operative with respect to a Participant in a profit sharing plan if the plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, a target benefit plan, stock bonus, or profit sharing plan which is subject to the survivor annuity requirements of sections 401(a)(11) and 417 of the Code. If this section is operative, then the provisions of the ARTICLE, other than section 9.7, shall be inoperative. (d) The Participant may waive the spousal death benefit described in this section at any time provided that no such waiver shall be effective unless it satisfies the conditions of section 9.4(c) (other than the notification requirement referred to therein) that would apply to the Participant's waiver of the qualified preretirement survivor annuity. (e) For purposes of this section, Vested Account Balance shall mean, in the case of a money purchase pension plan or a target benefit plan, the Participant's separate Account balance attributable solely to accumulated deductible Employee contributions within the meaning of section 72(o)(5)(B) of the Code. In the case of a profit sharing plan, Vested Account Balance shall have the same meaning as provided in section 9.4(g). 9.7 TRANSITIONAL RULES. (a) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous sections of this ARTICLE must be given the opportunity to elect to have the prior sections of this ARTICLE apply if such Participant is credited with at least one (1) Hour of Service under this Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least ten (10) years of vesting service when he or she separated from service. (b) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one (1) Hour of Service under this Plan or a predecessor plan on or after September 2, 194, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his or her benefits paid in accordance with subsection (d). (c) The respective opportunities to elect (as described in subsections (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants. (d) Any Participant who has elected pursuant to subsection (b) and any Participant who does not elect under subsection (a) or who meets the requirements of subsection (a) except that such Participant does not have at least ten (10) years of vesting service when he or she separates from service, shall have his or her benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity: (i) Automatic Joint and Survivor Annuity. If benefits in the form of a life annuity become payable to a married Participant who: (1) begins to receive payments under the Plan on or after Normal Retirement Age; or (2) dies on or after Normal Retirement Age while still working for the Employer; or (3) begins to receive payments on or after the qualified early retirement age; or (4) separates from service on or after attaining Normal Retirement age; (or qualified early retirement age) and under satisfying the eligibility requirements for the payments of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under this Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the Election Period. The Election Period must begin at least six (6) months before the Participant attains qualified early retirement age and end not more than ninety (90) days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (ii) Election of Early Survivor Annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect, during the Election Period, to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the Spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his or her death. Any election under this provision will be in writing and may be changed by the Participant at any time. The Election Period begins on the later of (1) the 90th day before the Participant attains the qualified early retirement age; or (2) the date on which participation begins, and ends on the date the Participant terminates employment. (e) The following terms shall have the meanings specified herein: (i) Qualified Early Retirement Age. The latest of: (1) the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits; (2) the first day of the 120th month beginning before the Participant reaches Normal Retirement Age; or 56 61 (3) the date the Participant begins participation. (ii) Qualified Joint and Survivor Annuity. An annuity for the life of the Participant with a survivor annuity for the life of the Spouse as described in section 9.4(d). ARTICLE 10 DISTRIBUTION PROVISIONS 10.1 VESTING ON DISTRIBUTION BEFORE BREAK IN SERVICE. (a) If an Employee terminates service, and the value of the Employee's vested Account balance derived from Employer and Employee Contributions is not greater than three thousand five hundred dollars ($3,500), the Employee will receive a distribution of the value of the entire vested portion of such Account balance and the nonvested portion will be treated as a forfeiture. For purposes of this section, if the value of an Employee's vested Account balance is zero, the Employee shall be deemed to have received a distribution of such vested Account balance. A Participant's vested Account balance shall not include accumulated deductible Employee contributions within the meaning of section 72(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989. (b) If an Employee terminates service and elects, in accordance with the ARTICLE, to receive the value of his Vested Account Balance, the nonvested portion will be treated as a forfeiture. If the Employee elects to have distributed less than the entire vested portion of the Account balance derived from Employer Contributions, the part of the nonvested portion that will be treated as a forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to Employer Contributions and the denominator of which is the total value of the vested Employer derived Account balance. (c) If an Employee receives a distribution pursuant to this section and the Employee resumes employment covered under this Plan, the Employee's Employer-derived Account balance will be restored to the amount on the date of distribution if the Employee repays to the Plan the full amount of the distribution attributable to Employer Contributions before the earlier of five (5) years after the first date on which the Participant is subsequently reemployed by the Employer, or the date the Participant incurs five (5) consecutive one (1) year Breaks in Service following the date of the distribution. If an Employee is deemed to receive a distribution to this section, and the Employee resumes employment covered under this Plan before the date the Participant incurs five (5) consecutive one (1) year Breaks in Service, upon the reemployment of such Employee, the Employer-derived Account balance of the Employee will be restored to the amount on the date of such deemed distribution. 10.2 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS. (a) If the value of a Participant's vested Account balance derived from Employer and Employee contributions exceeds(or at the time of any prior distribution exceeds) three thousand five hundred dollars (3,500) and the Account balance is immediately distributable, the Participant and the Participant's Spouse (or where either the Participant or the Spouse has died, the survivor) must consent to any distribution of such Account balance. The consent of the Participant and the Participant's Spouse shall be obtained in writing within the ninety (90) day period ending on the Annuity Starting Date. The Annuity Starting Date is the first day of the first period for which an amount is paid as an annuity or any other form. The Plan Administrator shall notify the Participant and the Participant's Spouse of the right to defer any distribution until the Participant's Account balance is no longer immediately distributable. Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of section 417(a)(3), and shall be provided no less than thirty (30) days and no more than ninety (90) days prior to the Annuity Starting Date. (b) Notwithstanding the provisions of subsection (a), only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the Account balance is immediately distributable. (Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to section 9.6 of the Plan, only the Participant need consent to the distribution of an Account balance that is immediately distributable). Neither the consent of the Participant nor the Participant's Spouse shall be required to the extent that a distribution is required to satisfy section 401(a)(9) or section 415 of the Code. In addition, upon termination of this Plan if the Plan does not offer an annuity option (purchased from a commercial provider), the Participant's Account balance may, without the Participant's consent, be distributed to the Participant or transferred to another defined contribution plan (other than an employee stock ownership plan as defined in section 4975(e)(7) of the Code) within the same controlled group. (c) An Account balance is immediately distributable if any part of the Account balance could be distributed to the Participant (or Surviving Spouse) before the Participant attains *or would have attained if not deceased) the later of Normal Retirement Age or age sixty-two (62). (d) For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Participant's vested Account balance shall not include amounts attributable to accumulated deductible Employee contributions within the meaning of section 72*o)(5)(B) of the Code. 10.3 COMMENCEMENT OF BENEFITS. (a) Unless the Participant elects otherwise, distribution of benefits will begin no later than the 60th day after the latest of the close of the Plan Year in which: 57 62 (i) the Participant attains age sixty-five (65) (or Normal Retirement Age, if earlier); (ii) the 10th anniversary of the year in which the Participant commenced participant in the Plan occurs; or (iii) the Participant terminates service with the Employer. (b) Notwithstanding the foregoing, the failure of a Participant and Spouse to consent to a distribution while a benefit is immediately distributable, within the meaning of section 10.2 of the Plan, shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this section. 10.4 EARLY RETIREMENT WITH AGE AND SERVICE REQUIREMENT. If a Participant separates from service before satisfying the age requirement for early retirement, but has satisfied the service requirement, the Participant will be entitled to elect an early retirement benefit upon satisfaction of such age requirement. 10.5 NONTRANSFERABILITY OF ANNUITIES. Any annuity contract distributed herefrom must be nontransferable. 10.6 CONFLICTS WITH ANNUITY CONTRACTS. The terms of any annuity contract purchased and distributed by the Plan to a Participant or Spouse shall comply with the requirements of this Plan. ARTICLE 11 TIMING AND MODES OF DISTRIBUTION 11.1 GENERAL RULES. (a) Subject to ARTICLE 9, the requirements of this ARTICLE shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this ARTICLE apply to calendar years beginning after December 31, 1984. (b) All distributions required under this ARTICLE shall be determined and made in accordance with the income tax regulations under section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of section 1.40(a)(9)-2 of the proposed regulations. 11.2 REQUIRED BEGINNING DATE. The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant's Required Beginning Date. 11.3 LIMITS ON DISTRIBUTION PERIODS. As of the first Distribution Calendar Year, distributions, if not made in single-sum, may only be made over one of the following periods (or a combination thereof): (a) the life of the Participant; (b) the life of the Participant and a Designated Beneficiary; (c) a period certain not extending beyond the Life Expectancy of the Participant; or (d) a period certain not extending beyond the joint and last survivor expectancy of the Participant and a Designated Beneficiary. 11.4 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR. (a) Individual Account. (i) If a Participant's Benefit is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant's Designated Beneficiary or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distribution for the first Distribution Calendar Year, must at least equal the quotient obtained by dividing the Participant's Benefit by the Applicable Life Expectancy. (ii) For calendar years beginning before January 1, 1989, if the Participant's Spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least fifty percent (50%) of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant. (iii) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first Distribution Calendar Year shall not be less than the quotient obtained by dividing the Participant's Benefit by the lesser of (1) the Applicable Life Expectancy or (2) if the Participant's Spouse is not the Designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of section 1.40(a)(9)-2 of the proposed regulations. Distributions after the death of the Participant shall be distributed using the Applicable Life Expectancy in subsection (a)(i) above as the relevant divisor without regard to proposed regulations section 1.40(a)(9)-2. (iv) The minimum distribution required for the Participant's first Distribution Calendar Year must be made on or before the Participant's Required Beginning Date. The minimum distribution for other calendar years, including the minimum distribution for the Distribution Calendar Year in which the Employee's Required Beginning Date occurs, must be made on or before December 31, of that Distribution Calendar Year. (b) Other Forms. If the Participant's benefit is distributed in the form of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of section 401(a)(9) of the Code and the proposed regulations thereunder. 11.5 DEATH DISTRIBUTION PROVISIONS. (a) Distribution Beginning Before Death. If the Participant dies after distribution of his or her interest has begun, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death. (b) Distribution Beginning After Death. If the Participant dies before distribution of his or her interest begins, distribution of the Participant's entire interest shall be completed by December 31 of the calendar year 58 63 containing the fifth anniversary of the Participant's death except to the extent that an election is made to receive distributions in accordance with (i) or (ii) below: (i) if any portion of the Participant's interest is payable to a Designated Beneficiary, distributions may be made over the life or over a period certain not greater than the Life Expectancy of the Designated Beneficiary commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; (ii) if the Designated Beneficiary is the Participant's Surviving Spouse, the date distributions are required to begin in accordance with (i) above shall not be earlier than the later of (1) December 31 of the calendar year immediately following the calendar year in which the Participant died and (2) December 31 of the calendar year in which the Participant would have attained age seventy and one-half (70 1/2). (c) If the Participant has not made an election pursuant to this section by the time of his or her death, the Participant's Designated Beneficiary must elect the method of distribution no later than the earlier of (1) December 31 of the calendar year in which distributions would be required to begin under this section; or (2) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no Designated Beneficiary, or if the Designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (d) For purposes of subsection (b) above, if the Surviving Spouse dies after the Participant, but before payments to such Spouse begin, the provisions of subsection (b), with the exception of paragraph (ii) therein, shall be applied as if the Surviving Spouse were the Participant. (e) For purposes of this section, any amount paid to a child of the Participant will be treated as if it had been paid to the Surviving Spouse if the amount becomes payable to the Surviving Spouse when the child reaches the age of majority. (f) For the purposes of this section, distribution of a Participant's interest is considered to begin on the Participant's Required Beginning Date (or, if subsection (d) above is applicable, the date distribution is required to begin to the Surviving Spouse pursuant to subsection (b) above). If distribution is in the form of an annuity described in section 11.4(b) above irrevocably commences to the Participant before the Required Beginning Date, the date distribution is considered to begin is the date distribution actually commences. 11.6 DESIGNATION OF BENEFICIARY. Subject to the rules of ARTICLE 9, a Participant (or former Participant) may designate from time to time any person or persons (who may be designated contingently or successively and may be an entity other than a natural person) as his Beneficiary who will be entitled to receive any undistributed amounts credited to the Participant's separate Account under the Plan at any time of the Participant's death. Any such beneficiary designation by a Participant shall be made in writing in the manner prescribed by the Plan Administrator, and shall be effective only when filed with the Plan Administrator during the Participant's lifetime. A Participant my change or revoke his Beneficiary designation at any time in the manner prescribed by the Plan Administrator. If any portion of the Participant's Account is invested in insurance pursuant to ARTICLE 14, the Beneficiary of the benefits under the insurance policy shall be the person or persons designated under the policy. If the Designated Beneficiary (or each of the Designated Beneficiaries) predeceases the Participant, the Participant's Beneficiary designation shall be ineffective. If no Beneficiary designation is in effect at the time of the Participant's death, his Beneficiary shall be his estate. 11.7 DEFINITIONS. (a) APPLICABLE LIFE EXPECTANCY. The Life Expectancy (or joint and last survivor expectancy) calculated using the attained age of the Participant (or Designated Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in the applicable calendar year reduced by one (1) for each calendar year which as elapsed since the date Life Expectancy was first calculated. If Life Expectancy is being recalculated, the Applicable Life Expectancy shall be the Life Expectancy as so recalculated. The applicable calendar year shall be the first Distribution Calendar Year, and if Life Expectancy is being recalculated such succeeding calendar year. If annuity payments commence in accordance with section 11.4(b) before the Required Beginning Date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest, the applicable calendar year is the year of purchase. (b) DESIGNATED BENEFICIARY. The individual who is designated as the Beneficiary under the Plan in accordance with section 401(a)(9) and the proposed regulations thereunder. (c) DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant's Required Beginning Date. For distributions beginning after the Participant's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to section 11.5 above. (d) LIFE EXPECTANCY. (i) Life Expectancy and joint and last survivor expectancy are computed by use of the expected return multiples in Table V and VI of section 1.72-9 of the income tax regulations. (ii) Unless otherwise elected by the Participant (or Spouse, in the case of distributions described in section 11.5(b)(ii)above) by the time distributions are required to begin, life expectancies shall be recalculated 59 64 annually. Such election shall be irrevocable as to the Participant (or Spouse) and shall apply to all subsequent years. The Life Expectancy of a non- Spouse Beneficiary may not be recalculated. (e) Participant's Benefit. (i) The Account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contributions or forfeitures allocated to the Account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. (ii) For purposes of subsection (i) above, if any portion of the minimum distribution for the first Distribution Calendar Year is made in the second Distribution Calendar Year on or before the Required Beginning Date, the amount of the minimum distribution made in the second Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year. (f) Required Beginning Date. (i) General Rule. The Required Beginning Date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age seventy and one-half (70 1/2). (ii) Transitional Rules. The Required Beginning Date of a Participant who attains age seventy and one-half (70 1/2) before January 1, 1988, shall be determined in accordance with (1) or (2) below: (1) Non-Five-Percent Owners. The Required Beginning Date of a Participant who is not a Five Percent (5%) Owner is the first day of April of the calendar year following the calendar year in which the later of retirement or attainment of age seventy and one-half (70 1/2) occurs. (2) Five Percent Owners. The Required Beginning Date of a Participant who is a Five Percent (5%) Owner during any year beginning after December 31, 1979, is the first day of April following the later of: (A) the calendar year in which the Participant attains age seventy and one-half (70 1/2); or (B) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a Five Percent (5%) Owner, or the calendar year in which the Participant retires. The Required Beginning Date of a Participant who is not a Five Percent (5%) Owner who attains age seventy and one-half (70 1/2) during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. (iii) Five Percent Owner. A Participant is treated as a Five Percent (5%) Owner for purposes of this section if such Participant is a Five Percent (5%) Owner as defined in section 416(i) of the Code (determined in accordance with section 416 but without regard to whether the Plan is to-heavy) at any time during the Plan Year ending with or within the calendar year in which such owner attains age sixty-six and one-half (66 1/2) or any subsequent year. (iv) Once distributions have begun to a Five Percent (5%) Owner under this section, they must continue to be distributed, even if the Participant ceases to be a Five Percent (5%) Owner in a subsequent year. 11.8 Transitional Rule. (a) Notwithstanding the other requirements of this ARTICLE and subject to the requirements of ARTICLE 9, distribution on behalf of any Employee, including a Five Percent (5%) Owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): (i) The distribution by the Trust is one which would not have disqualified such trust under section 401(a)(9) of the Internal Revenue Code as in effect prior to amendment by the Deficit Reduction Act of 1984. (ii) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of such Employee. (iii) Such designation was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. (iv) The Employee had accrued a benefit under the Plan as of December 31, 1983. (v) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. (b) A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. (c) For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee, or the Beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfies the requirements in subsections (a)(i) and (a)(v). (d) If a designation is revoked, any subsequent distribution must satisfy the requirements of section 401(a)(9) of the Code and the proposed regulations thereunder. If a designation is revoked subsequent to the date distributions are required to begin, the Trust must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy section 401(a)(9) of the Code and the regulations thereunder but for the section 242(b)(2) election. 60 65 For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in section 1.401(a)(9)-2 of the proposed regulations. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another beneficiary (one not named in the designation)under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case in which an amount is transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 shall apply. 11.9 OPTIONAL FORMS OF BENEFIT (a) Except to the extent benefits are required to be paid in the form of an automatic joint and survivor annuity under ARTICLE 9, any amount which a Participant shall be entitled to receive under the Plan shall be distributed in one or a combination of the following ways: (i) in a lump-sum payment of cash, the amount of which shall be determined by redeeming all Shares credited to the Participant's Account under the Plan as of the date of distribution; (ii) in a lump-sum payment including a distribution in kind of all Shares credited to the Participant's Account under the Plan as of the date of distribution; (iii) in substantially equal monthly, quarterly, or annual installment payments of cash, or the distribution of Shares in kind, over a period certain not to exceed the Life Expectancy of the Participant or the joint and last survivor Life Expectancy of the Participant and his Beneficiary, determined in each case as of the earlier of: (1) the end of the Plan Year in which occurs the event entitling the Participant to a distribution of benefits, or (2) the date such installments commence; (iv) if permitted by the Sponsor, in monthly, quarterly, or annual installment payments of cash, or the distribution of Shares in kind, so that the amount distributed in each Plan Year equals the quotient obtained by dividing the Participant's Account at the beginning of that Plan Year by the joint and last survivor Life Expectancy of the participant and the Beneficiary for that Plan Year. The Life Expectancy will be computed using the recomputation method described in section 11.7(d). Unless the Spouse of the retired Participant is the Beneficiary, the actuarial present value of all expected payments to the retired Participant must be more than fifty percent (50%) of the actuarial present value of payments to the retired Participant and the Beneficiary; or (v) by application of the Participant's vested Account to the purchase of a nontransferable immediate or deferred annuity contract, on an individual or group basis. Unless the Spouse of the retired Participant is the Beneficiary, the actuarial present value of all expected payments to the retired Participant must be more than fifty percent (50%) of the actuarial present value of payments to the retired Participant and the Beneficiary. (b) If the Participant fails to select a method of distribution, except as may be required by ARTICLE 9, all amounts which he is entitled to receive under the Plan shall be distributed to him in a lump-sum payment. ARTICLE 12 WITHDRAWALS 12.1 WITHDRAWAL OF NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Subject to the Qualified Election requirements of ARTICLE 9 and section 12.3, any Participant who has made nondeductible voluntary contributions may, upon thirty (30) days notice in writing filed with the Plan Administrator, have paid to him all or any portion of the fair market value of his nondeductible voluntary contribution subaccount. 12.2 HARDSHIP WITHDRAWALS. If the Adoption Agreement so provides and the Employer elects, this section applies only to the profit sharing contribution subaccount and only if the profit sharing allocation formula selected in the Adoption Agreement is not integrated with Social Security. (a) Demonstration of Need. Subject to the Qualified Election requirements of ARTICLE 9 and section 12.3, if a Participant establishes an immediate and heavy financial need for funds because of a hardship resulting form the purchase or renovation of a primary residence, the education of the participant or a member of his immediate family, or (including special education), the medial or personal expenses of the Participant or a member of his immediate family, or other demonstrable emergency as determined by the Plan Administrator on a uniform and nondiscriminatory basis, the Participant shall be permitted, subject to the limitations of subsection (b) below, to make a hardship withdrawal of an amount credited to his profit sharing contribution subaccount under the Plan. (b) Amount of Hardship Withdrawal. The amount of any hardship withdrawal by a Participant under subsection (a) above shall not exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other resources of the Participant. (c) Prior Withdrawal of Nondeductible Voluntary Participant Contributions. A Participant shall not be permitted to make a hardship withdrawal under subsection (a) above unless he has already withdrawn, in accordance with section 12.1, any amount credited to his nondeductible voluntary contributions subaccount. 12.3 MANNER OF MAKING WITHDRAWALS. Any withdrawal by a Participant under the Plan shall be made only after the Participant files a written request with the plan Administrator specifying the nature of the withdrawal (and the reasons therefor, if a hardship withdrawal), and the amount of funds requested to be withdrawn. Upon approving any withdrawal, the Plan Administrator shall furnish the Trustee with written instructions directing the Trustee to make the withdrawal in a lump-sum payment of cash to the Participant. In making any withdrawal payment, the Trustee shall be fully 61 66 entitled to rely on the instructions furnished by the Plan Administrator, and shall be under no duty to make any inquiry or investigation with respect thereto. Unless section 9.6 is applicable, if the Participant is married, his Spouse must consent to the withdrawal pursuant to a Qualified Election (as defined in section 9.4(c)) within the ninety (90) day period ending on the date of the withdrawal. 12.4 LIMITATIONS ON WITHDRAWALS. The Plan Administrator may prescribe uniform and nondiscriminatory rules and procedures limiting the number of times a Participant may make a withdrawal under the Plan during any Plan Year, and the minimum amount a Participant may withdraw on any single occasion. 13.1 GENERAL PROVISIONS. (a) If the Adoption Agreement so provides and the Employer so elects, loans shall be made available to any Participant or Beneficiary who is party-in-interest (as defined in section 3(14) of ERISA) on a reasonably equivalent basis. A Participant or Beneficiary who is not a party-in-interest (as defined in section 3(14) of ERISA) shall not be eligible to receive a loan under this ARTICLE. (b) Loans shall not be made available to Highly-Compensated Employees (as defined in section 414(q) of the Code) in an amount greater than the amount made available to other Employees. (c) Loans must be adequately secured and bear a reasonable interest rate. (d) No participant loan shall exceed the present value of the Participant's Vested Account Balance. (e) Unless section 9.6 is applicable, a Participant must obtain the consent of his or her Spouse, if any, to use of the Account balance as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the ninety(90) day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a Plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Account balance is used for renegotiation, extension, renewal or other revision of the loan. (f) In the event of default, foreclosure on the note and attachment of security will not occur until a distributable event occurs under the Plan. (g) Loans will not be made to any shareholder-employee or Owner-Employee. For purposes of this requirement, a shareholder-employee means an Employee or officer of an electing small business (subchapter S) corporation who owns (or is considered as owning within the meaning of section 318(a)(1) of the Code), on any day during the taxable year of such corporation, more than five percent(5%) of the outstanding stock of the corporation. (h) If a valid spousal consent has been obtained in accordance with subsection (e), then, notwithstanding any other provision of this Plan, the portion of the Participant's Vested Account Balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the Account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than one hundred percent (100%) of the Participant's Vested Account Balance (determined without regard to the preceding sentence) is payable to the Surviving Spouse, then the Account balance shall be adjusted by first reducing the Vested Account Balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the Surviving Spouse. 13.2 ADMINISTRATION OF LOAN PROGRAM. (a) The Plan's loan program will be administered by the Plan Administrator. (b) Loan requests shall be made on a form prescribed by the Plan Administrator and shall comply with section 13.4. (c) Loan request that comply with all the requirements of this ARTICLE shall be approved by the Plan Administrator. (d) The rate of interest to be charged on loans shall be determined under section 13.5. (e) The only collateral that may be used as security for a loan, and the limitations and requirements applicable, are determined under section 13.6. (f) The rules regarding defaults are set forth in section 13.9. 13.3 AMOUNT OF LOAN. Loans to any Participant or Beneficiary will not be made to the extent that such loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of: (a) fifty thousand dollars ($50,000) reduced by the excess (if any) of the highest outstanding balance of loans during the one (1) year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made; or (b) one-half(1/2) the present value of the nonforfeitable accrued benefit of the Participant. (c) For the purpose of the above limitation, all loans from all plans of the Employer and other members of a group of employers described in sections 414(b), 414(c) and 414(m) of the Code are aggregated. 13.4 MANNER OF MAKING LOANS. A request by a Participant for a loan shall be made in writing to the Plan Administrator and shall specify the amount of the loan, and the subaccount(s) or Shares of the Participant from which the loan should be made. The terms and conditions on which the Plan Administrator shall approve loans under the Plan shall be applied on a uniform and nondiscriminatory basis with respect to all Participants. If a Participant's request for a loan is 62 67 approved by the Plan Administrator, the Plan Administrator shall furnish the Trustee with written instructions directing the Trustee to make the loan in a lump-sum payment of cash to the Participant. In making any loan payment under this ARTICLE, the Trustee shall be fully entitled to rely on the instructions furnished by the Plan Administrator and shall be under no duty to make any inquiry or investigation with respect thereto. 13.5 TERMS OF LOAN. Loans shall be made on such terms and subject to such limitations as the Plan Administrator shall prescribe. Furthermore, any loan shall, by its terms, require that repayment (principal and interest) be amortized in level payments, not less frequently than quarterly, over a period not extending beyond five (5) years from the date of the loan, unless such loan is used to acquire a dwelling unit which, within a reasonable time (determined at the time the loan is made) will be used as the principal residence of the Participant. The rate of interest to be charged shall be determined by the Plan Administrator in accordance with the rates quoted by representative financial institutions in the local area for similar loans. 13.6 SECURITY FOR LOAN. Any loan to a Participant under the Plan shall be secured by the pledge of all the Participant's right, title, and interest in the Trust. Such pledge shall be evidenced by the execution of a promissory note by the Participant which shall provide that, in the event of any default by the participant on a loan repayment, the Plan Administrator shall be authorized (to the extent permitted by law) to deduct the amount of the loan outstanding and any unpaid interest due thereon from the Participant's wages or salary to be thereafter paid by the Employer, and to take any and all other actions necessary and appropriate to enforce collection of the unpaid loan. An assignment or pledge of any portion of the Participant's interest in the Plan and a loan, pledge, or assignment with respect to any insurance contract purchased under the Plan, will be treated as a loan under this section. In the event the value of the Participant's vested Account at any time is less than one hundred twenty-five percent (125%) of the outstanding loan balance, the Plan Administrator shall request additional collateral of sufficient value to adequately secure the repayment of the loan. Failure to provide such additional collateral upon a request of the Plan Administrator shall constitute an event of default. 13.7 SEGREGATED INVESTMENT. Loans shall be considered a Participant directed investment and, for the limited purposes of allocated earnings and losses pursuant to ARTICLE 5, shall not be considered a part of the common fund under the Trust. 13.8 REPAYMENT OF LOAN. The Plan Administrator shall have the sole responsibility for ensuring that a Participant timely makes all loan repayments, and for notifying the Trustee in the event of any default by the Participant on the loan. Each loan repayment shall be paid to the Trustee and shall be accompanied by written instructions from the Plan Administrator that identify the Participant on whose behalf the loan repayment was being made. 13.9 DEFAULT ON LOAN. (a) In the event of a termination of the Participant's employment with the Affiliated Employers or a default by a Participant on a loan repayment, all remaining payments on the loan shall be immediately due and payable. The Employer shall, upon the direction of the Plan Administrator, to the extent permitted by law, deduct the total amount of the loan outstanding and any unpaid interest due thereon from the wages or salaries payable to the Participant by the Employer in accordance with the Participant's promissory note. In addition, the Plan Administrator shall take any and all other actions necessary and appropriate to enforce collection of the unpaid loan. However, attachment of the Participant's Account pledged as security will not occur until a distributable event occurs under the Plan. (b) For purposes of this section, the term "default" shall mean failure, by a period of at least ten (10) days, to make any loan payment (whether principal or interest or both) that is due and payable. Neither the Plan Administrator nor any other fiduciary is required to give any written or oral notice of default. 13.10 UNPAID AMOUNTS. Upon the occurrence of a Participant's retirement or death, or upon a Participant's fifth consecutive Break in Service or earlier distribution, the unpaid balance of any loan, including any unpaid interest, shall be deducted from any payment or distribution from the Trust to which such Participant or his Beneficiary may be entitled. If after charging the Participant's Account with the unpaid balance of the loan, including any unpaid interest, there still remains an unpaid balance of any such loan and interest, then the remaining unpaid balance of such loan and interest shall be charged against any property pledged as security with respect to such loan. ARTICLE 14 INSURANCE 14.1 INSURANCE. If the Adoption Agreement so provides and the Employer elects to allocate or permit Participants to allocate a portion of their Accounts to purchase life insurance, the ensuing subsections of this ARTICLE shall apply: 14.2 POLICIES. The Plan Administrator shall instruct the Trustee to procure one or more life insurance policies on the Participant's life, the terms of which shall conform to the requirements of the Plan and the Code. The policies and the companies which write them shall be subject to the approval of the Plan Administrator and the Trustee. The Trustee shall procure and hold such policies in the name of the nominee. The Trustee shall be the sole owner of all contracts purchased hereunder, and it shall be so designated in each policy and application therefor. 14.3 BENEFICIARY. The Participant shall have the right to name the Beneficiary and to choose the benefit option under the policy for the Beneficiary. The Trustee shall designate the Beneficiary of all such policies in accordance with the written directions of the Plan Administrator and the policy terms. Such designations may be outlined in the original application as forwarded to the issuing company. However, the Plan Administrator shall have available and shall furnish the 63 68 Participant with the necessary forms for any Beneficiary designation or change of Beneficiary and it will keep a copy of all executed designations as part of its records. Upon a Participant's death, the Plan Administrator will promptly furnish the Trustee a copy of the last designation and shall authorize the Trustee to complete such forms as the insurance company may require in order to effect the benefit option. 14.4 PAYMENT OF PREMIUMS. Subject to the provisions of sections 7.3 and 14.5, premium payments to the insurer may be made only by the Trustee with respect to any insurance policy purchased on behalf of a Participant and shall constitute first an investment of a portion of the funds of the Participant's Employer Contribution subaccounts up to the maximum amount of such subaccounts permitted to be applied toward such premium payments, as provided in section 14.5. If a Participant's subaccounts lack sufficient assets to pay premiums on a life insurance policy due on his behalf, the Trustee, at the direction of the Plan Administrator, acting upon the request of the Participant, shall borrow under the policy loan provisions, if any, the amount necessary to pay such premiums, using the cash value of the insurance as security, or the Trustee may liquidate assets held in the Participant's Account, in the same order, of sufficient value to pay such premiums. Any loans shall be repaid by the application of earnings, contributions, or forfeitures to the Account of the Participant insured by such policy. In the absence of the Plan administrator's direction to borrow or to liquidate assets to pay premiums, the life insurance policy shall be put on a paid-up-basis or, if it has no cash value, canceled. 14.5 LIMITATION ON INSURANCE PREMIUMS. The Trustee shall not pay, nor shall anyone on behalf of the Trustee pay, any life insurance premium for any Participant out of the Participant's Employer Contribution subaccounts unless the amount of such payment, plus all premiums previously so paid on behalf of the Participant, is less than fifty percent (50%) of the Employer Contributions and forfeitures allocated to the Participant's Employer Contribution subaccounts as determined on the date such premium is paid with respect to reserve life insurance policies and shall be less than twenty-five percent (25%) thereof with respect to nonreserve (term) policies, or, if both reserve life and term insurance are purchased on the life of any Participant, the sum of the term insurance premium plus one-half (1/2) of the reserve life premiums may not exceed twenty-five percent (25%) of the Employer Contributions made on behalf of such Participant. For purposes of these incidental insurance provisions, reserve life insurance contracts are contracts with both nondecreasing death benefits and nonincreasing premiums. Dividends received on life insurance policies shall be considered a reduction of premiums paid in such computations. If payment of premiums on a Participant's life insurance policy is prohibited because of the limitation, the Trustee, as directed by the Plan Administrator, shall permit the Participant to maintain that part of the coverage made available by the prohibited premiums, either by payment of the amount of the prohibited premium by the Participant from sources other than the Trust or by distributing the policy to the extent of the Participant's vested interest to the Participant and eliminating it from the Trust. Nothing contained in the foregoing provisions of section 14.4 and this section shall be deemed to authorize the payment of any premium or premiums for any Participant which would result in a failure to maintain any mandatory investment in Shares required by the Sponsor in the account or subaccounts of any such Participant. 14.6 INSURANCE COMPANY. No insurance company which may issue any policies for the purposes of this Plan shall be required to take or permit any action contrary to the provisions of said policies, nor shall such insurance company be deemed to be a party to, or responsible for the validity of, this Plan for any purpose. No such insurance company shall be required to look into the terms of this Plan or question any action of the Trustee hereunder, nor be responsible to see that any action of the Trustee is authorized by the terms of this Plan. Any such issuing insurance company shall be fully discharged from any and all liability for any amount paid to the Trustee or paid in accordance with the direction of the Trustee, as the case may be, or for any change made or action taken by such insurance company upon such direction and no such insurance company shall be obliged to see the distribution or further application of any monies paid by it. The certificate of the Trustee signed by one of its trust officers, assistant secretary, or other authorized representative thereof, may be received by any insurance company as conclusive evidence of any of the matters mentioned in the Plan and any insurance company shall be fully protected in taking or permitting any action on the faith thereof and shall incur no liability or responsibility for so doing. 14.7 DISTRIBUTION OF POLICIES. Upon a Participant's death, the Trustee, upon direction of the Plan Administrator, shall procure the payment of the proceeds of any policy held by the Participant in accordance with its terms and this Plan. The Trustee shall be required to pay over all the proceeds of any policy to the Participant's Designated Beneficiary in accordance with the distribution provisions of the Plan. A Participant's Spouse will be the Designated Beneficiary unless a Qualified Election has been made in accordance with section 9.4(c) of the Plan. Under no circumstances shall the Trust retain any part of the proceeds. Subject to the joint and survivor annuity requirements of ARTICLE 9, the policies shall be converted or distributed upon commencement of benefits in accordance with the provisions of this section. Upon a Participant's retirement at or after his Normal Retirement Age, unless there is a single sum distribution in which case any policy shall be distributed, any such policy shall be converted paid-up contract and delivered to the Participant but the Plan Administrator may, with the Participant's consent, direct that a portion or all of such cash value of the policy be converted to provide retirement income as permitted within the terms of the policy and this Plan. Upon a Participant's retirement due to Total and Permanent Disability, any such policy shall be held for his account and assigned or delivered to the Participant in addition to any other benefits provided by this Plan. Upon a Participant's termination of employment for reasons other than death, Total and Permanent Disability, or retirement as stated above, to the extent of life insurance 64 69 purchased by Employer Contributions, he shall be entitled to a vested interest in any policy held for his account as his interest is vested in the remainder of his Employer Contribution subaccounts (exclusive of any such policy). Whenever the Participant is entitled to one hundred percent (100%), then such policy shall be assigned and delivered to the Participant in accordance with its terms and the terms of the Plan. Whenever the Participant is entitled to vesting of less than one hundred percent(100%), then the Participant shall be entitled to a vested interest of the cash surrender value of any such policy equal to his percent of vested interest in his Employer Contribution subaccounts, exclusive of the policy, and one of the following distribution procedures shall apply: (a) If the nonvested portion of the cash surrender value of all policies held for the Participant's Account is less than the amount of his vested termination benefit exclusive of the policies, then, such policy shall be assigned to the Participant and the remainder of the Participant's vested interest in the Participant's Employer Contribution subaccounts shall be reduced by the cash surrender value of the nonvested portion of all policies, after which it shall be paid or distributed to the Participant in accordance with the terms of the Plan; or (b) If the nonvested portion of the cash surrender value of all policies held for the Participant's Account exceeds the Participant's vested interest in the Employer Contribution subaccount exclusive of such policies, the Participant shall be given the opportunity to purchase such policies by paying to the Trustee the amount of such excess within thirty (30) days after notice to him of the amount to be paid. Upon receipt of such payment said policy shall be assigned and delivered to the Participant to the full satisfaction of all termination benefits under this Plan. Any such policy not so purchased shall be surrendered by the Trustee for its cash value and the proceeds thereof deposited in the Trust for reallocation pursuant to ARTICLE 5. It is the intention hereof that the total termination benefit of a Participant whose interest is not fully vested shall be equal to the sum of the vested percentage of his Employer Contribution subaccounts exclusive of all such policies and the same percentage of the cash value of all such policies held for his Account. To the extent possible under the foregoing provisions, such total termination benefits shall be satisfied by the transfer and delivery to the Participant of one or more such policies with the balance, if any, to be paid in cash or in kind. 14.8 POLICY FEATURES. The Trustee shall arrange, where possible, that all policies purchased for the benefit of a Participant shall have the same dividend option which shall be on the premium reduction plan, and as nearly as may be possible all policies issued under the Plan shall have the same anniversary date. To the extent any dividends or credits earned on insurance policies are not applied toward the next premiums due, they shall be allocated to the Participant's Employer Contribution subaccount in the same manner as a Participant's directed investment. 14.9 CHANGED CONDITIONS. From time to time because of changed conditions, the Trustee, acting at the direction of the Plan Administrator upon the election of the Participant concerned, shall obtain an additional contract or policy or make such change in the contracts or policies maintained by the Trustee on the life of the Participant as may be required by such changed conditions, within the limits permitted by the insurance company which issued or is requested to issue a contract and the limits established by this Plan. 14.10 CONFLICTS. In the event of any conflict between the terms of the Plan and the provisions of any contract issued hereunder, the terms of the Plan shall control. ARTICLE 15 ADMINISTRATION 15.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF FIDUCIARY RESPONSIBILITY. A fiduciary of the Plan shall have only those specific powers, duties, responsibilities, and obligations as are explicitly given him under the Plan and Trust Agreement. In general, the Employer shall have the sole responsibility for making contributions to the Plan required under ARTICLE 4; appointing the Trustee and the Plan Administrator; and determining the funds available for investment under the Plan. The Plan Administrator shall have the sole responsibility for the administration of the Plan, as more fully described in section 15.2. It is intended that each fiduciary shall be responsible only for the proper exercise of his own powers duties, responsibilities, and obligations under the Plan and Trust Agreement, and shall not be responsible for any act or failure to act of another fiduciary. A fiduciary may serve in more than one fiduciary capacity with respect to the Plan. 15.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. (a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall have all powers necessary to administer the Plan, including the power to construe and interpret the Plan documents; to decide all questions relating to an individual's eligibility to participate in the Plan; to determine the amount, manner and timing of any distribution of benefits or withdrawal under the Plan; to approve and ensure the repayment of any loan to a Participant under the Plan; to resolve any claim for benefits in accordance with section 15.7; and to appoint or employ advisors, including legal counsel to render advice with respect to any of the Plan Administrator's responsibilities under the Plan. Any construction, interpretation, or application of the Plan by the Plan Administrator shall be final, conclusive, and binding. All actions by the Plan Administrator shall be taken pursuant to uniform standards applied to all persons similarly situated. The Plan Administrator shall have no power to add to, subtract from, or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. (b) RECORDS AND REPORTS. The Plan Administrator shall be responsible for maintaining sufficient records to reflect the Eligibility Computation Periods in which an Employee is credited with one or more Years of Service 65 70 for purposes of determining his eligibility to participate in the Plan, and the Compensation of each Participant for purposes of determining the amount of contributions that may be made by or on behalf of the Participant under the Plan. The Plan Administrator shall be responsible for submitting all required reports and notifications relating to the Plan to Participants or their Beneficiaries, the Internal Revenue Service and the Department of Labor. (c) Furnishing Trustee with Instructions. The Plan Administrator shall be responsible for furnishing the Trustee with written instructions regarding all contributions to the Trust, all distributions to Participants in accordance with ARTICLE 10 all withdrawals by Participants in accordance with ARTICLE 12, all loans to Participants in accordance with ARTICLE 13 and all purchases of life insurance in accordance with ARTICLE 14. In addition, the Plan Administrator shall be responsible for furnishing the Trustee with any further information respecting the Plan which the Trustee may request for the performance of its duties or for the purpose of making any returns to the Internal Revenue Service or Department of Labor as may be required of the Trustee. (d) Rules and Decisions. The Plan Administrator may adopt such rules as it deems necessary, desirable, or appropriate in the administration of the Plan. All rules and decisions of the Plan Administrator shall be applied uniformly and consistently to all Participants in similar circumstances. When making a determination or calculation, the Plan Administrator shall be entitled to rely upon information furnished by a Participant or Beneficiary, the Employer, the legal counsel of the Employer, or the Trustee. (e) Application and Forms for Benefits. The Plan Administrator may require a Participant or Beneficiary to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it. The Plan Administrator may rely upon all such information so furnished to it, including the Participant's or Beneficiary's current mailing address. (f) Facility of Payment. Whenever, in the Plan Administrator's opinion, a person entitled to receive a payment of a benefit or installment thereof is under a legal disability or is incapacitated in any way so as to be unable to manage his financial affairs, it may direct the Trustee to make payments to such person or to the legal representative or to a relative or friend of such person for that person's benefit, or it may direct the Trustee to apply the payment for the benefit of such person in such manner as it considers advisable. 15.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator may, by written instrument, allocate among its members or employees any of its duties and responsibilities not already allocated under the Plan or may designate persons other than members or employees to carry out any of the Plan Administrator's duties and responsibilities under the Plan. Any such duties or responsibilities thus allocated must be described in the written instrument. If a person other than an Employee of the Employer is so designated, such person must acknowledge in writing his acceptance of the duties and responsibilities allocated to him. 15.4 APPOINTMENT OF THE PLAN ADMINISTRATOR. The Employer shall designate in the Adoption Agreement the Plan Administrator who shall administer the Employer's Plan. Such Plan Administrator may consist of an individual, a committee of two or more individuals, whether or not, in either such case, the individual or any of such individuals are Employees of the Employer, a consulting firm or other independent agent, the Trustee (with its consent), or the Employer itself. The Plan Administrator shall be charged with the full power and the responsibility for administering the Plan in all its details. If no Plan Administrator has been appointed by the Employer, or if the person designated as Plan Administrator by the Employer is not serving as such for any reason, the Employer shall be deemed to be the Plan Administrator of the Plan. The Plan Administrator may be removed by the Employer, or may resign by giving notice in writing to the Employer, and in the event of the removal, resignation, or death, or other termination of service by the Plan Administrator, the Employer shall, as soon as practicable, appoint a successor Plan Administrator, such successor thereafter to have all of the rights, privileges, duties, and obligations of the predecessor Plan Administrator. 15.5 EXPENSES. The Employer shall pay all expenses authorized and incurred by the Plan Administrator in the administration of the Plan except to the extent such expenses are paid from the Trust. 15.6 LIABILITIES. The Plan Administrator and each person to whom duties and responsibilities have been allocated pursuant to section 15.3 may be indemnified and held harmless by the Employer with respect to any alleged breach of responsibilities performed or to be performed hereunder. The Employer and each Affiliated Employer shall indemnify and hold harmless the Sponsor against all claims, liabilities, fines, and penalties, and all expenses reasonably incurred by or imposed upon him (including, but not limited to, reasonable attorney's fees) which arise as a result of actions or failure to act in connection with the operation and administration of the Plan. 15.7 CLAIMS PROCEDURE. (a) Filing a Claim. Any Participant or Beneficiary under the Plan may file a written claim for a Plan benefit with the Plan Administrator or with a person named by the Plan Administrator to receive claims under the Plan. (b) Notice of Denial of Claim. In the event of a denial or limitation of any benefit or payment due to or requested by any Participant or Beneficiary under the Plan ("claimant"), claimant shall be given a written notification containing specific reasons for the denial or limitation of his benefit. The written notification shall contain specific reference to the pertinent Plan provisions on which the denial or limitation of his benefit is based. In addition, it shall contain a description of any other material or information necessary for the claimant to perfect a claim, and an explanation of why such material or information is necessary. The notification shall further provide appropriate information as to the steps to be taken if the claimant wishes to submit his claim for review. This written notification shall be given to a claimant within ninety (90) 66 71 days after receipt of his claim by the Plan Administrator unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of said ninety (90) day period, and such notice shall indicate the special circumstances which make the postponement appropriate. (c) Right of Review. In the event of a denial or limitation of his benefit, the claimant or his duly authorized representative shall be permitted to review pertinent documents and to submit to the Plan Administrator issues and comments in writing. In addition, the claimant or his duly authorized representative may make a written request for a full and fair review of his claim and its denial by the Plan Administrator; provided, however, that such written request must be received by the Plan Administrator (or its delegate to receive such requests) within sixty (60) days after receipt by the claimant of written notification of the denial or limitation of the claim. The sixty (60) day requirement may be waived by the Plan Administrator in appropriate cases. (d) Decision on Review. A decision shall be rendered by the Plan Administrator within sixty (60) days after the receipt of the request for review, provided that where special circumstances require an extension of time for processing the decision, it may be postponed on written notice to the claimant (prior to the expiration of the initial sixty (60) day period) for an additional sixty (60) days, but in no event shall the decision by rendered more than one hundred twenty (120) days after the receipt of such request for review. Any decision by the Plan Administrator shall be furnished to the claimant in writing and shall set forth the specific reasons for the decision and the specific Plan provisions on which the decision is based. (e) Court Action. No Participant or Beneficiary shall have the right to seek judicial review of a denial of benefits, or to bring any action in any court to enforce a claim for benefits prior to filing a claim for benefits or exhausting his rights to review under this section. ARTICLE 16 AMENDMENT, TERMINATION AND MERGER 16.1 SPONSOR'S POWER TO AMEND. The Sponsor may amend any part of the Plan. For purposes of Sponsor's amendments, the mass submitted shall be recognized as the agent of the Sponsor. If the Sponsor does not adopt the amendments made by the mass submitted, it will no longer be identical to or a minor modifier of the mass submitted plan. 16.2 AMENDMENT BY ADOPTING EMPLOYER. (a) The Employer may: (i) change the choice of options in the Adoption Agreement; (ii) add overriding language in the Adoption Agreement when such language is necessary to satisfy section 415 or section 416 of the Code because of the required aggregation of multiple plans; and (iii) add certain model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed. (b) An Employer that amends the Plan for any other reason, including a waiver of the minimum funding requirement under section 412(d) of the Code, will no longer participate in this prototype plan and will be considered to have an individually designed plan. 16.3 VESTING UPON PLAN TERMINATION. In the event of the termination or partial termination of the Plan, the Account balance of each affected Participant will be nonforfeitable. 16.4 VESTING UPON COMPLETE DISCONTINUANCE OF CONTRIBUTIONS. In the event of a complete discontinuance of contributions under the Plan, the Account balance of each affected Participant will be nonforfeitable. 16.5 MAINTENANCE OF BENEFITS UPON MERGER. In the event of a merger or consolidation with, or transfer of assets to any other plan, each Participant will receive a benefit immediately after such merger, consolidation or transfer (if the Plan then terminated) which is at least equal to the benefit the Participant was entitled to immediately before such merger, consolidation or transfer (if the Plan had been terminated). 16.6 SPECIAL AMENDMENTS. The Employer may from time to time make any amendment to the Plan that may be necessary to satisfy section 415 or 416 of the Code. Any such amendment will be adopted by the Employer by completing overriding Plan language in the Adoption Agreement. In the event of such an agreement, the Employer must obtain a separate determination letter from the Internal Revenue Service to continue reliance on the Plan's qualified status. ARTICLE 17 MISCELLANEOUS 17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES. (a) All assets of the Trust shall be retained for the exclusive benefit of Participants and their Beneficiaries, and shall be used only to pay benefits to such persons or to pay the fees and expenses of the Trust. The assets of the Trust shall not revert to the benefit of the Employer, except as otherwise specifically provided in section 17.1(b). (b) To the extent permitted or required by ERISA and the Code, contributions to the Trust under this Plan are subject to the following conditions: (i) If a contribution or any part thereof is made to the Trust by the Employer under a mistake of fact, such contribution or part thereof shall be returned to the Employer within one (1) year after the date the contribution is made. 67 72 (ii) In the event the Plan is determined not to meet the initial qualification requirements of section 401 of the Code, contributions made in respect of any period for which such requirements are not met shall be returned to the Employer within one (1) year after the Plan is determined not to meet such requirements, but only if the application for the qualification is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. (iii) Contributions to the Trust are specifically conditioned on their deductibility under the Code and, to the extent a deduction is disallowed for any such contribution, such amount shall be returned to the Employer within one (1) year after the date of the disallowance of the deduction. 17.2 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee, or as a right of any Employee to be continued in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with or without cause. 17.3 RIGHTS TO TRUST ASSETS. No Employee, Participant, or Beneficiary shall have any right to, or interest in, any assets of the Trust upon termination of employment or otherwise, except as provided under the Plan. All payments of benefits under the Plan shall be made solely out of the assets of the Trust. 17.4 NONALIENATION OF BENEFITS. No benefit or interest available hereunder will be subject to assignment or alienation, either voluntarily or involuntarily. The preceding sentence shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order, as defined in section 414(p) of the Code, or any domestic relations order entered before January 1, 1985. 17.5 AGGREGATION RULES. (a) Except as provided in ARTICLE 6, all Employees of the Employer or any Affiliated Employer will be treated as employed by a single employer. (b) If this Plan provides contributions or benefits for one or more Owner-Employees who control both the business for which this Plan is established and one or more other trades or businesses, this Plan and the plan established for other trades or businesses must, when looked at as a single plan, satisfy sections 401(a) and (d) of the Code for the Employees of this and all other trades or businesses. (c) If the Plan provides contributions or benefits for one or more Owner-Employees who control one or more other trades or businesses, the employees of the other trades or businesses must be included in a plan which satisfies sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than provided for Owner-Employees under this Plan. (d) If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which are not controlled and the individual controls a trade or business, then the contributions or benefits of the employees under the plan of the trades or businesses which are controlled must be as favorable as those provided for him under the most favorable plan of the trade or business which is not controlled. (e) For purposes of paragraphs (b), (c) and (d), an Owner-Employee, or two or more Owner-Employees, will be considered to control a trade or business if the Owner-Employee, or two or more Owner-Employees together: (i) own the entire interest in an unincorporated trade or business; or (ii) in the case of a partnership, own more than fifty percent (50%) of either the capital interest or the profits interest in the partnership. For purposes of the preceding sentence, an Owner-Employee, or two or more Owner-Employees shall be treated as owning an interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee, or such two or more Owner-Employees, are considered to control within the meaning of the preceding sentence. 17.6 FAILURE OF QUALIFICATION. If the Employer's plan fails to attain or retain qualification, such plan will no longer participate in this master/prototype plan and will be considered an individually designed plan. 17.7 APPLICABLE LAW. Except to the extent otherwise required by ERISA, as amended, this Plan shall be construed and enforced in accordance with the laws of the state in which the Employer's principal place of business is located, as specified in the Adoption Agreement. 68 73 DETERMINATION LETTERS 69 74 INTERNAL REVENUE SERVICE Department of the Treasury Description: Prototype Standardized Profit Sharing Plan 50241605001 Case: 9012605 EIN: 74-1894784 01 Plan: 001 Letter Serial No: D248294a Washington D.C. 20224 Person to Contact: Ms. Arrington AIM DISTRIBUTORS, INC. Telephone Number: (202) 566-4576 ELEVEN GREENWAY PLAZA Refer Reply to: E:EP:Q:ICU SUITE 1919 HOUSTON, TX 77046 Date: 07/10/90
Dear Applicant: In our opinion, the form of the plan identified above is acceptable under section 401 of the Internal Revenue Code for use by employers for the benefit of their employees. This opinion relates only to the acceptability of the form of the plan under the Internal Revenue Code. It is not an opinion of the effect of other Federal or local statutes. You must furnish a copy of this letter to each employer who adopts this plan. You are also required to send a copy of the approved form of the plan, any approved amendments and related documents to each Key District Director of Internal Revenue Service in whose jurisdiction there are adopting employers. Our opinion on the acceptability of the form of the plan is not a ruling or determination as to whether an employer's plan qualifies under Code section 401(a). An employer who adopts this plan will be considered to have a plan qualified under Code section 401(a) provided all the terms of the plan are followed, and the eligibility requirements and contribution or benefit provisions are not more favorable for officers, owners, or highly compensated employees than for other employees. Except as stated below, the Key District Director will not issue a determination letter with regard to this plan. Our opinion does not apply to the form of the plan for purposes of Code section 401(a)(16) if: (1) an employer ever maintained another qualified plan for one or more employees who are covered by this plan, other than a specified paired plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or (2) after December 31, 1985, the employer maintains a welfare benefit fund defined in Code section 419(e), which provides postretirement medical benefits allocated to separate accounts for key employees as defined in Code section 419A(d)(3). In such situations, the employer should request a determination as to whether the plan, considered with all related qualified plans and, if appropriate, welfare benefit funds, satisfies the requirements of Code section 401(a)(16) as to limitations on benefits and contributions in Code section 415. The plan identified above is not a replacement plan as defined in section 3.10 of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not rely on this opinion letter to extend the remedial amendment period under section 401(b) of the Code and regulations thereunder. If you, the plan sponsor, have any questions concerning the IRS processing of this case, please call the above telephone number. This number is only for use of the plan sponsor. Individual participants and/or adopting employers with questions concerning the plan should contact the plan sponsor. The plan's adoption agreement must include the sponsor's address and telephone number for inquiries by adopting employers. If you write to the IRS regarding this plan, please provide your telephone number and the most convenient time for us to call in case we need more information. Whether you call or write, please refer to the Letter Serial Number and File Folder Number shown in the heading of this letter. You should keep this letter as a permanent record. Please notify us if you modify or discontinue sponsorship of the plan. Sincerely yours, /s/ [ILLEGIBLE] Chief, Employee Plans Qualifications Branch 75 Internal Revenue Service Department of the Treasury Plan Description: Prototype Standardized Money Purchase Pension Plan M: 50241605001-002 Case: 9812606 EIN: 74-1894784 BPD: 01 Plan: 802 Letter Serial No: D248295a Washington DC 20224 Person to Contact: Ms. Arrington AIM DISTRIBUTORS INC Telephone Number: (202) 566-4576 ELEVEN GREENWAY PLAZA SUITE 1919 Refer Reply to: E:EP:Q:ICU HOUSTON, TX 77046 Date: 07/10/90
Dear Applicant: In our opinion, the form of the plan identified above is acceptable under section 401 of the Internal Revenue Code for use by employers for the benefit of their employees. This opinion relates only to the acceptability of the form of the plan under the Internal Revenue Code. It is not an opinion of the effect of other Federal or local statutes. You must furnish a copy of this letter to each employer who adopts this plan. You are also required to send a copy of the approved form of the plan, any approved amendments and related documents to each Key District Director of Internal Revenue Service in whose jurisdiction there are adopting employers. Our opinion on the acceptability of the form of the plan is not a ruling or determination as to whether an employer's plan qualifies under Code section 401(a). An employer who adopts this plan will be considered to have a plan qualified under Code section 401(a) provided all the terms of the plan are followed, and the eligibility requirements and contribution or benefit provisions are not more favorable for officers, owners, or highly compensated employees than for other employees. Except as stated below, the Key District Director will not issue a determination letter with regard to this plan. Our opinion does not apply to the form of the plan for purposes of Code section 401(a)(16). If: (1) an employer ever maintained another qualified plan for one or more employees who are covered by this plan, other than a specified paired plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or (2) after December 31, 1985, the employer maintains a welfare benefit fund defined in Code section 419(e), which provides postretirement medical benefits allocated to separate accounts for key employees as defined in Code section 419A(d)(3). In such situations, the employer should request a determination as to whether the plan, considered with all related qualified plans and, if appropriate, welfare benefit funds, satisfies the requirements of Code section 401(a)(16) as to limitations on benefits and contributions in Code section 415. The plan identified above is not a replacement plan as defined in section 3.10 of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not rely on this opinion letter to extend the remedial amendment period under section 401(b) of the Code and regulations thereunder. If you, the plan sponsor, have any questions concerning the IRS processing of this case, please call the above telephone number. This number is only for use of the plan sponsor. Individual participants and/or adopting employers with questions concerning the plan should contact the plan sponsor. The plan's adoption agreement must include the sponsor's address and telephone number for inquiries by adopting employers. If you write to the IRS regarding this plan, please provide your telephone number and the most convenient time for us to call in case we need more information. Whether you call or write, please refer to the Letter Serial Number and File Folder Number shown in the heading of this letter. You should keep this letter as a permanent record. Please notify us if you modify or discontinue sponsorship of this plan. Sincerely yours, /s/ [ILLEGIBLE] Chief, Employee Plans Qualifications Branch 76 TRUST AGREEMENT 70 77 PROTOTYPE DEFINED CONTRIBUTION TRUST 71 78 INVESTMENT COMPANY INSTITUTE PROTOTYPE DEFINED CONTRIBUTION TRUST TABLE OF CONTENTS ARTICLE PAGE - ------- ---- ARTICLE I ACCOUNTS 1.1 Establishing Accounts 4 1.2 Charges Against Accounts 4 1.3 Prospectus to be Provided 4 ARTICLE II RECEIPT OF CONTRIBUTIONS 4 ARTICLE III INVESTMENT POWERS OF THE TRUSTEE 3.1 Investment of Account Assets 4 3.2 Directed Investments 5 3.3 General Investment Powers 5 3.4 Investment in Combined Funds 5 3.5 Other Powers of the Trustee 6 3.6 General Powers 6 3.7 Valuation of Trust 6 3.8 Bonding 6 3.9 Duties not Assigned 6 ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT 6 ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR 7 ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST 7 ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR 7.1 Information and Data to be Furnished 7 the Trustee 7.2 Limitation of Duties 7 ARTICLE VIII LIABILITY OF THE TRUST 8.1 Trustee's Liability 7 ARTICLE IX DELEGATION OF POWERS 9.1 Delegation by the Trustee 8 9.2 Delegation with Employer Approval 8 ARTICLE X AMENDMENT 8 ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE 8 ARTICLE XII TERMINATION OF THE TRUST 12.1 Term of the Trust 9 12.2 Termination by the Trustee 9 72 79 ARTICLE XIII MISCELLANEOUS 13.1 No Diversion of Assets 9 13.2 Notices 9 13.3 Multiple Trustees 9 13.4 Conflict with Plan 9 13.5 Applicable Law 9 13.6 Returned Contributions 9 13.7 General Undertaking 9 13.8 Invalidity of Certain Provisions 9 13.9 Counterpart Originals 9 73 80 TRUST AGREEMENT The employer identified at the end of this Trust Agreement (the "Employer") has established a prototype Money Purchase Pension and/ or Profit Sharing Plan sponsored by the AIM Family of Funds (the "Plan") for the benefit of Participants therein pursuant to section 401 of the Internal Revenue Code of 1986. As part of the Plan, the Employer has requested such person or persons (individual, corporate, or other entity), as may be designated in the Adoption Agreement, to serve as Trustee pursuant to the Trust established for the investment of contributions under the Plan upon the terms and conditions set forth in this Trust Agreement. Unless the context of this Trust Agreement clearly indicates otherwise, the terms defined in ARTICLE 2 of the Plan entered into by the Employer, of which this Trust Agreement forms a part, shall, when used herein, have the same meaning as in the Plan. ARTICLE I ACCOUNTS 1.1 ESTABLISHING ACCOUNTS. The Trustee shall open and maintain a Trust account for the Plan and, as part thereof, Participants' Accounts for such individuals as the Plan Administrator shall, from time to time, give written notice to the Trustee as being Participants in the Plan. The Trustee shall also open and maintain such other subaccounts as may be appropriate or desirable to aid in the administration of the Plan. Separate subaccounts shall be maintained for each Participant and shall be credited with the contributions made by the Employer and with forfeitures allocated to each such Participant pursuant to the Plan (and all earnings thereon). If nondeductible voluntary contributions by Participants are permitted by the Plan, the Trustee shall open and maintain as a part of the Trust a separate subaccount for each Participant who makes such nondeductible voluntary contributions, each such subaccount to be credited with the Participant's voluntary contributions (and all earnings attributable to such contributions). If trustee transfers or rollover contributions from another qualified plan are received, the Trustee shall open and maintain a separate rollover subaccount for each Participant, each such subaccount to be credited with the Participant's trustee transfers or rollover contributions (and all earnings attributable to such contributions). 1.2 CHARGES AGAINST ACCOUNTS. Upon receipt of written instructions from the Plan Administrator, the Trustee shall charge the appropriate subaccount of the Participant for any withdrawals or distributions made under the Plan and any forfeiture, which may be required under the Plan, of unvested interests attributable to Employer Contributions. The Plan Administrator will give written instructions to the Trustee specifying the manner in which Employer Contributions and any forfeiture of the nonvested portion of Accounts, as allocated by the Plan Administrator in accordance with the provisions of the Plan, are to be credited to the various Accounts maintained for Participants. 1.3 PROSPECTUS TO BE PROVIDED. The Plan Administrator shall ensure that a Participant who makes a nondeductible voluntary contribution has previously received or receives a copy of the then current prospectus relating to the Shares. Delivery of such a nondeductible voluntary contribution, pursuant to the provisions of the Plan by the Plan Administrator to the Trustee shall entitle the Trustee to assume that the Participant has received such a prospectus. ARTICLE II RECEIPT OF CONTRIBUTIONS The Trustee shall accept and hold in the Trust contributions made by the Employer and Participants under the Plan. The Plan Administrator shall give written instructions to the Trustee specifying the Participants' Accounts to which contributions are to be credited, the amount of each such credit which is attributable to Employer Contributions, and the amount, if any, which is attributable to the Participant's nondeductible voluntary contributions. If written instructions are not received by the Trustee, or is such instructions are received but are deemed by the Trustee to be unclear, upon notice to the Employer and Plan Administrator, the Trustee may elect to hold all or part of any such contribution in cash, without liability for rising security prices or distributions made, pending receipt by it from the Plan Administrator of written instructions or other clarification, or the Trustee may return the contribution to the Employer. If any contributions or earnings are less than any minimum which the then current prospectus for the Shares requires, the Trustee may hold the specified portion of contributions or earnings in cash, without interest, until such time as the proper amount has been contributed or earned so that the investment in the Shares required under the Plan may be made. All payments to the Trust shall be remitted in U.S. currency or other property to the Trustee at the address specified by it. Any payments not in U.S. currency may, in the sole discretion of the Trustee, be refused. ARTICLE III INVESTMENT POWERS OF THE TRUSTEE 3.1 INVESTMENT OF ACCOUNT ASSETS. The Trustee shall invest the amount of each contribution made hereunder and all earnings on the Trust in full and fractional Shares in accordance with the current prospectus for such Shares, in such amounts and proportions as shall from time to time be designated by the Plan Administrator on forms provided by the Sponsor, and shall credit such Shares to the Accounts of each Participant on whose behalf or by whom the contributions are made and any forfeitures are allocated. All dividends and capital gain distributions received on the Shares held by the Trustee in each Account, shall, if received in cash, be reinvested in such Shares in accordance with the current prospectus for such Shares and shall in any event be credited to such Account. If any distribution on Shares may be received at the election of the shareholder in additional Shares, the Trustee shall so elect. The Trustee 74 81 shall deliver, or cause to be executed and delivered, to the Plan Administrator, all notices, prospectuses, financial statements, proxies, and proxy soliciting materials relating to Shares held hereunder. The Trustee shall not vote any of the Shares held hereunder, except in accordance with the written instructions of the Plan Administrator. If no such written instructions are received, such Shares shall not be voted. The obligations of the Trustee hereunder may be delegated by it as provided in Sections 9.1 and 9.2. The Trustee shall sell Shares and purchase Shares to accomplish any change in investments desired by the Employer as indicated on any amended Adoption Agreement or other instructions in accordance with the terms of the Plan. Notwithstanding the above, if periodic payments are being made to a Participant pursuant to ARTICLE IV hereof, any dividends received on Shares held in such Participant's Account, which dividends are invested at an offering price which includes a sales charge, need not be invested in additional Shares but may be held for distribution to the Participant in periodic payments. In such instances, the Trustee may make any election necessary to receive any such dividends in cash. 3.2 DIRECTED INVESTMENTS. When so instructed by the Plan Administrator, the Trustee shall invest all or any portion of the individual Account of any Participant in accordance with the direction of the Employer or such Participant in lieu of participation in the general assets of the Trust. Such directed investments shall be accounted for separately for each Participant. Except as otherwise provided herein, the Trustee shall not have any discretion, and is specifically prohibited from exercising any control or discretion, with respect to such directed investments. Each Participant who directs the investment of his Account shall be solely and absolutely responsible for the investment or reinvestment of all directed investment assets held on is behalf in Trust, and, except as otherwise provided herein, the Trustee shall not question any such direction, review any securities or other such assets, or make suggestions with respect to the investment, retention or disposition of any such assets; provided that: (a) If any contributions are transmitted to otherwise received or held as directed investment assets without investment directions from the Participant, the Trustee shall retain such amounts in a noninterest-bearing savings account in a federally insured institution for the benefit of the Participant. (b) The Trustee may establish such reasonable rules and regulations, applied on a uniform basis to all Participants, with respect to the requirements for, and the form and manner of, effectuating any transaction with respect to directed investment assets including, without limitation, minimum amounts, rules applicable to conversion of directed investments into general assets of the Trust, and appropriate adjustments (based on fair market values) to Accounts to reflect any such conversion, as the Trustee shall determine to be consistent with the purposes of the Plan. Any such rules and regulations shall be binding upon all persons interested in the Trust. (c) The Trustee may establish a procedure for the periodic review of directed investment assets to determine, in light of the facts and circumstances reasonably known to it, whether any actual or proposed investment of such assets constitutes or would constitute a prohibited transaction as that term is defined in sections 406-408 of ERISA and the corresponding provisions of the Code. If the Trustee determines that any investment constitutes or would constitute a prohibited transaction, the Trustee shall promptly communicate this determination to the Plan Administrator, and shall recommend that the investment be prevented or disposed of, as the case may be, and may recommend any other action authorized or required by law, to prevent or remedy the transaction. (d) In accordance with and pursuant to uniform and nondiscriminatory rules established under and in accordance with the Plan, the Trustee may deny the Plan Administrator's application to allow a directed investment proposed by a Participant. (e) Notwithstanding anything herein to the contrary, in no event shall the Trustee engage in any transaction that would be prohibited under ERISA. 3.3 GENERAL INVESTMENT POWERS. Subject to any investment limitations or minimum requirements for investments in Shares imposed by the Sponsor, and subject to investment instructions given by the Plan Administrator, the Trustee shall be authorized and empowered to invest and reinvest all or any part of the Trust in any property, real or personal or mixed, including, but not being limited to, capital or common stock (whether voting or nonvoting or whether or not currently paying a dividend), preferred or preference stock (whether voting or nonvoting or whether or not paying a dividend), Shares of regulated investment companies, convertible securities, corporate and governmental obligations, leaseholds, ground rents, mortgages, and other interests in realty, trust, and participation certificates, oil, mineral or gas properties, royalty interests or rights, including equipment pertaining thereto, notes and other evidences of indebtedness or ownership, secured or unsecured, contracts, choses in action, and warrants, and other instruments entitling the owner thereof to subscribe to or purchase any of the aforesaid. Subject to any investment limitations or requirements imposed by the Sponsor relating to the type of permissible investments in the Trust or the minimum percentage of Trust assets to be invested in Shares, and subject to the provisions of ARTICLE VIII hereof, in making and retaining such investments and reinvestments pursuant hereto, the Trustee shall not be bound as to the character of any investments by any statute, rule of court, or custom governing the investment of Trust funds. 3.4 INVESTMENT IN COMBINED FUNDS. If the Trustee is a banking institution, subject to any investment limitations or minimum requirements for investment in Shares imposed by the Sponsor, and subject to investment instructions given by the Plan Administrator, it may, subject to the election of the Sponsor or the Employer, cause funds 75 82 of this Trust to be invested in its commingled funds for qualified employee benefit plan trusts and such commingled funds are hereby adopted and made a part of the Plan of which this Trust is a part, and any funds of this Trust invested in any such commingled funds shall be subject to all the provisions thereof, as the same may be amended from time to time. 3.5 OTHER POWERS OF THE TRUSTEE. The Trustee is authorized and empowered with respect to the Trust: (a) Subject to any investment limitations or minimum requirements for investment in Shares imposed by the Sponsor, and subject to investment instructions given by the Plan Administrator, to sell, exchange, convey, transfer, or otherwise dispose of, either at public or private sale, any property, real or personal or mixed, at any time held by it, for such consideration and on such terms and conditions as to credit or otherwise as the Trustee may deem best. (b) Subject to the provisions of section 3.1, to vote in person or by proxy any stocks, bonds, or other securities held by it; to exercise any options appurtenant to any stocks, bonds, or other securities, or to exercise any rights to subscribe for additional stocks, bonds, or other securities, and to make any and all necessary payments therefor, to join in, or to dissent from, and to oppose, the reorganizations, consolidation, liquidation, sale, or merger of corporations, or properties in which if may be interested as Trustee, upon such terms and conditions as it may deem wise. (c) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted. (d) To register any investment held in the Trust in the name of the Trust or in the name of a nominee, and to hold any investment in bearer form, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust. (e) To employ suitable agents and counsel (who may also be agents and/or counsel for the Employer or the Sponsor) and to pay their reasonable expenses and compensation. (f) To borrow or raise monies for the purpose of the Trust from any source and, for any sum so borrowed to issue its promissory note as Trustee and to secure the repayment thereof by pledging all or any part of the Trust fund, but nothing herein contained shall obligate the Trustee to render itself liable individually for the amount of any such borrowing; and no person loaning money to the Trustee shall be bound to see the application of money loaned or to inquire into the validity or propriety of any such borrowing. Each and all of the foregoing powers may be exercised without a court order or approval. No one dealing with the Trustee need inquire concerning the validity or propriety of anything that is done or need see to the application of any money paid or property transferred to or upon the order of the Trustee. 3.6 GENERAL POWERS. The Trustee shall have all of the powers necessary or desirable to do all acts, take all such proceedings, and exercise all such rights and privileges, whether or not expressly authorized herein, which it may deem necessary or proper for the administration and protection of the property of the Trust and to accomplish any action provided for in the Plan. 3.7 VALUATION OF TRUST. The Trustee, as of the Valuation Date, and at such other time or times as it determines, shall determine the net worth of the assets of the Trust. In determining such net worth, the assets of the Trust shall be evaluated at their fair market value and all expenses shall be deducted. The Trustee may adopt such methods of valuation as it deems advisable. 3.8 BONDING. Except to the extent otherwise required by law, the Trustee shall not be required to obtain any bonds in connection with its duties hereunder. The cost of any bond obtained may be charged as an expense of the Trust, but if not so charged, shall be paid by the Employer. 3.9 DUTIES NOT ASSIGNED. The duties of the Trustee with respect to the Plan are limited to those assumed by the Trustee by the terms of this Trust. The Trustee shall not be deemed, by virtue hereof, to be the administrator or sponsor of the Plan, and shall not be responsible for filing reports, returns or disclosures with any government agency except as may otherwise be required by its duties as Trustee under applicable law. ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT Distributions from the Trust shall be made by the Trustee in accordance with proper written directions of the Plan Administrator in accordance with the provisions of section 15.2 of the Plan, and the Plan Administrator shall have the sole responsibility for determining that the directions given conform to provisions of the Plan and applicable law, including (without limitation) responsibility for calculating the vested interests of the Participant, for calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the Plan, and for determining the proper person to whom benefits are payable under the Plan. Except to the extent otherwise provided in the Plan, the interest of Participants and Beneficiaries in the Trust and in the net earnings and profits thereof may not be assigned or used by a Participant or Beneficiary as collateral for a loan and shall not be subject to garnishment, attachment, levy or execution of any kind for the debts or defaults of the Trustee or of any person, natural or legal, having interest in the Trust. 76 83 ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR The Trustee shall keep accurate and detailed records of all receipts, investments, disbursements, and other transactions required to be performed hereunder with respect to the Trust. The Trustee shall file with the Plan Administrator a written report or reports reflecting the receipts, disbursements, and other transactions effected by it with respect to the Trust during such Plan Year and the assets and liabilities of the Trust at the close of the Plan Year. Such report or reports shall be open to inspection by any Participant for a period of one hundred eighty (180) days immediately following the date on which it is filed with the Plan Administrator. Except as otherwise prescribed by ERISA, upon the expiration of such one hundred eighty (180) day period, the Trustee shall be forever released and discharged from all liability and accountability to anyone with respect to its acts, transactions, duties, obligations, or responsibilities as shown in or reflected by such report, except with respect to any such acts or transactions as to which the Plan Administrator shall have filed written objections with the Trustee within such one hundred eighty (180) day period, and except for willful misconduct or lack of good faith on the part of the Trustee. ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by it from time to time. The Trustee shall furnish the Employer with its current schedule of fees and shall give written notice to the Employer whenever its fees are changed or revised. Such fees, any taxes of any kind whatsoever which may be levied or assessed upon or in respect of the Trust, to the extent incurred by the Trustee and any and all reasonable expenses incurred by the Trustee in the performance of its duties, including fees for legal services rendered to the Trustee, shall, unless paid by the Employer, be paid from the Trust in the manner provided in the Plan. Unless paid by the Employer, all fees of the Trustee and taxes and other expenses charged to a Participant's Account may be collected by the Trustee from the amount of any contribution to be credited or distribution to be charged to such Account or may be paid by redeeming or selling assets credited to such Account. ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR 7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE. In addition to making the contributions called for in ARTICLE II hereof, the Employer, through the Plan Administrator, agrees to furnish the Trustee with such information and data relative to the Plan as is necessary for the proper administration of the Trust established hereunder. 7.2 LIMITATION OF DUTIES. Neither the Employer nor any of its officers, directors, or partners, nor the Plan Administrator shall have any duties or obligations with respect to this Trust Agreement, except those expressly set forth herein and in the Plan. ARTICLE VIII LIABILITY OF THE TRUST 8.1 TRUSTEE'S LIABILITY (a) The Employer shall indemnify and save the Trustee (including its affiliates, representatives and agents) harmless from and against any liability, cost or other expense, including, but not limited to, the payment of attorneys' fees that the Trustee may incur in connection with this Trust Agreement or the Plan unless such liability, cost or other expense (whether direct or indirect) arises from the Trustee's own willful misconduct or gross negligence. The Employer recognizes that a burden of litigation may be imposed upon the Trustee as a result of some act or transaction for which it has no responsibility or over which it has no control under this Trust Agreement. Therefore, the Employer agrees to indemnify and hold harmless and, if requested, defend the Trustee (including its affiliates, representatives and agents) from any expenses (including counsel fees, liabilities, claims, damages, actions, suits or other charges) incurred by the Trustee in prosecuting or defending against any such litigation. (b) The Trustee shall not be liable for, and the Employer will indemnify and hold harmless the Trustee (including its affiliates, representatives and agents) from and against all liability or expense (including counsel fees) because of (i) any investment action taken or omitted by the Trustee in accordance with any direction of the Employer or a Participant, or investment inaction in the absence of directions from the Employer or a Participant or (ii) any investment action taken by the Trustee pursuant to an order to purchase or sell securities placed by the Employer or a Participant directly with a broker, dealer or issuer. It is understood that although, when the Trustee is subject to the direction of the Employer or a Participant the Trustee will perform certain ministerial duties with respect to the portion of the Fund subject to such direction (the "Directed Fund"), such duties do not involve the exercise of any discretionary authority or other authority to manage and control assets of the Directed Fund and will be performed in the normal course of business by officers and employees of the Trustee or its affiliates, representatives or agents who may be unfamiliar with investment management. It is agreed that the Trustee is not undertaking any duty or obligation, express or implied, to review, and will not be deemed to have any knowledge of or responsibility with respect to, any transaction involving the investment of the Directed Fund as a result of the performance of its ministerial duties. Therefore, in the event that "knowledge" of the Trustee shall be a prerequisite to imposing a duty upon or determining liability of the Trustee under the Plan or this Trust or any law or regulation regulating the conduct of the Trustee with 77 84 respect to the Directed Fund, as a result of any act or omission of the Employer or any Participant, or as a result of any transaction engaged in by any of them, then the receipt and processing of investment orders and other documents relating to Plan assets by an officer or other employee of the Trustee or its affiliates, representatives or agents engaged in the performance of purely ministerial functions shall not constitutes "knowledge" of the Trustee. (c) Notwithstanding the foregoing provisions of this Trust Agreement, the Trustee shall discharge its duties hereunder with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Any investment selected by the Trustee without specific direction from the Employer shall be selected to diversify the investments of the Trust fund so as to minimize the risk of large losses, unless in the circumstances it is clearly prudent not to do so. The Trustee shall perform its duties in accordance with this Trust Agreement insofar as this Trust Agreement is consistent with the provisions of ERISA. To the extent not prohibited by ERISA, the Trustee shall not be responsible in any way for any action or omission of the Employer or the Plan Administrator with respect to the performance of their duties and obligations set forth in the Plan. To the extent not prohibited by ERISA, the Trustee shall not be responsible for any action or omission of any of its agents, or with respect to reliance upon advice of its counsel (whether or not such counsel is also counsel to the Employer or to the Plan Administrator), provided that such agents or counsel were prudently chosen by the Trustee and that the Trustee relied in good faith upon the action of such agent or the advice of such counsel. The Trustee shall be indemnified and held harmless by the Employer against liability or losses occurring by reason of any act or omission of the Trustee under this Trust Agreement, unless such act or omission is due to its own willful nonfeasance, malfeasance, or misfeasance or other breach of duty under ERISA, to the extent that such indemnification does not violate ERISA or any other federal or state laws. ARTICLE IX DELEGATION OF POWERS 9.1 DELEGATION BY THE TRUSTEE. With respect to Shares held by the Plan, the Trustee hereby delegates to the custodian or other agent designated by the Sponsor the functions designated in (a) through (d) hereunder, other than the investment, management or control of the Trust assets. With respect to assets other than Shares, the Trustee may delegate in writing pursuant to a procedure permitted and established by the Sponsor, to a person (individual, corporate, or other entity) designated by the Sponsor as an agent or custodian, any of the powers or functions of the Trustee hereunder other than the investment, management or control of the Trust assets, including (without limitation): (a) custodianship of all or any part of the assets of the Trust; (b) maintaining and accounting for the Trust and for Participants and other Accounts as a part thereof; (c) distribution of benefits as directed by the Plan Administrator; and (d) Preparation of the annual report on the status of the Trust. The agent or custodian so appointed may act as agent for the Trustee, without investment responsibility, for fees to be mutually agreed upon by the Employer and the agent or custodian and paid in the same manner as Trustee's fees. The Trustee shall not be responsible for any act or omission of the agent or custodian arising from any such delegation, except to the extent provided in ARTICLE VIII. 9.2 DELEGATION WITH EMPLOYER APPROVAL. The Trustee (whether or not a bank or trust company) and the Employer may, by mutual agreement, arrange for the delegation by the Trustee to the Plan Administrator or any agent of the Employer of any powers of functions of the Trustee hereunder other than the investment and custody of the Trust assets. The Trustee shall not be responsible for any act or omission of such person or persons arising from any such delegation, except to the extent provided in ARTICLE VIII. ARTICLE X AMENDMENT As provided in section 16.1 of the Plan, and subject to the limitations set forth herein, the prototype Adoption Agreement, Plan and Trust Agreement may be amended at any time, in whole or in part, by the Sponsor. The Trustee hereby delegates authority to the Sponsor, and to any successor Sponsor, to so amend the prototype Adoption Agreement, Plan and Trust Agreement and the Trustee hereby agrees that it shall be deemed to have consented to any amendment so made which does not increase the duties of the Trustee without its consent. ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE The Trustee may resign at any time upon thirty (30) days notice in writing to the Employer, and may be removed by the Sponsor or Employer at any time upon thirty (30) days notice in writing to the Trustee. Upon such resignation or removal, the Sponsor or Employer shall appoint a successor Trustee or Trustees. Upon receipt by the Trustee of written acceptance of such appointment by the successor Trustee, the Trustee shall transfer and pay over to such successor the assets of the Trust and all records pertaining thereto, provided that any successor Trustee shall agree not to dispose of any such records without the Trustee's consent. The successor Trustee shall be entitled to rely upon all accounts, records, and other documents received by it from the Trustee, and shall not incur any liability whatsoever for such reliance. The Trustee is authorized, however, to reserve such sum of money or property as it may deem advisable 78 85 for payment of all its fees, compensation, costs, and expenses, or for payment of any other liabilities constituting a charge on or against the reasonable assets of the Trust or on or against the Trustee, with any balance of such reserve remaining after the payment of all such items to be paid over to the successor Trustee. Upon the assignment, transfer, and payment over of the assets of the Trust, and obtaining a receipt thereof from the successor Trustee, the Trustee shall be released and discharged from any and all claims, demands, duties, and obligations arising out of the Trust and its management thereof, excepting only claims based upon the Trustee's willful misconduct or lack of good faith. The successor Trustee shall hold the assets paid over to it under terms similar to those of this Trust Agreement under a trust that will qualify under section 401 of the Code. If within thirty (30) days after the Trustee's resignation or removal, the Employer or Sponsor has not appointed a successor Trustee which has accepted such appointment, the Trustee may apply to a court of competent jurisdiction for appointment or a successor or appoint such successor itself. ARTICLE XII TERMINATION OF THE TRUST 12.1 TERM OF THE TRUST. This Trust shall continue as to the Employer so long as the Plan is in full force and effect. If the Plan ceases to be in full force and effect, this Trust shall thereupon terminate unless expressly extended by the Employer. ARTICLE XIII MISCELLANEOUS 13.1 NO DIVERSION OF ASSETS. At no time shall it be possible for any part of the assets of the Trust to be used for or diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries or revert to the Employer, except as specifically provided in the Plan or this Trust Agreement. 13.2 NOTICES. Any notice from the Trustee to the Employer or from the Employer to the Trustee provided for in the Plan and Trust shall be effective if sent by first class mail to their respective last address of record. 13.3 MULTIPLE TRUSTEES. In the event that there shall be two (2) or more of the Trustees serving hereunder, any action taken or decision made by any such Trustee may be taken or made by a majority of them with the same effect as if all had joined therein, if there be more than two (2), or unanimously if there be two (2). 13.4 CONFLICT WITH PLAN. In the event of any conflict between the provisions of the Plan and those of this Trust Agreement, the Plan shall prevail. 13.5 APPLICABLE LAW. Except to the extent otherwise required by ERISA, as amended, this Trust Agreement shall be construed in accordance with the laws of the state where the Trustee has its principal place of business. 13.6 RETURNED CONTRIBUTIONS. (a) A contribution made by the Employer by a mistake of fact shall, if the Administrator so directs, be returned to the Employer within one (1) year after its repayment. The Administrator shall, in its sole discretion, determine whether the contribution was made by mistake of fact based upon such evidence as it deems appropriate. (b) A contribution made by the Employer that is conditioned on deductibility under section 404 of the Code shall, to the extent such deduction is disallowed, be returned to the Employer within one (1) year after the disallowance, if the Administrator so directs. 13.7 GENERAL UNDERTAKING. All parties to this Trust and all persons claiming any interest whatsoever hereunder agree to perform any and all acts and execute any and all documents and papers which may be necessary or desirable for the carrying out of the Trust or any of its provisions. 13.8 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Trust shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Trust shall be construed and enforced as if such provisions had not been included. 13.9 COUNTERPART ORIGINALS. This Trust may be executed in one or more counterpart originals. IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this Trust effective as of the date specified in the Adoption Agreement. ---------------------------- Attest: [NAME OF EMPLOYER] ------------------ BY: --------------------- Secretary President TRUSTEE(S) ---------------------------- ---------------------------- 79 86 ------------------------------------- ) ) SS ) I,_______________________________________, a notary public in and for the jurisdiction above named, do hereby certify that _____________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ did personally appear before me and do acknowledge that they executed the foregoing Trust as their free act and deed. Subscribed and sworn to before me this_____ day of ______________, 19____. ------------------------------------- Notary Public My Commission Expires: -------------------- 80 87 EMPLOYEE NOTICES 81 88 SPD, Pension and Welfare Benefits Administration Room N-5644 U.S. Department of Labor 200 Constitution Avenue N.W. Washington, DC 20210 Re: Dear Sir or Madam: Enclosed is a copy of the _____________ Summary Plan Description. This copy is (Plan Name) respectfully being submitted to Department of Labor in order to satisfy the disclosure requirements of ERISA for Qualified Plans. Should you have any questions, please feel free to contact me at your earliest convenience. Sincerely, Plan Sponsor 82 89 MODEL SUMMARY PLAN DESCRIPTION OF THE ------------------------------- [INSERT NAME OF EMPLOYER) PROFIT SHARING PLAN Copyright 1990 Investment Company Institute March 1990 83 90
TABLE OF CONTENTS Page I. INTRODUCTION ........................................................... 3 II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3 A. Terms With Special Meanings ...................................... 3 B. Participation .................................................... 4 C. Individual Accounts .............................................. 4 D. Contributions .................................................... 4 E. Allocations ...................................................... 5 F. Vesting .......................................................... 7 G. Forfeitures ...................................................... 8 H. Distributions of Benefits ........................................ 8 I. Investment of Plan Assets ........................................ 9 J. Withdrawals ...................................................... 10 K. Loans ............................................................ 10 L. Insurance ........................................................ 10 III. CLAIMS PROCEDURE ....................................................... 11 IV. CHANGES TO THE PLAN .................................................... 11 V. GENERAL INFORMATION .................................................... 11 VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 12 VII. SPECIAL RIGHTS UNDER ERISA ............................................. 12
84 91 MODEL SUMMARY PLAN DESCRIPTION OF THE ------------------------------- (INSERT NAME OF EMPLOYER) PROFIT SHARING PLAN I. INTRODUCTION _____________________________[INSERT NAME OF EMPLOYER] (the "Employer") is pleased to be able to provide you with the ____________________ [INSERT NAME OF EMPLOYER] Profit Sharing Plan (the "Plan" or the "Profit Sharing Plan"). The Plan is effective as of ________________________________[INSERT EFFECTIVE DATE]. The Plan is a defined contribution plan, to which the Employer makes contributions to an account held in your name. With this type of plan, the retirement benefit you receive will depend on the investment performance of the amounts that are in your account. The Plan is designed to provide retirement income to employees who remain with the Employer until retirement and to those who have a vested interest in their account when they terminate their employment with the Employer. Only the main features of the Plan am explained in this Summary Plan Description. Any questions which are not answered here should be referred to _________________________________________________(INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT INFORMATION), if there is any inconsistency between the Plan as described in this Summary Plan Description and the Plan document itself, the terms of the Plan document will govern. Copies of the Plan document and the Trust Agreement are available for your inspection during regular working hours. II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS A. TERMS-WITH SPECIAL MEANINGS Certain words and terms used in this Summary have special meanings. Many of these terms am defined in this section, while others are explained in the text of the Summary. To assist you in identifying these terms within the text; they are capitalized. 1. BENEFICIARY. Your designated Beneficiary is the person you name to receive your benefit distribution in the event of your death. If you are married, you will need written consent from your spouse to name someone other than your spouse as your Beneficiary. 2. BREAK IN SERVICE. A Break in Service occurs if you complete less than 501 Hours of Service with the Employer during a Plan Year. 3. COMPENSATION. Compensation is the total compensation paid to you by the Employer during any portion of a Plan Year during which you were a Plan Participant. If you an self employed, your Compensation is your earned income less your deductible contributions to any qualified retirement plans. 4. HOURS OF SERVICE. Each hour for which you are paid or entitled to be paid by the Employer. In addition, uncompensated authorized leaves of absence that do not exceed two years, military leave while your reemployment rights are protected by law, and absences from work for maternity or paternity reasons may be credited as Hours of Service for the purpose of determining whether you had a Break in Service. 5. PARTICIPANT. A Participant is an employee who has met the requirements for participating in this Plan, and whose account has been neither completely forfeited nor distributed. 6. PLAN YEAR. The Plan Year is the 12-month period ending on the date shown in section V of this Summary. 7. SPONSOR. The Sponsor is the organization which has made this Plan available to the Employer. 8. TRUST. The Trust is a fund maintained by the Trustee for the investment of Plan assets, including the amount in your account. 9. YEAR OF SERVICE. A Year of Service is the applicable 12-month period during which you complete 1,000 [INSERT NUMBER OF HOURS) or more Hours of Service. For eligibility purposes, the applicable 12-month period Is your first year of employment or any Plan Year, 85 92 beginning after your hire date. For vesting purposes, the applicable 12-month period is the Plan Year. B. PARTICIPATION You will be eligible to participate in the Plan after you have met the following eligibility requirements: [CHECK ALL APPLICABLE ITEMS] X You have reached age 21 - - X You have completed 1 Year (s) of Service. - - X You are not a member of a collective bargaining unit. - - X You are not a nonresident alien. - - The first entry date, or date in which you can first participate in the Plan if you meet these requirements, is _________________________ [INSERT EFFECTIVE DATE). Thereafter, the entry date(s) will be January 1 & July 1 of each year. Once you become a Participant, you will remain a Participant as long as you do not incur a Break in Service. If you do incur a Break in Service, and are later reemployed by the Employer, you will be reinstated as a Participant and any previous Hours of Service will be reinstated as of the date of your reemployment. C. INDIVIDUAL-ACCOUNTS A separate account will be maintained for you within the Plan. This account will be further divided into subaccounts, which will be credited with the different types of contributions that are described in the next section, the subaccounts that will be maintained for you are as follows: 1. PROFIT SHARING CONTRIBUTION SUBACCOUNT. This subaccount will be credited with your share of Employer Profit Sharing Contributions, forfeitures (if any), distributions from this subaccount, and the earnings and losses attributable to this subaccount. 2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will be credited with any rollover contributions or transfer contributions you may make to the Plan, any distributions from this subaccount, and the earnings and losses attributable to this subaccount. Include the following item if your plan permits voluntary employee contributions: 3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount will be credited with your Voluntary Employee Contributions, any distributions from this subaccount, and the earnings and losses attributable to this subaccount. D. CONTRIBUTIONS X 1. EMPLOYER PROFIT SHARING CONTRIBUTIONS. The Employer will make - Profit Sharing Contributions to the Plan each Plan Year in accordance with the following contribution formula: [CHECK ONE OF THE FOLLOWING]: X Contributions will be made in an amount to be determined each year by the Employer. _ Contributions will be made in an amount equal to ___________ INSERT CONTRIBUTION PERCENTAGE] of each Participant's Compensation, plus any discretionary amount the Employer may choose to contribute. 2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have participated in other pension or profit sharing plans, you will be permitted to make a rollover contribution to the Plan of certain amounts you may receive from those other plans. You will also be permitted, with the approval of 86 93 the Plan Administrator, to authorize a direct transfer to the Plan of amounts that are attributable to your participation in other pension or profit sharing plans. CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS: 3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your retirement benefits from this Plan, you may choose to make voluntary contributions to the Plan of up to NA [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of your compensation. Such contributions will not be permitted, however, for Plan Years beginning after __________ [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum contribution you must make if you choose to make a voluntary,contribution is as follows: [CHECK ONE OF THE FOLLOWING ITEMS]: ___ The minimum voluntary contribution is __________[INSERT MINIMUM VOLUNTARY CONTRIBUTION PERCENTAGE] of your Compensation. X There is no minimum voluntary contribution. E. ALLOCATIONS. ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer may make a Profit Sharing Contribution to the Plan in accordance with the formula described in the previous section . If the Employer chooses to make a Profit Sharing Contribution for a year, your account will be allocated a share of that contribution. If you are an employee as of the last day of the Plan Year. X Unless you terminate your employment during the Plan year with not more - than 500 Hours of Service. (You will receive an allocation, however, if you die, retire or become disabled during the Plan Year). Under some circumstances, special minimum allocation rules may result in your receiving an allocation even if you do not meet any of the requirements set forth above. AMOUNT OF ALLOCATION. If you are eligible, your account will be credited with a portion of the Profit Sharing Contribution (and any forfeitures) as follows: [CHECK ONE OF THE FOLLOWING ITEMS]: X * Your account will be credited with a portion of the Profit Sharing - - Contribution that is equal to the ratio of your Compensation to the Compensation of all Participants for such year. For example, if your Compensation for a Plan Year was $10,000 and the total Compensation of all Participants was $100,000, your account would be credited with $10,000/$100,000 = 1/10 of the total contribution made by the Employer for that Plan Year. [CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE NOT ADOPTED THE MONEY PURCHASE PENSION PLAN) __ * Profit Sharing Contributions WILL be allocated to eligible Participants in four steps as follows: Step One: Your account will be credited with a portion of the Profit Sharing Contribution that is equal to the ratio of your Compensation to the Compensation of all Participants for such year, but only up to a maximum of three percent of each Participant's Compensation. Step Two: Your account will be credited with a portion of the balance of the Profit Sharing Contribution (after the allocation in Step One) that is equal to the ratio of your Compensation in excess of the Plan's Integration Level to the Compensation in excess of the Plan's Integration Level of all Participants for such year, but only up to a maximum of three percent of any Participant's Compensation in excess of the Plan's Integration Level. For example, if the Plan's Integration Level were $51,300 and your Compensation were $61,300, your Compensation in excess of the Integration Level would be $10,000. If the total Compensation in excess of the Integration Level of all Participants were $70,000, your account would be credited with $10,000/$70,000 = 1/7 of the total allocation made under Step Two (but only up to a maximum of three percent of your Compensation in excess of the Plan's Integration Level, or $300). 87 94 Step Three: Your account will be credited with a portion of the balance of the Profit Sharing Contribution (after the allocations in Step One and Step Two) that is equal to the ratio that the sum of your Compensation plus your Compensation in excess of the Plan's Integration Level bears to the sum of all Participants' Compensation plus their Compensation in excess of the Plan's Integration Level for such year, up to a maximum of the Maximum Profit Sharing Disparity Rate. The Maximum Profit Sharing Disparity Rate is 2.7 percent if the Integration Level equals the annual earnings subject to Social Security (FICA) tax (the taxable wage base). If the Integration Level is lower (see below), then the Maximum Profit Sharing Disparity Rate is determined by the following formula: If the Integration is:
The Applicable More Than But Not More Than Percentage Is: --------- ----------------- -------------- $0 X */ 2.7% - X of TWB 80% of TWB 1.3% 80% of TWB Y **/ 2.4% --
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base. - - **/ Y = any amount more than 80% of the Taxable Wage Base but less - -- than 100% of the Taxable Wage Base. "TWB" means the Taxable Wage Base. For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent, your Compensation is $61,300, the Plan's Integration Level is $51,300, the total Compensation of all Participants is $700,000 and the Compensation of all Participants that is in excess of the Plan's Integration Level is $70,000, then the ratio applied under Step Three would be: (61,300 + 10,000)/(700,000 + 70,000) - 9.25% However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7 percent is applicable instead, and your account would receive 2.7% of the Employer contribution under this step. STEP FOUR: Your account will be credited with a portion of the balance of the Profit Sharing Contribution (after the allocations in Step One, Step Two and Step Three) that is equal to the ratio of your Compensation to the Compensation of all Participants for such year. [CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE ADOPTED THE MONEY PURCHASE PENSION PLAN]: __ Profit Sharing Contributions will be allocated to eligible Participants in two steps as follows: STEP ONE: Your account will be credited with a portion of the Profit Sharing Contribution that is equal to the ratio that the sum of your Compensation plus your Compensation in excess of the Plan's Integration Level bears to the sum of all Participants' Compensation plus their Compensation in excess of the Plan's Integration level for such year, up to a maximum that does not exceed the lesser of two amounts. The first is the percentage determined by dividing the allocation by your Compensation up to the Plan's Integration Level. The second is the Maximum Disparity Rate. The Maximum Disparity Rate is 5.7 percent if the Integration Level equals the annual earnings subject to Social Security (FICA) tax (the taxable wage base). If the Integration Level is lower (see below), then the Maximum Disparity Rate is determined by the following formula: If the Integration is:
The Applicable More Than But Not More Than Percentage Is: --------- ----------------- -------------- $0 X*/ 5.7% -
88 95 X Of TWB 80% of TWB 4.3% 80% of TWB Y **/ 5.4% */ X - the greater of $ 10,000 or 20% of the Taxable - Wage Base. **/ Y - any amount more than 80% of the Taxable Wage -- Base but less than 100% of the Taxable Wage Base. "TWB" means the Taxable Wage Base. For example, if the Maximum Disparity Rate is 5.7 percent, your Compensation is $61,300, the Plan's Integration Level is $51,300, the total Compensation of all Participants is $700,000 and the Compensation of all Participants that is in excess of the Plan's Integration Level is $70,000, then the ratio applied under Step One would be. (61,300 + 10,000)/(700,000 + 70,000) = 9.25% However, this exceeds the Maximum Disparity Rate, so 5.7 percent is applicable instead. (This assumes the allocation as a percentage of your Compensation up to the Plan's Integration Level would exceed 5.7 percent). Step Two: Your account will be credited with a portion of the balance of the Profit Sharing Contribution (after the allocation in Step One) that is equal to the ratio of your Compensation to the Compensation of all Participants for such year. The Plan's Integration Level is equal to: [CHECK ONE OF THE FOLLOWING ITEMS) __ The taxable wage base, which is the annual earnings subject to Social Security (FICA) tax. __ A dollar amount equal to $__________________________[INSERT DOLLAR AMOUNT]. __ A percentage of the taxable wage base equal to ___% of the annual earnings subject to Social Security (FICA) tax. Under some circumstances, special minimum allocation rules may result in your receiving a larger allocation than you normally would. The amount that can be allocated to your Account in any Plan Year, including forfeitures (if any), is limited by rules applying to all qualified plans. F. VESTING. Vesting refers to the nonforfeitable interest you have in each of your subaccounts. In other words, your vested interest in your account is the amount you will receive when your account is distributed to you. You will always have a 100 percent vested and nonforfeitable interest in the amounts you have in your: __ * Trustee Transfer and Rollover Subaccounts. (CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS]: __ * Nondeductible Voluntary Contribution Subaccount. You will earn a vested interest in your Profit Sharing Contribution Subaccount in accordance with the following: [CHECK ONE OF THE FOLLOWING ITEMS]: __ * You will always have a 100 percent vested and nonforfeitable interest in your Profit Sharing Contribution Subaccount. 89 96 __ * You will have a 100 percent vested and nonforfeitable interest in your Profit Sharing Contribution Subaccount in the event of any of the following: * You reach your Normal Retirement Age or Early Retirement Date. * You die or become disabled. Otherwise, you will earn a vested interest in your Profit Sharing Contribution Subaccount in accordance with the following schedule: [CHECK ONE OF THE FOLLOWING ITEMS]:
__ * YEARS 0F SERVICE VESTED PERCENTAGE ---------------- ----------------- 1 year 0% 2 years 20% 3 years 40% 4 years 60% 5 years 80% 6 or more years 100%
For example, if you are employed for six years, you will be entitled to the entire amount in your Profit Sharing Contribution Subaccount. However, if you terminate employment with the Employer after only four years, even though you return to employment with the Employer six years later, you will be entitled to receive only 60 percent of that amount. __ * You will be 100 percent vested after three years of service. If you terminate employment prior to three years you will not have any vested interest in your Profit Sharing Contribution Subaccount. G. FORFEITURES. [CHECK ONE OF THE FOLLOWING ITEMS]: __ * You have a 100 percent vested and nonforfeitable interest in the amounts in your account at all times. Your account therefore will not be subject to forfeitures. __ * Forfeitures occur when you terminate employment before becoming fully vested in your account, as explained in the section on "Vesting." Effective for the first Plan Year beginning after 1984, any portion of your Account that is not vested will be forfeited as of the last day of the Plan Year in which your fifth consecutive Break in Service occurs. Forfeited amounts will not be reinstated, even if you return to service with the Employer. Such forfeitures will be allocated among the Accounts of other Participants in the same manner as Profit Sharing Contributions. H. DISTRIBUTION OF BENEFITS. 1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a distribution of the vested amounts in your account upon occurrence of any of the following: * Your termination of employment with the Employer for any reason. * Your total and permanent disability. * Your death. * Termination of the Plan. * Your attainment of normal retirement age, which is: [CHECK ONE OF THE FOLLOWING ITEMS), X * Age 65 - __ * Age _____ [INSERT NORMAL RETIREMENT AGE] or the___________ INSERT ANNIVERSARY DATE) of the day you commenced participation in the plan. (CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT): 90 97 __ * If you elect Early Retirement, attainment of your Early Retirement Date, which is the first day of the month coincident with or next following the date you reach age ____________________INSERT EARLY RETIREMENT AGE] and complete __________ INSERT NUMBER OF YEARS] Years of Service. 2. TIMING OF DISTRIBUTION. You will begin receiving benefit distributions in accordance with the following; * Generally, benefit distributions will commence not later than 60 days after the end of the Plan Year in which you become eligible to receive benefits. * In the event of your death, your spouse, if you are married, will generally be entitled to receive your benefit distribution. If you are unmarried, or if your spouse has given written consent, your designated Beneficiary will receive your benefit distribution, If you have no spouse or designated Beneficiary, your benefit distribution will go to your estate. * If you so elect, you may defer commencement of the distribution of your benefit beyond the date you first become eligible to receive that distribution, to a date which you may specify. The date you specify must not be later than the April 1 following the close of your taxable year in which you attain age 70-1/2. * If you attained age 70-1/2 before January 1, 1988, special rules apply to your distributions. If you wish to receive benefit distributions before attaining age 59-1/2, you may be subject to a penalty tax, and you must notify the Plan Administrator in writing that you am aware of the consequences of this tax. 3. FORM OF DISTRIBUTION. Your benefit will automatically be distributed or a lump sum payment of cash, or a lump sum payment that includes an in-kind distribution of all mutual fund shares credited to your account. I. INVESTMENT OF PLAN ASSETS All contributions made to the Plan are kept in the Trust. A separate account including all of the subaccounts described in the section on "Participant Accounts," is maintained for you within that Trust. The assets of the Trust are invested as follows: [CHECK ONE OF THE FOLLOWING ITEMS]: X * You must direct the Plan Administrator to invest the amounts in all of - - your subaccounts in specified investments offered by the Sponsor. __ * _____________________ (INSERT PERCENTAGE) of the assets of the Trust are invested in shares or other investments offered by the Sponsor. The remaining assets are invested in such other investments as are acceptable to the Trustee. __ * You ___ [INSERT "MAY" OR "MUST"] direct the Plan Administrator to invest the amounts in the following subaccount in specified investments offered by the Sponsor: [CHECK ONE OR MORE OF THE FOLLOWING ITEMS]: __ * The amounts in your Nondeductible Voluntary Contribution Subaccount. __ * The amounts in your Profit Sharing Contribution Subaccount. __ * The amounts in your Trustee Transfer and Rollover Subaccounts. [CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS WITHDRAWALS]: J. WITHDRAWALS You may make the following types of withdrawals from your account: 91 98 (CHECK ALL APPLICABLE ITEMS] __ * If you have made Voluntary Employee Contributions to the Plan, you will be permitted to withdraw the amounts in your Nondeductible Voluntary Contribution Subaccount. If you are married, your spouse must consent to the withdrawal. __ * In the event of an imminent and heavy financial need due to the purchase or renovation of a primary residence, the educational, medical or personal expenses of you or a member of your immediate family, or other hardship, you will be permitted to make a hardship withdrawal of amounts credited to your Profit Sharing Contribution Subaccount. All hardship withdrawals are subject to approval by the Plan Administrator. Such withdrawals can only be made after prior withdrawal of all amounts in your Nondeductible Voluntary Contribution Subaccount, and after exhausting all other reasonable sources of funds. If you are married, your spouse must consent to any withdrawals. (CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED): __ K. LOANS. This Plan contains provisions that permit you to borrow (with the consent of your spouse) from the Plan part of your vested interest in your account. Such a loan will not be made, however, if the total of all outstanding loans to you from all pension and profit sharing plans of the Employer exceed the lesser of $50,000 (taking into account the highest principal balance of any loan outstanding at any time during the preceding 12 months) or one-half of the value of your vested interest in your account. The Plan Administrator will set the terms of all loans. The maximum payment term for any loan will generally be five years. The interest rate will be determined by the Plan Administrator. Your account will be security for the loan. [CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE LIFE INSURANCE]: __ L. INSURANCE. The Plan contains provisions permitting you to designate a portion of the amounts in your Profit Sharing Contribution Subaccount to purchase life insurance. The portion of your Profit Sharing Contribution Subaccount which may be used to purchase life insurance is equal to____________________ [INSERT PERCENTAGE] of that subaccount. III. CLAIMS PROCEDURE You or your Beneficiary may file a written claim for benefits under this Plan with the Plan Administrator at any time. If your claim is denied to any extent by the Plan Administrator, a written notification must be sent to you within 90 days. If you choose to appeal the decision, a request for review must be made in writing to the Plan Administrator within 60 days of receipt of written notification of the denial. Within 60 days after the appeal is filed, or within 120 days, if there are special circumstances involved, the Plan Administrator will issue a written decision. IV. CHANGES TO THE PLAN A. AMENDMENT OF THE PLAN The Employer, together with the Sponsor, reserves the right to amend the Plan at any time. You will be kept informed of any material amendments to the Plan by updates to this Summary Plan Description. B. TERMINATION OF THE PLAN The Employer intends to continue this Plan indefinitely. However, the Employer reserves the right to terminate the Plan at any time. if a termination takes place, or If the Employer discontinues making contributions to the Plan, you WILL have a 100 percent vested and nonforfeitable interest in all of the amounts in your account. These amounts may be distributed to you at that time, or may be distributed in accordance with the benefit distribution rules. C. MERGER, CONSOLIDATION OR TRANSFER OF THE PLAN In the event of the merger, consolidation or transfer of assets or liabilities of the Plan to any other plan, your benefits will not be decreased from what they would have been prior to such an event. V. GENERAL INFORMATION 92 99 Name of Plan: ______________________________________________________ [INSERT NAME OF EMPLOYER] Profit Sharing Plan Employer: ______________________________________________________ ______________________________________________________ [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER) Type of Plan: Profit Sharing Plan Type of Administration: Trusteed Employer's Fiscal Year: ______________________________________________________ Plan Year End: ______________________________________________________ Plan Administrator: ______________________________________________________ [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN ADMINISTRATOR] Trustees: ______________________________________________________ ______________________________________________________ [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE OF EACH TRUSTEE] Agent for Service of Legal Process: ______________________________________________________ [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR SERVICE OF LEGAL PROCESS) Employer Identification # ______________________________________________________ Plan Number: ______________________________________________________ Also, a complete list of the employers and employee organizations sponsoring the Plan may be obtained by participants and beneficiaries upon written request to the Plan administrator, and is available for examination by participants and beneficiaries, as required by Labor Reg. Section 1.2520.104-bl and Section 2520.104b-30. VI. NON-APPLICATION OF PBGC GUARANTEES Because this Plan is a defined contribution plan, the benefits you will receive are exempt from and not insured by the Pension Benefit Guaranty Corporation. VII. SPECIAL RIGHTS UNDER ERISA As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants shall be entitled to: * Examine, without charge, at the Plan Administrator's office and at other specified locations, all Plan documents, including insurance contracts, affecting the individual making the request, and copies of all documents filed by the Plan with the U.S. Department of Labor, such as annual reports and Plan descriptions. * Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. 93 100 * Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report. * obtain a statement of the total value of your account under the Plan and your vested (nonforfeitable) portion of this account. This statement must be requested in writing and is not required to be given more than once a year, The Plan will provide the statement free of charge. In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. These people who operate your plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan Participants and Beneficiaries. No one, including your Employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit under this Plan or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $100 a day until you receive the materials unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. if you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. 94 101 MODEL SUMMARY PLAN DESCRIPTION OF THE -------------------------------- [INSERT NAME OF EXPLOYER1 MONEY PURCHASE PENSION PLAN Copyright 1990 Investment Company Institute March 1990 95 102
TABLE OF CONTENTS Page I. INTRODUCTION ............................................................. 3 II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3 A. Terms With Special Meanings ......................................... 3 B. Participation ....................................................... 4 C. Individual Accounts ................................................. 4 D. Contributions ....................................................... 4 E. Allocations ......................................................... 5 F. Vesting ............................................................. 6 G. Forfeitures ......................................................... 7 H. Distributions of Benefits ........................................... 7 I. Investment of Plan Assets ........................................... 8 J. Withdrawals ......................................................... 9 K. Loans ............................................................... 9 L. Insurance ........................................................... 9 III. CLAIMS PROCEDURE ....................................................... 9 IV. CHANGES TO THE PLAN .................................................... 9 V. GENERAL INFORMATION .................................................... 10 VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 11 VII. SPECIAL RIGHTS UNDER ERISA ............................................. 11
96 103 MODEL SUMMARY PLAN DESCRIPTION OF THE ------------------------------------- [INSERT NAME OF EMPLOYER] MONEY PURCHASE PENSION PLAN I. INTRODUCTION __________________________________ [INSERT NAME OF EMPLOYER] (the "Employer") is pleased to be able to provide you with the____________________ [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the "Plan" or the "Pension Plan"). The Plan is effective as of ____________________________ [INSERT EFFECTIVE DATE]. The Plan is a defined contribution plan, to which the Employer makes contributions to an account hold in your name. With this type of plan; the retirement benefit you receive will depend on the investment performance of the amounts that are in your account. The Plan is designed to provide retirement income to employees who remain with the Employer until retirement and to those who have a vested interest in their account when they terminate their employment with the Employer. Only the main features of the Plan are explained in this Summary Plan Description. Any questions which are not answered here should be referred to ____________________________ [INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT INFORMATION]. If there is any inconsistency between the Plan as described in this Summary Plan Description and the Plan document itself, the terms of the Plan document will govern. Copies of the Plan document and the Trust Agreement are available for your inspection during regular working hours. II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS A. TERMS WITH SPECIAL MEANINGS Certain words and terms used in this Summary have special meanings. Many of these terms are fined in this section, while others are explained in the text of the Summary. To assist you in identifying these terms within the text, they are capitalized. 1. BENEFICIARY. Your designated Beneficiary is the person you name to receive your benefit distribution in the event of your death. If you are married, you will need written consent from your spouse to name someone other than your spouse as your Beneficiary. 2. BREAK IN SERVICE. A Break in Service occurs if you complete less than 501 Hours of Service with the Employer during a Plan Year. 3. COMPENSATION. Compensation is the total compensation paid to you by the Employer during any portion of a Plan Year during which you were a Plan Participant. If you are self-employed, your Compensation is your earned income less your deductible contributions to any qualified retirement plans. 4. HOURS OF SERVICE. Each hour for which you are paid or entitled to be paid by the Employer. In addition, uncompensated authorized leaves of absence that do not exceed two years, military leave while your reemployment rights are protected by law, and absences from work for maternity or paternity reasons may be credited as Hours of Service for the purpose of determining whether you had a Break in Service. 5. PARTICIPANT. A Participant is an employee who has met the requirements for participating in this Plan, and whose account has been neither completely forfeited nor distributed. 6. Plan Year. The Plan Year is the 12-month period ending on the date shown in section V of this Summary. 7. SPONSOR. The Sponsor is the organization which has made this Plan available to the Employer. 8. TRUST. The Trust is a fund maintained by the Trustee for the investment of Plan assets, including the amount in your account. 9. YEAR OF SERVICE. A Year of Service is the applicable 12-month period during which you complete 1,000 or more Hours of Service. For 97 104 eligibility purposes, the applicable 12-month period is your first year of employment or any Plan Year, For vesting purposes, the applicable 12-month period is the Plan Year. B. PARTICIPATION. You will be eligible to participate in the Plan after you have met the following eligibility requirements: [CHECK ALL APPLICABLE ITEMS] [X] o You have reached age 21. [X] o You have completed 1 Year(s) of Service. [X] o You are not a member of a collective bargaining unit. [X] o You are not a nonresident alien. The first entry date, or date in which you can first participate in the Plan if you meet these requirements, is ________________ [INSERT EFFECTIVE DATE]. Thereafter, do entry date(s) will be January 1 & July 1 of each Plan Year. Once you become a Participant, you will remain a Participant as long as you do not incur a Break in Service. If you do incur a Break in Service, and are later reemployed by the Employer, you will be reinstated as a Participant and any previous Hours of Service will be reinstated as of the date of your reemployment. C. INDIVIDUAL ACCOUNTS A separate account will be maintained for you within the Plan. This account will be further divided into subaccounts, which will be credited with the different types of contributions that are described in the next section. The subaccounts that will be maintained for you are as follows: 1. MONEY PURCHASE PENSION CONTRIBUTION SUBACCOUNT. This subaccount will be credited with your share of Employer Money Purchase Pension Contributions, distributions from this subaccount, and the earnings and losses attributable to this subaccount. 2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will be credited with any rollover contributions or transfer contributions you may make to the Plan, any distributions from the subaccount, and the earnings and losses attributable to the subaccount. (CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS]: ___ 3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount will be credited with our Voluntary Employee Contributions, any distributions from this subaccount, and the earnings and losses attributable to this subaccount. D. CONTRIBUTIONS The Employer will make, or you will be permitted to make, the following types of contributions. These contributions will be allocated to the appropriate subaccounts within your account. 1. EMPLOYER MONEY PURCHASE PENSION CONTRIBUTIONS. The Employer will make Money Purchase Pension Contributions to the Plan each Plan Year in accordance with a formula based on your Compensation. This formula is given in the section on "Allocations." 2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have participated in other pension or profit sharing plans, you will be permitted to make a rollover contribution to the Plan of certain amounts you may receive from those other plans. You will also be permitted, with the approval of the Plan Administrator, to authorize a direct transfer to the Plan of amounts that are attributable to your participation in other pension or profit sharing plans. [CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS]. 98 105 3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your --- retirement benefits from this Plan, you may choose to make voluntary contributions to the Plan of up to _____ (INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE) of your Compensation. Such contributions will not be permitted, however, for Plan Years beginning after _____________ (THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED). The minimum contribution you must make if you choose to make a voluntary contribution is as follows: [CHECK ONE OF THE FOLLOWING ITEMS]: - The minimum voluntary contribution is ____ [INSERT MINIMUM --- VOLUNTARY CONTRIBUTION PERCENTAGE] of your Compensation. X - There is no minimum voluntary contribution. --- E. Allocations 1. ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer will make a Money Purchase Pension Contribution to the Plan in accordance with the formula based on your Compensation. Your account will be allocated a contribution if you are an employee as of the last day of the Plan Year. [X] o Unless you terminate your employment during the Plan Year with not more than 500 [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service. (You will receive an allocation, however, if you die, retire or become disabled during the Plan Year). Under some circumstances, special minimum allocation rules may result in your receiving an allocation, even if you do not meet any of the requirements set forth above. 2. AMOUNT OF ALLOCATION. If you are eligible, your account will be credited with a Money Purchase Pension Contribution as follows: [CHECK ONE OF THE FOLLOWING ITEMS] o The Employer will make a contribution on your behalf equal to _______ (INSERT CONTRIBUTION PERCENTAGE) of your Compensation. [CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY]: o The Employer will make a contribution equal to ______% of your - --- Compensation up to the Plan's Integration Level, plus ____% of your Compensation excess of the Plan's Integration Level. The Plan's Integration Level is equal to: (CHECK ONE OF THE FOLLOWING ITEMS): [ ] o The taxable wage base, which is the annual earnings subject to Social Security (FICA) tax. [ ] o A dollar amount equal to ____ [INSERT DOLLAR AMOUNT]. [ ] o A percentage of the taxable wage base equal to ___% of the annual earnings subject to Social Security (FICA) tax. For example, suppose that the Plan's taxable wage base is equal to $51,300, and that your Compensation during a Plan Year totaled $61,300. You would receive an allocation of ____ [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300 in Compensation, and ____ [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the remainder of $ 10,000. Under some circumstances, special minimum allocation rules may cause you to receive a larger allocation than you normally would. The amount that can be allocated to your account in any Plan Year is limited by rules applying to all qualified plans. 99 106 F. VESTING. Vesting refers to the nonforfeitable interest you have in each of your subaccounts. In other words, your vested interest in your account is the amount you will receive when your account is distributed to you. You will always have a 100 percent vested and nonforfeitable interest in the amounts you have in your: o Trustee transfer and rollover subaccounts. [CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS]: o Nondeductible Voluntary Contribution Subaccount. You will earn a vested interest in your Money Purchase Pension Contribution Subaccount in accordance with the following: [CHECK ONE OF THE FOLLOWING ITEMS]: [ ] o You will always have a 100 percent vested and nonforfeitable interest in your Money Purchase Pension Contribution Subaccount. [ ] o You will have a 100 percent vested and nonforfeitable interest in your Money Purchase Pension Contribution Subaccount in the event of any of the following: o You reach your Normal Retirement Age or Early Retirement Date. o You die or become disabled. Otherwise, you will earn a vested interest in your Money Purchase Pension Contribution Subaccount in accordance with the following schedule: [CHECK ONE OF THE FOLLOWING ITEMS] [ ] o YEARS OF SERVICE VESTED PERCENTAGE ---------------- ----------------- 1 year 0% 2 years 20% 3 yam 40% 4 years 60% 5 years 80% 6 or more years 100% For example, If you are employed for six years, you will be entitled to the entire amount in your Money Purchase Pension Contribution Subaccount. However, If you terminate employment with the Employer after only four years, even though you return to employment with the Employer six years later, you will be entitled to receive only 60 percent of that amount. [ ] o You will be 100 percent vested after three years of service. If you terminate employment prior to three years you will not have any vested amount in your Money Purchase Pension Contribution Subaccount. Any portion of your Money Purchase Pension Contribution Subaccount in which you do not have a vested interest will be forfeited by you as of the last day of the Plan Year in which your fifth consecutive Break in Service occurs. G. FORFEITURES [CHECK ONE OF THE FOLLOWING ITEMS]: [ ] o You have a 100 percent vested and nonforfeitable interest in the amounts in your account at all times. You will therefore not be subject to forfeitures. [ ] o Forfeitures occur when you terminate employment before becoming fully vested in your account, as explained in the section on "Vesting." Effective for the Trust Plan Year beginning after 1984, any portion of your account that is not vested will be forfeited as of the last day of the Plan Year in which your fifth consecutive Break in Service occurs. Forfeited amounts will not be reinstated, even if you return to service with the Employer. Such forfeitures either will be: 100 107 [CHECK ONE OF THE FOLLOWING ITEMS]: [ ] o Used by the Employer as a credit against its future contributions to the Plan; or [ ] o Reallocated among the accounts of remaining Participants in proportion to their pay. H. DISTRIBUTION OF BENEFITS. 1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a distribution of the vested amounts in your account upon occurrence of any of the following: o Your termination of employment with the Employer for any reason. o Your total and permanent disability. o Your death. o Termination of the Plan. o Your attainment of normal retirement age, which is: [CHECK ONE Of THE FOLLOWING ITEMS]: [X] o Age 65. [ ] o Age ____ [INSERT NORMAL RETIREMENT AGE] or the ____________ [INSERT ANNIVERSARY DATE] of the day you commenced participation in the Plan. [CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]: [ ] o If you elect early retirement, attainment of your early retirement date, which is the first day of the month coincident with or next following the date you reach age _ (INSERT EARLY RETIREMENT AGE) and complete _________ [INSERT NUMBER OF YEARS] Years of Service. 2. TIMING OF DISTRIBUTIONS. You will begin receiving benefit distributions in accordance with the following: o Generally, benefit distributions will commence not later then 60 days after the end of the Plan Year in which you become eligible to receive benefits. o In the event of your death, your spouse, if you are married, will generally be entitled to receive your benefit distribution. If you are unmarried, or if your spouse has given written consent, your designated Beneficiary will receive your benefit distribution. If you have no spouse or designated Beneficiary, your benefit distribution will go to your estate. o If you so elect, you may defer commencement of the distribution of your benefit beyond the date you first become eligible to receive that distribution, to a date which you may specify. The date you specify must not be later than the April 1 following the close of your taxable year in which you attain age 70-1/2. o If you attained age 70-1/2 before January 1, 1988, special rules apply to your distributions. If you wish to receive benefit distributions before attaining age 59-1/2, you may be subject to a penalty tax, and you must notify the Plan Administrator in writing that you are aware of the consequences of this tax. 3. FORM OF DISTRIBUTION. Your benefit will automatically be distributed in the form of a in a lump sum payment of cash, or a lump sum payment that includes an in-kind distribution of all mutual fund shares credited to your account. I. INVESTMENT OF PLAN ASSETS All contributions made to the Plan are kept in the Trust. A separate account, including all of the subaccounts described in the section on "Participant accounts," is maintained for you within that Trust. The assets of the Trust are invested as follows: 101 108 (CHECK ONE OF THE FOLLOWING ITEMS:: [X] o All of the assets of the Trust are invested in shares or other investments offered by the Sponsor. [ ] o _________ [INSERT PERCENTAGE] of the assets of the Trust are invested in shares or other investments offered by the Sponsor. The remaining assets are invested in such other investments as are acceptable to the Trustee. [ ] o You ______ [INSERT "may" OR "must"] direct the Plan Administrator to invest the amounts in the following subaccount in specified investments offered by the Sponsor: (CHECK ONE OR MORE OF THE FOLLOWING ITEMS): [ ] o The amounts in your Nondeductible Voluntary Contribution Subaccount. [ ] o The amounts in your Money Purchase Pension Contribution Subaccount. [ ] o The amounts in your trustee transfer and rollover subaccounts. [CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS]: [ ] J. WITHDRAWALS If you have made Voluntary Employee Contributions to the Plan, you will be permitted to withdraw the amounts in your Nondeductible Voluntary Contribution Subaccount. If you are married, your spouse must consent to the withdrawal. [CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED] [ ] K. LOANS The Plan contains provisions that permit you to borrow from the Plan part of your vested interest in your account. Such a loan will not be made, however, if the total of all outstanding loans to you from all pension and profit sharing plans of the Employer exceed the lower of $50,000 (taking into account the highest principal balance of any loan outstanding at any time during the preceding 12 months) or one-half of the value of your vested interest in your account. The Plan Administrator will set the terms of all loans. The maximum payment term for any loan will generally be five years. The interest rate will be determined by the Plan Administrator, your account will be security for the loan. [CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE LIFE INSURANCE]: [ ] L. INSURANCE. The Plan contains provisions permitting you to designate a portion of the amounts in your Money Purchase Pension Contribution Subaccount to purchase life insurance. The portion of your Money Purchase Pension Contribution Subaccount which may be used to purchase life insurance is equal to ________ [INSERT PERCENTAGE] of that subaccount. III. CLAIMS PROCEDURE You or your Beneficiary may file a written claim for benefits under this Plan with the Plan Administrator at any time. If your claim is denied to any extent by the Plan Administrator, a written notification must be sent to you within 90 days. If you choose to appeal the decision, a request for review must be made in writing to the Plan Administrator within 60 days of receipt for written notification of the denial. Within 60 days after the appeal is filed, or within 120 days, if there are special circumstances involved, the Plan Administrator will issue a written decision. 102 109 IV. CHANGES TO PLAN A. AMENDMENT OF THE PLAN The Employer, together with the Sponsor, reserves the right to amend the Plan at any time. You will be kept informed of any material amendments to the Plan by updates to this Summary Plan Description. B. TERMINATION OF THE PLAN The Employer intends to continue this Plan indefinitely. However, the Employer reserves the right to terminate the Plan at any time. If a termination takes place, or if the Employer discontinues making contributions to the Plan, you will have a 100 percent vested and nonforfeitable interest in all of the amounts in your account. These amounts may be distributed to you at that time, or may be distributed in accordance with the benefit distribution rules. C. Merger, Consolidation, or Transfer of the Plan In the event of the merger, consolidation or transfer of assets or liabilities of the Plan to any other plan, your benefits will not be decreased from what they would have been prior to such an event. V. GENERAL INFORMATION NAME OF PLAN: _____________________________________________________ Money Purchase Pension Plan EMPLOYER: _____________________________________________________ _____________________________________________________ TYPE OF PLAN: Money Purchase Pension Plan TYPE OF ADMINISTRATION: Trusteed EMPLOYER'S FISCAL YEAR: __________________________ PLAN YEAR END: __________________________ PLAN ADMINISTRATOR: _____________________________________________________ _____________________________________________________ _____________________________________________________ Trustees: _____________________________________________________ _____________________________________________________ _____________________________________________________ [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE OF BUSINESS OF EACH TRUSTEE) AGENT FOR SERVICE OF LEGAL PROCESS: __________________________________________ __________________________________________ INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR SERVICE OF LEGAL PROCESS) EMPLOYER IDENTIFICATION NUMBER: __________________________________________ PLAN NUMBER: __________________________________________ Also, a complete list of the employers and employee organizations sponsoring the Plan may be obtained by participants and beneficiaries upon written request to the Plan administrator, and is available for examination by participants and beneficiaries, as required by Labor Reg. Section 2520.104b-1 and Section 2520.104b-30. V1. NON-APPLICATION OF PBGC GUARANTEES Because this Plan is a defined contribution plan, the benefits you will receive are exempt from and not insured by the Pension Benefit Guaranty Corporation. 103 110 VII. SPECIAL RIGHTS UNDER ERISA As a participant in the ________________________________ [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants shall be entitled to: o Examine, without charge, at the Plan Administrator's office and at other specified locations, all Plan documents, including insurance contracts, affecting the individual making the request, and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions. Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. o Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report. o Obtain a statement of the total value of your account under the Plan and your vested (nonforfeitable) portion of this account. This statement must be requested in writing and is not required to be given more than once a year. The Plan will provide the statement free of charge. In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. These people who operate your plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan Participants and Beneficiaries. No one, including your Employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit under this Plan or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $100 a day until you receive the materials unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. NOTICE TO INTERESTED PARTIES Current employees of ________________________________ are hereby notified that (Name of Employer) ___________________________ has adopted the __________________________________ (Name of Adopting Employer) (Name of Plan or Plans) as its employee retirement benefit plan. The employee eligible to participate under this Plan are ____________________________________. (Insert Eligible Class of Employees) It is not expected that this Plan will be submitted to the Internal Revenue Service for an advance determination as to whether or not the Plan meets the qualification requirements of section 401(a) of the Internal Revenue Code. However, this Plan is a prototype plan and the Internal Revenue Service has previously issued a favorable opinion letter to the sponsor with regard to the this plan. As in interested party, you have the right to submit to the Key District Director of the Internal Revenue Service, either individually or jointly with other interested parties, your comments as to whether this Plan meets the qualification requirements of the Internal Revenue Code. 104 111 You may also, either or jointly with other interested parties, request that the Department of Labor submit, on your behalf, comments to the Key District Director regarding qualification of this Plan. If the Department of Labor declines to comment on all or some of the matters you raise, you may, individually or jointly if your request was made to the Department jointly, submit your comments on these matters directly to the Key District Director as the following address: ___________________________________________ (NAME AND ADDRESS OF KEY DISTRICT DIRECTOR) The Department of Labor may not comment on behalf of interested parties unless requested to do so by the lesser of 10 employees or 10 percent of the employees who qualify as interested parties. The number of persons needed for the Department of Labor to comment with respect to this Plan is ___________________. A request to the Department of Labor should be sent to the following address: Administrator of Pension and Welfare Benefit Programs U.S. Department of Labor 200 Constitution Avenue N.W. Washington, D.C. 20216 Attention: 3001 Comment Request Any comment you submit to the Key District to the Key District Director, or any request to the Department of Labor must include the name of the Plan, the Plan number, the opinion letter number, the adopting employer's identification number, the name and address of the sponsor, and the name and address of the Plan administrator. Any request to the Department of Labor must also include the address of the Key District Director. This information can be found at the end of this Notice. A comment to the Key District must be received by ____________________________________. (Date 45 Days After Plan is Adopted) if you wish to preserve your right to comment to the Key District Director, or by ____________________________________ if you wish to waive that right. (Date 55 Days After Plan is Adopted) If there are matters upon which you request the Department of Labor to comment upon on your behalf, and the Department declines to do so, you may submit comments on these matters directly to the Key District Director. These comments must be received by the Key District Director within 15 days from the time the Department of Labor notifies you that it will not comment on a particular matter, or by ___________________________________ whichever is later. (Date 75 Days After The Plan is Adopted). Detailed instructions regarding the requirements for submitting comments may be found in sections 6,7, and 8 of Revenue Procedure 80-30. Additional information concerning this Plan (including, where applicable, a description of the circumstances which may result in eligibility of loss of benefits, a description of the source of financing of the plan, and copies of section 6 of Revenue Procedure 80-30) is available at_________________________ (LOCATION) during the hours of _________________, for inspection of copying. There may be a normal charge for copying and/or mailing. The following information will be needed for correspondence with the Department of Labor or the Key District Director: ___________________________________ (Name of Adopting Employer) 105 112 ______________________________________ (Name of Plan or Plans) ______________________________________ Plan Identification Number(s) ______________________________________ (Opinion Letter Number) ______________________________________ (Name of Sponsor) ______________________________________ (Address of Sponsor) ______________________________________ (Adopting Employer's EIN) ______________________________________ (Name of Plan Administrator) ______________________________________ (Address of Plan Administrator) ______________________________________ (Address of Key District Director) 106 113 FORMS 107 114 [AIM LOGO APPEARS HERE] ASSET TRANSFER FORM AIM Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 Phone Number 1-800-347-1919 (ext. 506) THIS FORM SHOULD BE USED ONLY IF YOU ARE TRANSFERRING PLAN ASSETS DIRECTLY TO AIM. ================================================================================ 1. PRINT PLAN NAME AND ADDRESS HERE - -------------------------------------------------------------------------------- Plan Name/Trustees - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- City State Zip Tax ID Number ------------------------------------------------------------------- Telephone ( ) ----------------------------------------------------------------- ================================================================================ 2. ACCOUNT TO BE TRANSFERRED TO AIM - -------------------------------------------------------------------------------- Account Number - -------------------------------------------------------------------------------- Name of Resigning Trustee/Custodian - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- City State Zip - -------------------------------------------------------------------------------- Attention Telephone ================================================================================ 3. PLEASE TELL US WHERE TO INVEST THE MONEY YOU ARE TRANSFERRING Please deposit proceeds in my [ ] existing [ ]* new [ ] Money Purchase Plan [ ] Profit Sharing * Application Attached - -------------------------------------------------------------------------------- Fund Name Account Number - -------------------------------------------------------------------------------- Fund Name Account Number If assets are to be invested in multiple participant accounts you must submit a separate statement identifying each participant and the percentage to be invested in each fund(s). If transferred assets are to be invested in "pooled" accounts you must indicate the percentage (%) to be invested in each funds. ================================================================================ 4. PLEASE AUTHORIZE YOUR CURRENT OR CUSTODIAN TO TRANSFER ACCOUNT TO THE AIM FUNDS To Resign Trustee or Custodian: Please transfer [ ] all or [ ] part ($_________________) of our assets listed in Section 2 to The AIM Funds. [ ] immediately [ ] at maturity [ ] Please transfer [ ] all or part (__________________) of the assets to AIM Fund Acct# ___________________________. - -------------------------------------------------------------------------------- Signature/Trustee Date An Important note: Your current investment manager or custodian may require your signature to be guaranteed. Call that institution for requirement. Signature guaranteed by: - -------------------------------------------------------------------------------- Name of Bank or Firm - -------------------------------------------------------------------------------- Signature of Officer and Title ================================================================================ 5. CUSTODIAN ACCEPTANCE OF PLAN This to advise you that _______________________, trustee custodian, will accept the account identified above for: Plan Name ________________________________ Account Number _____________________________ This transfer of assets is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt of all or any of the plan assets. NO FEDERAL INCOME TAX IS TO BE WITHHELD FROM THIS TRANSFER OF ASSETS. If you have any further questions regarding the transfer, please feel free to contact us at the above toll-free number. - -------------------------------------------------------------------------------- Authorized Signature/Trustee - -------------------------------------------------------------------------------- Date ================================================================================ 6. RESIGNING TRUSTEE OR CUSTODIAN Please Indicate Account Number on all documents sent to AIM. Please attach a copy of this form to the check. Check Payable to: AIM Funds, FBO: (Plan Name) c/o AIM Fund Services, Inc, P.O. Box 4739 Houston, TX 77210-4739 108 115 PROFIT SHARING AND/OR MONEY PURCHASE PENSION PLAN CONTRIBUTION TRANSMITTAL FORM All contributions must be allocated in dollars to the fund(s) selected as investment options of the plan. For plans using individual mutual fund accounts for each participant, you must allocate each participant's contribution to their selected AIM Fund(s). The minimum investment in $25 per fund per contribution submission for each participant. Plan Name: ---------------------------------------------------------------------- Tax ID#: ------------------------------------------------------------------------ Contribution for Plan Year: -----------------------
================================================================================ NAME SS# AIM AIM AIM TOTAL ____ FUND ____ FUND ____ FUND - -------------------------------------------------------------------------------- $ $ $ $ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Total $ $ $ $ ================================================================================
1 EX-99.B14.D2 13 FORMS OF REGISTRANT'S 403(B) PLAN DOCUMENTS 1 EXHIBIT 14(d)(2) 403(b) PLAN [AIM LOGO APPEARS HERE] ACCOUNT APPLICATION To open your AIM 403(b) Plan account. Employer mail to: A I M Fund Services, Inc., P.O. Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246 ALL sections must be fully completed. - -------------------------------------------------------------------------------- 1. EMPLOYEE INFORMATION (please print) Participant --------------------------------- Birth Date / / First Name Middle Last Name ---- ---- --- Address ------------------------------------------------------------------- Street City State Zip Code Social Security # Daytime Telephone -------------------- ------------------- Employer ------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. INVESTMENT INFORMATION (Minimum investment in any AIM Fund is $25 per pay period per Fund.) CONTRIBUTIONS: [ ] I will be making salary-deferral contributions in the amount of $_______________ or______% of compensation. [ ] This is a transfer of 403(b) assets only; no salary-deferral contribution will be made at this time. Each contribution to the Custodial Account shall be invested in the following AIM Funds in the amounts specified.
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES FIXED INCOME FUNDS $ OR % OF ASSETS CLASS OF SHARES (CHECK ONE) (CHECK ONE) AIM Blue Chip Fund $ Class [ ] A [ ] B AIM Balanced Fund $ Class [ ] A [ ] B ------------ ------------ AIM Capital AIM Global Income Fund $ Class [ ] A [ ] B Development Fund $ Class [ ] A [ ] B ------------ ------------ AIM Intermediate AIM Charter Fund $ Class [ ] A [ ] B Government Fund $ Class [ ] A [ ] B ------------ ------------ AIM High Yield Fund $ Class [ ] A [ ] B AIM Global Aggressive ------------ Growth Fund $ Class [ ] A [ ] B AIM Income Fund $ Class [ ] A [ ] B ------------ ------------ AIM Global Growth Fund $ Class [ ] A [ ] B ------------ AIM Limited Maturity AIM Constellation Fund $ Class [ ] A Treasury Shares $ Class [ ] A ------------ ------------ AIM Growth Fund $ Class [ ] A [ ] B MONEY MARKET FUNDS $ ------------ ------------ AIM Money Market Fund $ Class [ ] A [ ] B [ ] C AIM International ------------ Equity Fund $ Class [ ] A [ ] B Total $ ------------ ------------ AIM Global Utilities Fund $ Class [ ] A [ ] B ------------ AIM Value Fund $ Class [ ] A [ ] B ------------ AIM Weingarten Fund $ Class [ ] A [ ] B ------------
If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where Class C Shares will be purchased. BILLING: PLEASE CONFIRM WITH YOUR EMPLOYER THAT THIS IS REQUIRED BEFORE COMPLETING THIS SECTION. MY EMPLOYER HAS REQUESTED THAT AIM FORWARD A BILLING EACH MONTH FOR SUBMISSION OF MY ON-GOING SALARY-DEFERRAL CONTRIBUTION. (NOTE: BILLING IS ONLY AVAILABLE WHEN AN ORGANIZATION HAS 10 OR MORE 403(B) PARTICIPANTS WITH AIM.) PLEASE REMIT THE BILLING TO: Employer's Name Attention -------------------------- ------------------- Address Telephone ---------------------------------- ------------------- - -------------------------------------------------------------------------------- 3. ACCOUNT OPTIONS Please indicate options you desire, if any. TELEPHONE EXCHANGE PRIVILEGE. Unless indicated below, I authorize the Transfer Agent to accept from any person instructions to exchange shares in my account(s) by telephone for shares of other AIM Funds within the same Class of Shares, in accordance with the procedures and conditions set forth in the Fund's current prospectus. [ ] I DO NOT want the telephone exchange privilege. 11 2 REDUCED SALES CHARGE (optional/available for Class A shares only) Right of Accumulation I apply for Right of Accumulation reduced sales charges based on the following accounts in The AIM Family of Funds(--Registered Trademark--): Fund(s) Account No(s). --------------------------- ------------------------- LETTER OF INTENT I agree to the Letter of Intent provisions in the prospectus. I plan to invest during a 13-month period a dollar amount of at least: [ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000 - -------------------------------------------------------------------------------- 4. BENEFICIARY DESIGNATION Primary Beneficiary: I hereby designate the following individual(s) to receive the full value of the assets of my 403(b) plan with A I M Distributors, Inc. upon my death. This revokes any and all prior Beneficiary Designations made by me and filed with the Custodian. (If you designate a beneficiary other than your spouse, your spouse must acknowledge the designation by signing this form.) Full Name ------------------------------------------------------------------ Address ------------------------------------------------------------------- Social Security # ---------------------------------------------------------- Relationship --------------------------------------------------------------- Percentage of Assets ------------------------------------------------------- Please complete and sign the beneficiary designation. We cannot accept this application without proper designation of beneficiary. If you wish to identify additional or contingent beneficiaries, please attach a separate letter identifying the same information requested above. - -------------------------------------------------------------------------------- 5. AUTHORIZATION AND SIGNATURE I hereby adopt the A I M Distributors, Inc. 403(b)(7) Custodial Agreement appointing Boston Safe Deposit and Trust Company as Custodian. I have received and read the current prospectus of the investment company(ies) selected in this agreement and have read and understand the 403(b)(7) custodial agreement and consent to the custodial account fee as specified. I understand that an annual AIM 403(b)(7) Maintenance Fee (currently $10) will be deducted in early December from my 403(b)(7) Fund account. Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is required to have the following certification. Please refer to the Fund prospectus for complete instructions regarding backup withholding. Under the penalties of perjury, I certify that (i) the number shown in Section 1 is my correct Social Security/Taxpayer Identification Number and (ii) I am not subject to backup withholding because the Internal Revenue Service (a) has not notified me that I am subject to backup withholding as a result of failure to report all interest or dividends, or (b) has notified me that I am no longer subject to backup withholding (does not apply to real estate transactions, mortgage interest paid, the acquisition or abandonment of secured property, contributions to an individual retirement arrangement [403(b)(7)], and payments other than interest and dividends). Certification Instructions-You must cross out item (b) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting of interest or dividends on your tax return. [ ] Exempt from Backup Withholding (i.e. exempt entity as described in the prospectus) [ ] Nonresident alien [Form(s) W-8 attached] Your Signature Date / / ------------------------------------------- --- --- --- - -------------------------------------------------------------------------------- 6. BROKER/DEALER INFORMATION: Name of Broker/Dealer Firm ------------------------------------------------- Branch Address ------------------------------------------------------------- Rep. Name and Number ------------------------------------------------------- Rep. Signature ------------------------------------------------------------- Rep. Telephone ---------------------- 12 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 3 403(b) PLAN [AIM LOGO APPEARS HERE] ASSET-TRANSFER FORM To move assets from another 403(b) custodian to AIM. Use this form only when transferring assets from an existing 403(b) (account # __________) to an AIM 403(b) (account # __________). If you do not already have an AIM 403(b), you must also submit a 403(b) Application. AIM will arrange the transfer for you. - -------------------------------------------------------------------------------- 1. INVESTOR INFORMATION (please print) Name ----------------------------------------------------------------------- Address -------------------------------------------------------------------- City State Zip ----------------------------------- ----------- ----------- Social Security Number Daytime Telephone ----------------- ---------------- - -------------------------------------------------------------------------------- 2. CURRENT CUSTODIAN Name of Resigning Trustee Account Number --------------- ------------------- Address of Resigning Trustee ----------------------------------------------- City State Zip ----------------------------------- ----------- ----------- Attention Telephone ------------------------------ ------------------------- - -------------------------------------------------------------------------------- 3. 403(b) ACCOUNT INFORMATION Please deposit proceeds in my [ ] existing [ ] new*
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES (CHECK ONE) AIM Blue Chip Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Capital Development Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Charter Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Global Growth Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Constellation Fund $ [ ] Class A ------------------------------- AIM Growth Fund $ [ ] Class A [ ] Class B ------------------------------- AIM International Equity Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Global Utilities Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Value Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Weingarten Fund $ [ ] Class A [ ] Class B ------------------------------- FIXED INCOME FUNDS CLASS OF SHARES (CHECK ONE) AIM Balanced Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Global Income Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Intermediate Government Fund $ [ ] Class A [ ] Class B ------------------------------- AIM High Yield Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Income Fund $ [ ] Class A [ ] Class B ------------------------------- AIM Limited Maturity Treasury Shares $ [ ] Class A ------------------------------- MONEY MARKET FUNDS CLASS OF SHARES (CHECK ONE) AIM Money Market Fund $ [ ] Class A [ ] Class B [ ] Class C ------------------------------- Total $ -------------------------------
If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where Class C Shares will be purchased. - -------------------------------------------------------------------------------- 4. TRANSFER INSTRUCTIONS To Resigning Trustee or Custodian: Please liquidate [ ] all or [ ] part of the account(s) listed in Section 2 and transfer the proceeds to my 403(b) account with Boston Safe Deposit and Trust Company. 13 4 [ ] Partial amount to transfer $ ------------------- [ ] immediately [ ] at maturity ( / / ) ---- ---- ---- [ ] Please transfer "In Kind" [ ] all [ ] part of the shares of the AIM Fund held in my account to Boston Safe Deposit and Trust Company. Percent of shares to transfer % ----- - -------------------------------------------------------------------------------- 5. AUTHORIZATION AND SIGNATURE I have established a 403(b) account with the AIM Funds and have appointed Boston Safe Deposit and Trust Company as the successor Custodian. Please accept this as your authorization and instruction to liquidate or transfer in kind the assets noted above, which your company holds for me. Your Signature Date / / ------------------------------------ ---- ---- ---- Note: Your resigning trustee or custodian may require your signature to be guaranteed. Call that institution for requirements. Name of Bank or Firm ------------------------------------------------------- Signature Guaranteed by ---------------------------------------------------- (Name & Title) - -------------------------------------------------------------------------------- 6. CUSTODIAN ACCEPTANCE This is to advise you that Boston Safe Deposit and Trust Company, as custodian, will accept the account identified above for: Depositor's Name Account Number ------------------------------- ------------ This transfer of assets is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt of all or any of the plan assets. No federal income tax is to be withheld from this transfer of assets. Authorized Signature --------------------------------------------------- (Boston Safe Deposit and Trust Company) Mailing Date / / ---- ---- ---- - -------------------------------------------------------------------------------- 7. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN Please attach a copy of this form to the check. Indicate account number on all documents. Return this completed form and completed 403(b) Application to Boston Safe Deposit and Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246. - -------------------------------------------------------------------------------- 8. DISTRIBUTION ELECTION INFORMATION If this participant is age 70-1/2 or older this year, the resigning Trustee/Custodian must complete this section. Election made by the participant as of the required beginning date: 1. Method of calculation (check one): [ ] declining years [ ] recalculation 2. Life expectancy (check one): [ ] single life payout [ ] joint life payout* 3. The amount withheld from this transfer to satisfy this year's required distribution: $ ------------------- Were any previous distributions made to the participant this year? [ ] No [ ] Yes $ ------------------------------ The factor used to calculate this required payment was --------------------- Name of Designated Beneficiary -------------------------------------------- Relationship Date of Birth / / ------------------------------------ --- --- --- Signature of Current Custodian/Trustee ------------------------------------- [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 14 5 403(b) PLAN EXCHANGE AND CONTRIBUTION CHANGE FORM [AIM LOGO APPEARS HERE] - -------------------------------------------------------------------------------- 1. PARTICIPANT INFORMATION (PLEASE PRINT) Employee Name -------------------------------------------------------------- Social Security Number Account Number ---------------------- --------------- Employer Name -------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. FUND EXCHANGE An AIM Fund exchange is the transfer of existing fund assets from one AIM Fund to another AIM Fund. Please consult your investment adviser first. Fund exchanges will not effect how your future 403(b) contributions are invested. You must indicate under the 403(b) Contribution Section any changes with respect to your future contribution. From AIM Fund to AIM Fund Shares, or $ or % ---------- --------- ----- ---- ---- From AIM Fund to AIM Fund Shares, or $ or % ---------- --------- ----- ---- ---- - -------------------------------------------------------------------------------- 3. 403(b) CONTRIBUTIONS MARK BELOW THE STATEMENT THAT APPLIES [ ] All future contributions are to be invested as previously indicated. [ ] All future contributions (indicate % or dollar amount) are to be invested as indicated below. INVESTMENT SELECTION I wish to change the investment of my future 403(b) contributions to the AIM Funds listed below. This change is to be effective with the first payroll contribution received following receipt of this form. A. Fund % --------------------------------- ----------------------- B. Fund % --------------------------------- ----------------------- C. Fund % --------------------------------- ----------------------- D. Fund % --------------------------------- ----------------------- Total: 100% Signature Date --------------------------------------- ------------------ Please return the completed form to A I M Fund Services, Inc., Attn: Qualified Plan Services Department, P.O. Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246. If you have any questions, please call one of our Client Services Representatives. Please retain a photocopy of this form for your records. 15 A I M Distributors, Inc. 6 403(b) PLAN AGREEMENT FOR SALARY DEFERRAL [AIM LOGO APPEARS HERE] Use this form only if your employer does not supply you with its own form. Submit this form to your employer. [ ] Original Authorization [ ] Amended Authorization BY THIS AGREEMENT MADE BETWEEN (the "Employee") ----------------------------------------------------------- (Please Print) and (the "Employer") ----------------------------------------------------------- the parties hereto agree as follows: Effective with the paycheck dated ______________________________ , 19_____ (which date is subsequent to the date of execution of this Agreement), the Employee's basic salary will be deferred by the amount indicated in item (1) or (2) below, as designated by the Employee. This Agreement shall be legally binding and irrevocable as to each of the parties hereto while employment continues; provided, however, that either party may terminate this Agreement by giving at least 30 days written notice of the date of termination. The amount of the Employee's salary deferral cannot exceed the Exclusion Allowance under Section 403(b) of the Internal Revenue Code or the limitations under Section 402(g) and 415 of the Internal Revenue Code. The amount of the Employee's salary deferral will be: (select one) 1. $ per pay period beginning . ------------------- -------------------------- 2. % of basic salary beginning . ------------------ ------------------------- It is understood that the amount of such salary deferral will be sent by the Employer directly to A I M Fund Services, Inc., P.O. Box 4399, Houston, Texas 77210-4399. Checks should be made payable to Boston Safe Deposit and Trust Company. If your employer is requesting a billing from AIM, please indicate this on the application. Signed this day of , 19 . ---------------------- --------------------------- ---- Employee Signature --------------------------------------------------------- Signed this day of , 19 . ---------------------- --------------------------- ---- Name of Employer ----------------------------------------------------------- By ------------------------------------------------------------------------- (Accepted) Title ---------------------------------------------------------------------- 17 A I M Distributors, Inc. 7 403(b) PLAN SALARY-DEFERRAL WORKSHEET [AIM LOGO APPEARS HERE] - -------------------------------------------------------------------------------- 1. INSTRUCTIONS Under current IRS rules, the maximum amount you may defer from your salary is based upon a formula using a number of factors, including current salary, years of service, type of employer, and plan contributions made on your behalf in past years. Simplified, the contribution to your 403(b) plan is the lesser of: o Basic Exclusion Allowance o 20% of your gross salary o $9,500 It is important not to exceed the maximum permitted contribution in any tax year. Excess contributions may be subject to federal taxes unless corrected by April 15 of the tax year following the tax year for which the contribution is made. Excess contributions, not corrected, are also subject to a 6% non-deductible annual excise tax. Please note that some employees of certain church organizations and employees of more than one qualified organization are subject to somewhat different limitations. Also, special "catch-up" provisions may permit you to exceed the basic limits. If you think you may qualify for such special treatment, consult your tax adviser for details. The worksheet below will help you determine the amount you may defer. However, you may be required to further reduce this amount if your employer is making plan contributions in addition to your deferrals or you are currently making salary-deferral contributions to other retirement plans. You should keep this worksheet for your own records. Do not return it to AIM. - -------------------------------------------------------------------------------- 2. WORKSHEET DEFINITIONS Current Salary $ = Current annual salary (before --------------- salary-deferral contributions) Service Years = Years of service with current --------------- employer (enter whole and fractional years; however, if less than 1 year, use "1" year). Prior Contributions $ = All contributions (excluding this --------------- year's salary deferrals) made by your present employer to a pension or profit sharing plan, state teachers retirement plan,403(b) plan, 457 deferred compensation plan or SEP-IRA. Prior Deferrals $ = All salary deferrals made to 403(b) --------------- plans, including tax-sheltered annuities, 457 plans (relating to state deferred compensation plans), SAR-SEP, and 401(k) plans on your behalf by your present employer in past years. Current Deferrals $ = Your salary-deferral contributions --------------- made in the current tax year. This amount may be zero or the amount deferred year to date. - -------------------------------------------------------------------------------- 3. BASIC EXCLUSION ALLOWANCE FOR SALARY DEFERRALS: a. $ x x .1667 = $ ------------------------------------- --------------- ------------------------------ Current Salary Service Years b. $ + $ = $ ------------------------------------- ----------------------- ------------------------------ Prior Contributions Prior Deferrals c. $ - $ = $ ------------------------------------- ----------------------- ------------------------------ Total Line a Total Line b Basic Exclusion Allowance d. $ x .20 = $ ------------------------------------- ------------------------------ Current Salary Employer's Contribution Limit e. $9,500 - = $ ----------------------------- ------------------------------ Current Year's Salary Deferral Salary Deferral Limit f. Your Basic Salary Deferral Limit is the lesser of c, d, or e = $ ------------------------------
19 8 4. SPECIAL INCREASE IN DOLLAR LIMITATION: This option is only available if you have at least 15 years of service with the same qualified employer. This Special Increase in the Dollar Limitation may permit you to exceed the $9,500 salary-deferral limit. g. ($5,000 x ) - $ = $ -------------------------- ------------------------ ----------------------------- Service Years Prior Deferrals h. Total of Special Increase Dollars(1) used in prior years under this option = $ ----------------------------- i. $15,000 - $ = $ ------------------------ ----------------------------- Amount on Line h j. Lesser of lines g or i or $3,000 = $ ----------------------------- k. $9,500 + = $ --------------------------- ----------------------------- Amount on Line j Special Deferral Limit l. The maximum amount you can defer is the lesser of lines c, d, or k = $ -----------------------------
- -------------------------------------------------------------------------------- 5. "CATCH-UP" OPTIONS Employees of a qualified organization(2) may elect to use one of three special "catch-up" options to increase your 403(b) contribution. Each option is irrevocable and once chosen, no other "catch-up" option may be used in future years. However, an individual may choose to use the Basic Exclusion Allowance in any year instead of the "catch-up" option. NOTE: The "catch-up" options calculate the total amount your employer plus you may contribute. Your salary deferral may not exceed $9,500 even if the total "catch-up" amount is greater than $9,500.
OPTION A-May be elected only in the year in which the participant separates from service. m. Amount on line c, recalculated using steps a, b, c based on only the last 10 years of service = $ ------------------------------ n. The option's limit is the lesser of line m or $30,000 (Your salary-deferral contribution is limited to $9,500.) = $ ------------------------------ OPTION B-May be elected in any year of service. o. Amount on line c = $ ------------------------------ p. $3,200 + $ = $ ---------------------- ------------------------------ Total Line d q. Option b overall limit = $ $15,000 ------------------------------ r. The maximum contribution under this option is the lesser of line o, p or q (Your salary-deferral contribution is limited to $9,500.) = $ ------------------------------ OPTION C-May be elected in any year of service. s. x .20 = $ --------------------------- ------------------------------ Current Salary t. The maximum contribution under this option is the lesser of line s, or $30,000 (Your salary-deferral contribution is limited to $9,500.) = $ ------------------------------
(1) Special Increase in Dollar Limitation permits you an additional lifetime contribution up to $15,000, not to exceed $3,000 extra in any one year. Step h accounts for previous contributions made under this option. (2) A "qualified organization" is an educational organization [described in IRC Section 170(b)(1)(A)(ii)], hospital, home health service agency [described in IRC Section 501(c)(3) and which has been determined by the Secretary of Health, Education, and Welfare to be a home health agency, as defined in Section 1861(o) of the Social Security Act], health and welfare service agency, church or convention or association of churches [described in IRC Section 414(e)] or an organization which is exempt from tax under IRC Section 501 and which is controlled by or associated with a church or a convention or association of churches. You should review these calculations with your tax adviser. You may also want to consult the Internal Revenue Service Publication 571 as an additional source of information. The Custodian, its agent or the sponsor of the AIM 403(b) Plan will not provide legal or tax advice, nor calculate your 403(b) plan contributions. 20 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 9 403(b)(7) PLAN CUSTODIAL AGREEMENT ARTICLE I. EFFECTIVE DATE This AIM 403(b)(7) Custodial Agreement shall become effective on the date on which the Custodian or its agent, A I M Distributors, Inc., receives incorporated AIM 403(b)(7) Application executed by the Employee. ARTICLE II. DEFINITIONS 2.01. ACCOUNT OR FUND(S) means the separate account or accounts established and maintained by the Custodian for an Employee pursuant to this Agreement. 2.02. AGREEMENT OR AIM 403(b)(7) AGREEMENT means this document and the Application. 2.03. AIM FUND(S) means any of the mutual funds which are distributed by A I M Distributors, Inc. and are part of The AIM Family of Funds--Registered Trademark--. 2.04. APPLICATION OR AIM 403(b)(7) APPLICATION means the document(s) which established the Agreement and is (are) executed by the Employer, Employee and Custodian. 2.05. BENEFICIARY means the person or persons (including entities) designated by the Employee as entitled to receive the Account balance, if any, at the Employee's death. If at the time of the Employee's death, no designated Beneficiary is alive, Beneficiary shall mean the Employee's surviving spouse or, if the Employee does not have a surviving spouse, the Employee's estate. 2.06. CODE means the Internal Revenue Code of 1986, as amended. 2.07. CONTRIBUTIONS shall mean Salary Reduction Contributions and/or Employer Contributions. 2.08. CUSTODIAN means the party who executed the Application as Custodian, and any successor thereto, provide that such successor is either a bank or another person who satisfies the requirements of Code Section 401(f)(2). 2.09. DESIGNATION OF BENEFICIARY means a form executed and submitted to the Custodian in accordance with the terms of Article IX. 2.10. DISABILITY means the inability of the Employee to engage in any substantial gainful activity because of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. The Employee shall not be considered to be suffering from Disability until the Custodian has received certification from the Employer to such effect. 2.11. DISTRIBUTOR means A I M Distributors, Inc. and any successor thereto. 2.12. EMPLOYEE means an individual who is employed by the Employer and who has properly executed the Application. 2.13. EMPLOYER means the employer who is listed on the Application. 2.14. EMPLOYER CONTRIBUTIONS mean the amount, if any, transmitted by the Employer to the Custodian for addition to the Employee's Account other than Salary Reduction Contributions. 2.15. SALARY REDUCTION CONTRIBUTION means the amount not included in the Employee's compensation pursuant to a written salary reduction agreement and transmitted by the Employer to the Custodian for addition to the Employee's Account. ARTICLE III. MAINTENANCE OF A CUSTODIAL ACCOUNT 3.01. SALARY REDUCTION CONTRIBUTIONS TO THE ACCOUNT. The Employee may make Salary Reduction Contributions to the Account. Any salary reduction agreement between the Employer and the Employee shall be effective only as to amounts earned by the Employee after such agreement becomes effective. Each such agreement shall be legally binding and irrevocable with respect to compensation subsequently earned. A salary reduction agreement may be terminated by written notice received at least 30 days prior to the date of termination. The Employer and Employee shall not enter into more than one salary reduction agreement in any one taxable year of the Employee. 3.02. TRANSFERS TO AND FROM THE ACCOUNT. All direct or indirect asset transfers to an Account from an existing custodial account described in Code Section 403(b)(7) or an annuity contract qualified under Code Section 403(b)(1) shall be in cash unless the Custodian otherwise consents. Direct transfers into an account may be accepted to the extent permitted by the Code. The Employee has the right by proper written instruction to cause a transfer of cash or, if agreed to by the Custodian, shares of AIM Fund(s) to another custodial account described in Code Section 403(b)(7), an annuity contract qualified under Code Section 403(b)(1), an individual retirement account described in Code Section 408(a) or an individual retirement annuity described in Code Section 408(b). 3.03. ROLLOVERS TO THE ACCOUNT. The Employee shall be permitted to make rollover contributions to the Account of an amount received by the Employee that is attributable to participation in another annuity or custodial account which meets the requirements of Section 403(b) of the Code. Neither the Custodian nor the Distributor shall have responsibility to ensure that contributions under 3.02 or 3.03 satisfy the applicable provisions of the Code. 3.04. EMPLOYER CONTRIBUTIONS. In addition to Salary Reduction Contributions, the Employer may make a contribution to the Account on behalf of the Employee in accordance with any retirement plan, fund or program for which the Employee is eligible, subject to the limitations under 3.05. 3.05. CONTRIBUTION LIMITS. (a) Unless the Employee has made a special election as described under Section 415(c)(4) of the Code, the total amount of annual additions that may be made to the Account on behalf of the Employee for any limitation year shall not exceed the lesser of: (i) $30,000 (or, if greater, one-fourth the defined benefit plan dollar limitation in effect under Section 415(b)(1) of the Code for the limitation year); or (ii) 25 percent of the Employee's compensation (within the meaning of Section 415(c)(3) of the Code) for the limitation year. (b) For purposes of this subsection (a) above, the term "annual additions" shall include contributions to the Account under 3.01 (pertaining to Salary Reduction Contributions) for the limitation year. (c) The term "limitation year" shall mean the calendar year, unless the Employee elects to change the limitation year to another twelve-month period by attaching a statement to his or her federal income tax return in accordance with the regulations under Section 415 of the Code. If the Employee is in control of the Employer (within the meaning of Code Section 414(b) or (c), as modified by Code Section 415(h)), the limitation year shall be the same as the limitation year of the Employer under Section 415 of the Code. (d) If the Employer or any affiliated employer as described in Section 415(h) of the Code makes contributions on behalf of the Employee to any other annuity contract described in Section 403(b) of the Code, then the contributions to such annuity contract shall be combined with the contributions to the Account for purposes of the limitations of subsection (a) above. 3.06. LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS. For any taxable year beginning after December 31, 1986, Salary Reduction Contributions shall not exceed the amount of $9,500, as adjusted in accordance with Code Section 402(g)(4), or such greater amount as may be permitted with respect to the Employee for the taxable year under Code Section 402(g)(8). ARTICLE IV. INVESTMENT OF CONTRIBUTIONS 4.01. PURCHASE OF SHARES. As soon as is practical after the Custodian receives a Contribution, it shall invest such Contribution in shares of the designated AIM Fund(s). 4.02. REPORTS AND VOTING OF SECURITIES. The Custodian shall deliver to the Employee or, if applicable, his other Beneficiary, any notices, prospectuses, financial statements, proxies and proxy solicitation materials received by it with respect to investments made for the Employee's Account. 4.03. DIVIDEND. All capital gain distributions and dividends received on the shares of the selected AIM Fund(s) shall be automatically reinvested in shares of the Fund consistent with the Employee's investment instruction in effect on the date such dividend or distribution is paid. ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS 5.01. INSTRUCTIONS TO CUSTODIAN. The Custodian shall not be responsible for making any distributions until such time as it has been notified in writing by the Employee to begin making distributions. No distribution will be made upon the death of the Employee unless the Custodian has been notified in writing of the Employee's death. The Custodian may require adequate verification of such death. Distributions to the Employee (or, if applicable, his or her Beneficiary) of amounts in the Account shall be made in cash and/or, if the Distributor consents, in kind. 5.02. EMPLOYEE WITHDRAWALS. (a) After Attainment of Age 59-1/2. At any time after the Employee attains age 59-1/2, he or she may withdraw amounts from his or her Account by making written instructions to the Custodian as to the amounts to be so withdrawn. (b) Hardship Withdrawals. An Employee who has a financial hardship, as determined by the Employer, and who has made all available withdrawals pursuant to the paragraph above and pursuant to the provisions of any other plans of the Employer and any related entities of which he is a member and who has obtained all available loans pursuant to the provisions of any other plans of the Employer and any related entities of which he or she is a member may withdraw from his Account an amount not to exceed the lesser of the balance of 21 10 his Account or the amount determined by the Employer as being available for withdrawal pursuant to this paragraph. For purposes of this paragraph, financial hardship means the immediate and heavy financial needs of the Employee. A withdrawal based upon financial hardship pursuant to this paragraph shall not exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other resources of the Employee. The determination of the existence of an Employee's financial hardship and the amount required to be distributed to meet the need created by the hardship shall be made by the Employer. A withdrawal shall be deemed to be made on account of an immediate and heavy financial need of an Employee if the withdrawal is on account of: (i) medical expenses described in Section 213(d) of the Code incurred by the Employee, the Employee's spouse or any dependents of the Employee (as defined in Section 152 of the Code); (ii) purchase (excluding mortgage payments) of a principal residence of the Employee; (iii) payment of tuition for the next semester or quarter of post-secondary education of the Employee, or the Employee's spouse, children or dependents (as defined in Section 152 of the Code); (iv) the need to prevent the eviction of the Employee from his principal residence or foreclosure on the mortgage of the Employee's principal residence; (v) such other financial needs which the Commissioner of Internal Revenue may deem to be immediate and heavy financial needs through the publication of revenue rulings, notices and other documents of general applicability; or (vi) such other circumstances as the Employer determines, and certifies, as an immediate and heavy financial need of the Employee in accordance with applicable governmental regulations and procedures adopted by the Employer. The decision of the Employer shall be final and binding, provided that all Employees similarly situated shall be treated in a uniform and nondiscriminatory manner. The above notwithstanding, (a) withdrawals under this paragraph from an Employee's Account shall be limited to the sum of the Employee's Salary Reduction Contributions to his Account, plus income allocable thereto and credited to the Employee's Account as of December 31,1988, less any previous withdrawals of such amounts. An Employee who makes a withdrawal under this paragraph may not again make Salary Reduction Contributions or employee contributions to the Account or to any other qualified or nonqualified plan of the Employer or any related entity for a period of twelve months following such withdrawal. Further, such Employee may not make Salary Reduction Contributions to the Account or to any other plan maintained by the Employer or any related entity for such Employee's taxable year immediately following the taxable year of the withdrawal in excess of the applicable limit set forth in Section 402(g) of the Code for such next taxable year less the amount of such Employee's Salary Reduction Contributions for the taxable year of the withdrawal.All hardship withdrawals shall be made by executing the Financial Hardship Form prescribed by AIM Distributors and completed and signed by the Employer and filing such form with AIM Distributors prior to the proposed date of withdrawal. 5.03. DISTRIBUTIONS AT SEPARATION FROM SERVICE. Unless the Employee otherwise irrevocably elects in writing within 60 days after the Employee's separation from service with the Employer, and the Custodian consents to such election, distribution of the Account shall be made in a lump sum 90 days after the Employee's separation from service. If the Employee makes such an election, distribution of the Account shall not commence until the date specified in such election unless the Employee earlier dies or becomes disabled as defined in this Agreement. If the Employee wishes to make such an irrevocable election, he or she may do so by filing a written notice with the Custodian in a form acceptable to the Custodian. The written notice to the Custodian shall list the date on which distribution shall commence, the period over which distribution shall be made, and amount(s) of each distribution. The Employee may not elect either (a) a date for commencement of distribution which delays the commencement of distribution from the Account beyond April 1 following the calendar year during which the Employee attains age 70-1/2 or (b) a form of distribution which results in the present value (determined at the time distribution commences) of payments to be made to the Employee over the Employee's life expectancy (as determined under Section 1.72-9 of the Treasury Regulations) equaling less than 50% of the present value of the total payments to be made. 5.04. DISTRIBUTIONS AT THE EMPLOYEE'S DEATH. At the Employee's death, if such Employee has not already specified the form of distribution, the Beneficiary (or each beneficiary if there is more than one) may elect the form of distribution. Such election, which will be irrevocable, must be in writing and provided to the Custodian within 60 calendar days after the Custodian has received notification of the Employee's death. If such an election is not made in the time provided, distribution of the Account shall be made in a lump sum 90 days after the Custodian receives notification of the Employee's death. Any form of distribution must comply with the following requirements: (a) Death While Receiving Distributions. If the Employee had already begun to receive distributions from the Account and the Employee's spouse is not the Beneficiary, the Account balance which remains at the time of the Employee's death shall be distributed to the Beneficiary at least as rapidly as under the distribution method being used at the time of the Employee's death. (b) Death Prior to Receiving Distributions. If the Employee had not begun to receive distributions at his or her death and the Employee's spouse is not the Beneficiary, the entire Account balance which remains at the time of the Employee's death shall be distributed to the Beneficiary either (i) within five (5) years, or (ii) in installments over a period not exceeding the life expectancy of the Beneficiary (as determined as of the date of the Employee's death by using the return multiples contained in Section 1.72-9 of the Treasury Regulations), provided that such distributions commence within one year after the date of the Employee's death. (c) Spousal Beneficiary. If the Employee's spouse is the Beneficiary, regardless of whether distributions to the Employee have already commenced, this Section 5.04 shall be applied to the spouse as though the spouse were the Employee and, as though the spouse, as Employee, separated from service with the Employer on the date of the Employee's death. 5.05. DISTRIBUTION UPON DISABILITY. If the Employee becomes disabled as defined in this Agreement after his or her separation from service with the Employer, he or she shall receive a lump sum distribution of the Account 90 days after the date of such Disability unless, within 60 days after the date of such Disability, the Employee elects another time for commencement and/or form of distribution and the Custodian consents to such election. The Employee may not elect either (a) a date for commencement of distribution which delays the commencement of distribution from the Account beyond the first April 1 following the calendar year during which the Employee attains age 70-1/2 or (b) a form of distribution which results in the present value (determined at the time distribution commences) of payments to be made to the Employee over the Employee's life expectancy (as determined under Section 1.72-9 of the Treasury Regulations) equaling less than 50% of the present value of the total payments to be made. 5.06. DISTRIBUTION OF EXCESS DEFERRAL. Upon written notice to the Custodian from the Employee, by the first March 1 following the close of the taxable year of the Employee, that "excess deferrals" (as that term is defined in Code Section 402(g)(2)(A)) have been made with respect to the Account for such taxable year, the Custodian shall distribute to the Employee such "excess deferrals" not later than the first April 15 following the close of such taxable year. The Employer shall have sole responsibilities for determining such an excess deferrals and timely notification to the Custodian. 5.07. DISTRIBUTION TO INCOMPETENTS. If a distribution is payable to a person known by the Custodian to be a minor or a person under a legal disability, the Custodian may, in its absolute discretion, make all or any part of the distribution to (a) a parent of such person, (b) the guardian, committee or other legal representative, wherever appointed, of such person, including a custodian for such person under a Uniform Gifts to Minors Act or similar act, (c) any person having the control and custody of such person, or (d) to such person directly. ARTICLE VI. CUSTODIAN 6.01. DUTIES. The Custodian shall: (a) Receive transmitted Contributions; (b) Provide safekeeping for the assets in the Account; (c) Collect income; (d) Execute orders for purchase, sale or exchange of shares of the AIM Fund(s) and make settlements in accordance with general practice; (e) Maintain records of all transactions in the Account; (f) Transmit to each Employee, not less frequently than annually, appropriate statements of the amount of the Custodian's compensation, if any, charged to the Account; (g) File with the Internal Revenue Service and/or any other government agency such returns, reports, forms and other information as may be prescribed as the responsibility of the Custodian in its capacity as Custodian by the applicable statue and regulations thereunder; and (h) Perform all other duties and services consistent with the purposes and intentions of this Agreement. The Custodian may perform any of its administrative duties through other persons designated by the Custodian from time to time, including persons otherwise unaffiliated with the Custodian. 6.02. SHARE REDEMPTIONS. If cash funds are required to pay taxes, fees, or other expenses pursuant to Article VI or to make payments to the Employee or his or her Beneficiary pursuant to Article V, the Employee (or Beneficiary, if applicable) shall redeem shares of the AIM Fund(s) held in the Employee's Account. 6.03. LIMITATIONS ON LIABILITIES AND DUTIES. (a) The Custodian shall be fully protected in acting or omitting to take any action in reliance upon any document, order or other direction believed by the Custodian to be genuine and properly given. Conversely, the Custodian shall 22 11 be fully protected in acting or omitting to take any action in reliance on its belief that any document, order or other direction either is not genuine or was not properly given. (b) To the extent permitted by law, 30 days after providing to the Employee the statements required under Section 6.01(f), the Custodian shall be released and discharged from all liability to the Employee or any third party as to the matters contained in such statement unless the Employee files written objections with the Custodian within such 30-day period. (c) In no event shall the Custodian or Distributor be under a fiduciary duty to the Employee in regard to the selection of investments or be liable for any loss incurred on account of a selected investment. (d) The Custodian and Distributor shall have no responsibility with regard to the initial or continued qualification of the Account under Code Section 403(b)(7) or with regard to whether the Account or any Contributions to the Account satisfy any applicable minimum participation, coverage or nondiscrimination requirements under the Code. (e) Neither the Custodian nor the Distributor shall be obligated to determine the amount of any Contribution due or to collect any Contribution from the Employee or Employer. (f) Neither the Custodian nor the Distributor shall be held responsible for determining the amount, character, or timing of any distribution to the Employee. (g) Neither the Custodian nor the Distributor shall have responsibility, and the Employee shall have sole responsibility, with respect to the computation of the Employee's "exclusion allowance" as defined in Code Section 403(b)(2), any applicable limitation(s) on contributions under Code Section 402(g) and Code Section 415(c), any election available to the Employee under Code Section 415, or any matters relating to any tax consequences with respect to Contributions, Account earnings, Account distributions, transfers or rollovers. (h) The Custodian shall not be required to carry out any instructions not given in accordance with this Agreement and neither the Custodian nor the Distributor shall be liable for loss of income, or for appreciation or depreciation in share value that shall result from the Custodian's failure to follow instructions not given in accordance with this Agreement. (i) If instructions are received that, in the opinion of the Custodian, are unclear, neither the Custodian nor the Distributor shall be liable for loss of income, or for appreciation or depreciation in share value during the period preceding the Custodian's receipt of written clarification of the instructions. (j) The Custodian shall have no responsibility to make any distribution or process any withdrawal by order of the Employee or Beneficiary unless and until the requisite written instructions specify the occasion for such action and the Custodian is furnished with any and all applications, certificates, tax waivers, signature guarantees and other documents (including proof of any legal representative's authority) deemed necessary or advisable by the Custodian. (k) The Custodian shall neither assume nor have any duty of inquiry about any matter arising under the Plan. (l) Neither the Custodian nor the Distributor shall have any liability to the Employee or Beneficiary for any tax penalty or other damages resulting from any inadvertent failure by the Custodian to make a distribution under this Agreement. (m) Neither the Custodian nor the Distributor shall be liable for interest on temporary cash balances, if any, maintained in the Account. (n) To the extent permitted by law, the Employee shall always fully indemnify the Custodian and hold it harmless from any and all liability whatsoever which may arise either (i) in connection with this Agreement and matter which it contemplates (except that which arises due to the Custodian's gross negligence or willful misconduct) or (ii) with respect to making or failing to make distribution, other than for failure to make distribution in accordance with instructions therefore which are in full compliance with both Article IX and this Section 6.03. (o) Except as required by law, the Custodian shall not be obligated or expected to commence or to defend a legal action or proceeding in connection with this Agreement, unless the Custodian and the Employer agree that the Custodian will defend a given legal action and the Custodian is fully indemnified for so doing to its satisfaction. (p) In no event shall the Employee, Employer, or Distributor have any responsibility or liability for any acts or omissions of the Custodian (or its agents or designees) hereunder. 6.04. COMPENSATION. In consideration for its services hereunder, the Custodian shall be entitled to receive the applicable fees specified in its then current fee schedule, if any. The Custodian may substitute a revised fee schedule from time to time upon 30 days' written notice to the Employer or Employee. The Custodian shall be entitled to such reasonable additional fees as it may from time to time determine for services required of it and not clearly identified on the fee schedule. 6.05. RESIGNATION AND REMOVAL. The Custodian may resign at any time by giving at least 30 days' written notice to the Employer or Employee. The Distributor may remove the Custodian hereunder by giving at least 30 days' written notice to the Custodian. In each case, the Distributor shall designate a successor custodian qualified pursuant to Section 2.07 hereof, which successor custodian shall accept such appointment by a writing to be submitted to the Employer or Employee and the Custodian. On the effective date of its resignation or removal, the Custodian shall transfer to the designated successor custodian the assets and records (or copies thereof) of the Account provided, however, that the Custodian may retain whatever assets it deems necessary for payment of its fees, costs, expenses, compensation and any other liabilities which constitute a charge on or against the assets of the Account or on or against the Custodian. ARTICLE VII. FEES, TAXES AND OTHER EXPENSES Any income taxes or other taxes of any kind whatsoever that may be levied or assessed upon or in respect of the Account (including any transfer taxes incurred in connection with the investment and reinvestment of Account assets), expenses, fees and administrative costs incurred by the Custodian in the performance of its duties (including fees for legal services rendered to the Custodian), and the Custodian's compensation as determined under Section 6.04, if any, shall constitute a charge upon the assets of the Account. At the Custodian's option, such fee, tax or expense shall be paid from the Account or directly by the Employee. ARTICLE VIII. PROTECTION OF EMPLOYEE BENEFITS At no time shall any part of the Account be used for purposes other than for the exclusive benefit of the Employee. The Employee's rights to Contributions shall be nonforfeitable at all times after such Contributions are transferred to the Custodian. ARTICLE IX. BENEFICIARY DESIGNATION Each Employee may submit to the Custodian a properly executed written Designation of Beneficiary acceptable to the Custodian who will receive any undistributed assets held in the Account at the time of the Employee's death. Any such Designation of Beneficiary shall not be effective unless it is filed during the Employee's lifetime with the Custodian at the Custodian's home office. Whether or not fully dispositive of the Account, the most recently filed Designation of Beneficiary accepted by the Custodian shall be controlling and all previously filed designations shall be considered superseded and shall have no effect. To the extent that the Account is not fully disposed of at the time of the Employee's death, it shall go to the Employee's surviving spouse, if any; otherwise, to the Employee's estate. If a Beneficiary dies while receiving distributions, the portion of the Account to which the Beneficiary would have been entitled (had he or she survived) shall be paid to the Beneficiary's beneficiary or beneficiaries (or if impossible, to the Beneficiary's estate) in a lump sum within 90 days after the Custodian receives notification of the Beneficiary's death. ARTICLE X. AMENDMENT 10.01. BY THE DISTRIBUTOR. The Distributor may amend this Agreement in its entirety or any portion thereof. The Distributor shall provide copies of such amendment to the Employer and/or Employee. Neither this Section nor any other portion of this agreement shall impose on the Distributor an affirmative obligation to amend the Agreement. 10.02. LIMITATIONS. No amendment shall be made: (a) Which would cause or permit any part of the Account to be diverted to purposes other than for the exclusive benefit of the Employee and/or his or her Beneficiary, or cause or permit any portion of such assets to revert to or become the property of the Employer; (b) Without the written consent of the Custodian; or (c) Which would retroactively deprive any Employee of any benefit to which he or she was entitled under the Agreement, unless such amendment is necessary, in the opinion of counsel, to conform the Agreement to, or satisfy the conditions of, Code Section 403(b), any other law, or any Governmental regulation or ruling, provided that this prohibition shall not be construed to prohibit prospective amendment of the Agreement (including prospective amendment to eliminate a benefit) where such prospective amendment is permitted by law. ARTICLE XI. TERMINATION 11.01. AUTOMATIC TERMINATION ON DISTRIBUTION. This Agreement shall terminate when all the assets held in the Account established hereunder have been distributed or otherwise transferred out of the Account. 11.02. TERMINATION ON DISQUALIFICATION. This Agreement shall terminate if, after notification by the Internal Revenue Service that the Employee's Account does not qualify under Code Section 403(b)(7), the Employer and/or Distributor do not make the amendments necessary to so qualify the Account. On such 23 12 termination of this Agreement, the Custodian shall distribute in cash or in kind, to the Employee or, in the event of the Employee's death, to the Beneficiary, subject to the Custodian's right to reserve funds as provided in Section 6.05. ARTICLE XII. LOANS 12.01. LOAN APPLICATION AND CONDITIONS. The Custodian may make a loan to an Employee from the Employee's Account upon the Custodian's receipt of the Employee's written application in a form acceptable to the Custodian, provided the following conditions are satisfied: (i) each loan shall satisfy rules adopted by the Custodian regarding the minimum and maximum loan amounts permitted, which rules may be changed at any time, provided, however, that in no event shall the total of all outstanding loans to any Employee exceed the lesser of $50,000 (reduced by the highest outstanding balance of loans from Account during the one year period ending the day before the day on which such loan is made), or 50% of the balance in the Employee's Account; (ii) each loan shall be evidenced by the Employee's execution of a personal demand note on a form supplied or approved by the Custodian, and each note shall specify a reasonable rate of interest as determined by the Custodian and shall require that the loan be repaid by the Employee in approximately equal installments (not less frequently than quarterly) over a specified period of time not exceeding five years; (iii) each loan shall be secured by the Employee's Account balance. 12.02. DEFAULT. If the Employee dies or fails to pay any installment of the loan when due, the unpaid balance of the loan shall become immediately due and payable. The Employee may satisfy the loan by paying the outstanding balance of the loan within such time as may be specified in the note and according to rules adopted by the Custodian. If the loan and interest are not repaid within the time specified, the Custodian shall treat the unpaid balance as a deemed distribution from the Employee's Account, and shall offset the unpaid balance before making any distribution payment otherwise due under this Agreement to the Employee or his Beneficiary. If an Employee does not repay any portion of the principal amount of a loan within the required term, the Employee shall continue to be liable for the unpaid balance of the loan including interest owed on principal payments not made. 12.03. RULES OF ADMINISTRATION. The Custodian shall adopt such rules as from time to time it deems proper under this Article XII (including, but not limited to rules regarding maximum and minimum amounts of loans, and permitted number of loans outstanding) which rules shall be applied on a uniform and non-discriminatory basis. The Custodian reserves the right to charge an administrative fee for processing and maintaining loans. ARTICLE XIII. MISCELLANEOUS 13.01. APPLICABLE LAW. To the extent not preempted by Federal law, this Agreement shall be construed and administered in accordance with the laws of the state in which the home office of the Custodian is located. No provision of this Agreement shall be construed to conflict with any provision of an Internal Revenue Service regulation, ruling or order affecting the status of this Agreement under Code Section 403(b)(7). 13.02. EMPLOYER'S SIGNATURE. If the Employer does not sign the Application and is not required to do so under the Code and the regulations thereunder, the Employee, to the extent allowed by law, assumes all obligations and responsibilities of the Employer under this Agreement. 13.03. CHANGE OF ADDRESS. The Employer or if permitted by the Custodian, the Employee, shall notify the Custodian in writing of any change of address within 30 days of such change. 13.04. NOTICE. Any notice from the Custodian to the Employee pursuant to this Agreement shall be effective when sent by U.S. Mail to the address of record of the Employer or Employee. Any notice to the Custodian pursuant to this Agreement shall be by first class mail addressed to its home of office. 13.05. SUCCESSORS. This Agreement shall be binding upon and shall inure to the benefit of the successors in interest of the parties hereto. 13.06. CONSTRUCTION. It is intended that this Agreement, together with the other documents that compose the 403(b)(7) arrangement pursuant to which the Employee's funds are invested under this Agreement, qualify as a custodial account under Code Section 403(b)(7). This Agreement shall be construed and limited by applicable laws, and the powers and discretions conferred hereunder shall be exercised in a manner consistent with that purpose. Subject to the foregoing provisions of this Section 12.06, in the event of any conflict between these Articles I through XII and the documents incorporated in this Agreement by reference, the provisions of these Articles I through Xll shall prevail. 13.07. SEPARABILITY. If any provision of this Agreement shall be held invalid or illegal for any reason, such determination shall not affect any remaining provisions of this Agreement, but this Agreement shall be construed and enforced as if such invalid or illegal provision had never been included in this Agreement. 13.08. STATUTORY REQUIREMENTS. In the event any applicable state or local law, regulating or rule conflicts with and/or supplements the terms of this Agreement, such law, regulation or rule shall be deemed to supersede and/or supplement the terms of this Agreement, provided that the Distributor and the Custodian receive written notice of such law, regulation or rule. 13.09. RETIREMENT PLAN PROVISIONS SHALL CONTROL. In the event Contributions are being made to the Account pursuant to any retirement plan or program sponsored by the Employer, to the extent any provisions of this Agreement are inconsistent with such retirement plan or program, the provisions of the Employer's retirement plan or program shall control, provided: (a) such provisions are not contrary to the rules and regulations under Section 403(b)(7) of the Code; and (b) such provisions do not impose any additional responsibilities or duties on the Custodian without its prior written consent. The Employer shall be responsible for delivering the most recent copy of any such retirement plan or program to the Custodian. 13.10. ERISA REQUIREMENTS. If the Agreement is determined to constitute part of an "employee benefit plan" established or maintained by the Employer within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, then the Employer shall have sole responsibility and be solely responsible for ensuring that such employee benefit plan complies at all times within such law, including, but not limited to, any reporting and disclosure requirement thereunder. 13.11. PLAN ADMINISTRATION. Absent a separate written agreement to the contrary, neither the Custodian nor the Distributor shall be considered the plan administrator for any purpose under the Code or the Employee Retirement Income Security Act of 1974, as amended. 24 EX-99.B14.E 14 FORMS OF REGISTRANT'S SIMPLE IRA DOCUMENTS 1 EXHIBIT 14(e) SIMPLE IRA APPLICATION [AIM LOGO APPEARS HERE] Complete Sections 1 - 10 Employee: Return completed application to your employer. Employer: Return completed applications and check to: A I M Fund Services, Inc., P. O. Box 4739, Houston, TX 77210-4739. Phone: 800-959-4246. Minors cannot open an AIM SIMPLE IRA Account. Make check payable to INVESCO Trust Company. - -------------------------------------------------------------------------------- 1 PARTICIPANT INFORMATION (Please print or type) Name ---------------------------------------------------------------------- First Name Middle Last Name Address ----------------------------------------------------------------- Street City State ZIP Code Social Security Number Birth Date / / -------------------- ------ ------ ------ Month Day Year Home Telephone ( ) Work Telephone ( ) ---- ------------------ ---- ------------- - -------------------------------------------------------------------------------- 2 EMPLOYER INFORMATION (Please print or type) Name Contact Person --------------------------------------- --------------- Address ------------------------------------------------------------------- Street City State ZIP Code Phone ( ) ---- ------------------------ - -------------------------------------------------------------------------------- 3 DEALER INFORMATION (To be completed by registered securities dealer) Name of Broker/Dealer Firm ------------------------------------------------ Home Office Address ------------------------------------------------------- Representative Name and Number --------------------------------------------- Authorized Signature of Dealer --------------------------------------------- Branch Address ------------------------------------------------------------ Branch Phone Number ( ) --------- ------------------------ / / Authorized for NAV purchase (If authorized for NAV purchase, other than the Broker, please attach NAV Certification Form) - -------------------------------------------------------------------------------- 4 ACCOUNT INFORMATION Date of Initial Deposit / / ------ ------ ------ Month Day Year Contribution Type: / / Elective Deferral / / Employer Contribution / / Rollover from SIMPLE IRA / / Transfer from SIMPLE IRA 11 2 5 FUND INVESTMENT Indicate Fund(s) and contribution amount(s). MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY (ITC) Fund Amount of Investment Class of Shares (check one) / / AIM Advisor Flex Fund $_________________ / / A Shares (522) / / C Shares (322) / / AIM Advisor Income Fund _________________ / / A Shares (521) / / C Shares (321) / / AIM Advisor International Value Fund _________________ / / A Shares (526) / / C Shares (326) / / AIM Advisor Large Cap Value Fund _________________ / / A Shares (520) / / C Shares (320) / / AIM Advisor MultiFlex Fund _________________ / / A Shares (524) / / C Shares (324) / / AIM Advisor Real Estate Fund _________________ / / A Shares (525) / / C Shares (325) / / AIM Aggressive Growth Fund _________________ Fund Currently Closed To New Investors (407) / / AIM Blue Chip Fund _________________ / / A Shares (515) / / B Shares (615) / / C Shares (315) / / AIM Capital Development Fund _________________ / / A Shares (514) / / B Shares (614) / / C Shares (314) / / AIM Constellation Fund _________________ / / A Shares (002) / / B Shares (602) / / C Shares (302) / / AIM Limited Maturity Treasury Fund _________________ Only "A Shares" Available (007) / / AIM Balanced Fund _________________ / / A Shares (006) / / B Shares (685) / / C Shares (306) / / AIM Charter Fund _________________ / / A Shares (010) / / B Shares (645) / / C Shares (310) / / AIM Global Aggressive Growth Fund _________________ / / A Shares (081) / / B Shares (691) / / C Shares (381) / / AIM Global Growth Fund _________________ / / A Shares (082) / / B Shares (692) / / C Shares (382) / / AIM Global Income Fund _________________ / / A Shares (083) / / B Shares (693) / / C Shares (383) / / AIM Global Utilities Fund _________________ / / A Shares (408) / / B Shares (655) / / C Shares (308) / / AIM Growth Fund _________________ / / A Shares (406) / / B Shares (650) / / C Shares (350) / / AIM High Yield Fund _________________ / / A Shares (425) / / B Shares (675) / / C Shares (375) / / AIM Income Fund _________________ / / A Shares (402) / / B Shares (665) / / C Shares (365) / / AIM Intermediate Government Fund _________________ / / A Shares (404) / / B Shares (660) / / C Shares (360) / / AIM International Equity Fund _________________ / / A Shares (016) / / B Shares (694) / / C Shares (316) / / AIM Money Market Fund _________________ / / A Shares (401) / / B Shares (680) / / C Shares (380) / / AIM Cash Reserve Shares (421) / / AIM Value Fund _________________ / / A Shares (405) / / B Shares (690) / / C Shares (305) / / AIM Weingarten Fund _________________ / / A Shares (001) / / B Shares (640) / / C Shares (301) Total $_________________
(Please note that if no class of shares is selected, Class A shares will be purchased with the exception of the AIM Money Market Fund where AIM Cash Reserve Shares will be purchased.) - -------------------------------------------------------------------------------- 6 TELEPHONE EXCHANGE PRIVILEGE Unless indicated below, I authorize A I M Fund Services, Inc., to accept instructions from any person to exchange shares in my account(s) by telephone in accordance with the procedures and conditions set forth in the AIM Fund's current prospectus. / / I DO NOT want the Telephone Exchange Privilege. - -------------------------------------------------------------------------------- 7 REDUCED SALES CHARGE (Optional) Right of Accumulation (This option is for Class A shares only.) I apply for Right of Accumulation reduced sales charges based on the following accounts in The AIM Family of Funds-Registered Trademark-: Fund(s)/Account No(s). Social Security No(s). -------------- -------------- -------------- -------------- -------------- --------------
LETTER OF INTENT I agree to the Letter of Intent provisions in the prospectus. I plan to invest during a 13-month period a dollar amount of at least: / / $25,000 / / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000 12 3 8 BENEFICIARY INFORMATION I hereby designate the following beneficiary to receive the balance in my SIMPLE IRA custodial account upon my death. To be effective, the designation of beneficiary and any subsequent change in designation of beneficiary must be filed with the Custodian prior to my death. The balance of my account shall be distributed in equal amounts to the beneficiary(ies) who survives me. If no beneficiary is designated or no designated beneficiary or contingent beneficiary survives me, the balance in my IRA will be distributed to the legal representatives of my estate. This designation revokes any prior designations. I retain the right to revoke this designation at any time. I hereby certify that there is no legal impediment to the designation of this beneficiary. PRIMARY BENEFICIARY(IES) Name % Relationship ------------------------------ ----- ----------------- Address -------------------------------------------------------------------- Street City State ZIP Code Beneficiary's Social Security Number Birth Date / / --------------- ----- --- ---- Month Day Year Name % Relationship ------------------------------ ----- ----------------- Address -------------------------------------------------------------------- Street City State ZIP Code Beneficiary's Social Security Number Birth Date / / --------------- ----- --- ---- Month Day Year CONTINGENT BENEFICIARY In the event that I die and no primary beneficiary listed above is alive, distribute all Fund accounts in my SIMPLE IRA to the following contingent beneficiary(ies) who survives me, in equal amounts. If more than on, please attach a list. Name % Relationship ------------------------------ ----- ----------------- Address -------------------------------------------------------------------- Street City State ZIP Code Beneficiary's Social Security Number Birth Date / / --------------- ----- --- ---- Month Day Year 13 4 9 AUTHORIZATION AND SIGNATURE I hereby establish the A I M Distributors, Inc. SIMPLE Individual Retirement Account appointing INVESCO Trust Company as Custodian. I have received and read the current prospectus of the investment company(ies) selected in this agreement and have read and understand the SIMPLE IRA custodial agreement and disclosure statement and consent to the custodial account fees as specified. I understand that a $10 annual AIM Fund SIMPLE IRA Maintenance Fee will be deducted early in each December from my AIM SIMPLE IRA. WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9) Under the penalties of perjury I certify by signing this Application as provided below that: (1) The number shown in Section 1 of this Application is my correct Social Security (or Tax Identification) Number, and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, (c) the IRS has notified me that I am no longer subject to backup withholding. (This paragraph (2) does not apply to real estate transactions, mortgage interest paid, the acquisition or abandonment of secured property, contributions to an individual retirement arrangement and payments other than interest and dividends.) YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. In addition, the Fund hereby incorporates by reference into this section of the Application either the IRS instructions for Form W-9 or the substance of those instructions whichever is included in the prospectus. SIGNATURE PROVISIONS I, THE UNDERSIGNED DEPOSITOR, HAVE READ AND UNDERSTAND THE FOREGOING APPLICATION AND THE ATTACHED MATERIAL INCLUDED HEREIN BY REFERENCE. IN ADDITION, I CERTIFY THAT THE INFORMATION WHICH I HAVE PROVIDED AND THE INFORMATION WHICH IS INCLUDED WITHIN THE APPLICATION AND THE ATTACHED MATERIAL INCLUDED HEREIN BY REFERENCE IS ACCURATE INCLUDING BUT NOT LIMITED TO THE REPRESENTATIONS CONTAINED IN THE WITHHOLDING INFORMATION SECTION OF THIS APPLICATION. [THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.] Dated / / ----- ----- ----- Month Day Year Signature of SIMPLE IRA Shareholder ---------------------------------------- 10 SERVICE ASSISTANCE Our knowledgeable Client Service Representatives are available to assist you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246. [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 12/97 14 5 AIM SIMPLE IRA ASSET-TRANSFER FORM [AIM LOGO APPEARS HERE] USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING SIMPLE IRA TO AN AIM SIMPLE IRA. Note: Use this form ONLY if you want AIM to request the money directly from another custodian. Complete Sections 1 - 5. If you do not already have an AIM SIMPLE IRA, you must also submit an AIM SIMPLE IRA Application. AIM will arrange the transfer for you. - -------------------------------------------------------------------------------- 1 INVESTOR INFORMATION (Please print or type.) Name ---------------------------------------------------------------------- First Name Middle Last Name Address ----------------------------------------------------------------- Street - -------------------------------------------------------------------------------- City State ZIP Code Social Security Number Birth Date / / -------------------- ------ ------ ------ Month Day Year Home Telephone ( ) Work Telephone ( ) ---- ------------------ ---- ------------- - -------------------------------------------------------------------------------- 2 CURRENT TRUSTEE/CUSTODIAN Name of Resigning Trustee -------------------------------------------------- Account Number of Resigning Trustee ---------------------------------------- Address of Resigning Trustee ----------------------------------------------- Street - -------------------------------------------------------------------------------- City State ZIP Code Attention Telephone ------------------------ ------------------------------ - -------------------------------------------------------------------------------- 3 IRA ACCOUNT INFORMATION Please deposit proceeds in my / / New* / / Existing AIM SIMPLE IRA Account Number --------------------------- INVESTMENT ALLOCATION: Fund Name Class % ----------------------------- ------------------- -------- Fund Name Class % ----------------------------- ------------------- -------- Fund Name Class % ----------------------------- ------------------- --------
*If this is a new AIM SIMPLE IRA account, you must attach a completed AIM SIMPLE IRA Application. If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be purchased. - -------------------------------------------------------------------------------- 4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN OPTION 1: Please liquidate from the account(s) listed in Section 2 and issue a check in cash to my SIMPLE IRA with INVESCO Trust Company. Amount to liquidate: / / All / / Partial amount of $ ---------------- When to liquidate: / / Immediately / / At maturity / / --- --- --- OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund, you may choose to transfer them "in kind.") Please deposit "in kind" the shares of the AIM Fund held in my account to INVESCO Trust Company. NOTE: ONLY AIM FUND SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED. Amount to transfer "in kind": / / All / / Partial amount of shares --------- 15 6 5 AUTHORIZATION AND SIGNATURE I have established a SIMPLE IRA with the AIM Funds and have appointed INVESCO Trust Company as the successor Custodian. Please accept this as your authorization and instruction to liquidate or transfer in kind the assets noted above, which your company holds for me. Your Signature Date / / ---------------------------------- ---- ---- ---- Note: Your resigning trustee or custodian may require your signature to be guaranteed. Call that institution for requirements. Name of Bank or Brokerage Firm --------------------------------------------- Signature Guaranteed by --------------------------------------------------- (Name and title) - -------------------------------------------------------------------------------- 6 DISTRIBUTION ELECTION INFORMATION SECTION 6 OF FORM TO BE COMPLETED BY PRIOR CUSTODIAN If this participant is age 70 1/2 or older this year, the resigning Trustee/Custodian must complete this section. Election made by the participant as of the required beginning date: 1. Method of calculation / / declining years / / recalculation / / annuitization / / amortization 2. Life expectancy / / single life payout / / joint life expectancy factor-Joint birth date and relationship -------- 3. The amount withheld from this rollover to satisfy this year's required distribution $ ------------------------------------------------------ The life-expectancy ages used to calculate this required payment was --------------------------------------------------------------------------- Signature of Current Custodian/Trustee ------------------------------------ - -------------------------------------------------------------------------------- REMAINDER OF FORM TO BE COMPLETED BY AIM 7 CUSTODIAN ACCEPTANCE This is to advise you that INVESCO Trust Company, as custodian, will accept the account identified above for: Depositor's Name Account Number --------------------------- --------------- This transfer of assets is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt of all or any of the plan assets. No federal income tax is to be withheld from this transfer of assets. Authorized Signature /s/ Illegible Mailing Date / / ---------------------------- ---- ---- ---- (INVESCO Trust Company) - -------------------------------------------------------------------------------- 8 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN Please attach a copy of this form to the check and return to: INVESCO Trust Company, c/o A I M Fund Services, Inc., P. O. Box 4739, Houston, TX 77210-4739. Make check payable to INVESCO Trust Company. Indicate the AIM account number and the social security number of the SIMPLE IRA holder on all documents. [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 12/97 16 7 SIMPLE INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT [AIM LOGO APPEARS HERE] FORM 5305-SA (December 1996) Department of the Treasury Internal Revenue Service (under Sections 408(a) and 408(p) of the Internal Revenue Code) ARTICLE I 1.01 THE CUSTODIAN WILL ACCEPT CASH CONTRIBUTIONS made on behalf of the participant by the participant's employer under the terms of a SIMPLE plan described in section 408(p). In addition, the Custodian will accept transfers or rollovers from other SIMPLE IRAs of the participant. No other contributions will be accepted by the Custodian. ARTICLE II 2.01 THE PARTICIPANT'S INTEREST in the balance in the custodial account is nonforfeitable. ARTICLE III 3.01 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN LIFE INSURANCE contracts, nor may the assets of the custodial account be commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5)). 3.02 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN COLLECTIBLES (within the meaning of section 408(m)) except as otherwise permitted by section 408(m)(3), which provides an exception for certain gold and silver coins and coins issued under the laws of any state. ARTICLE IV 4.01 NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT to the contrary, the distribution of the participant's interest in the custodial account shall be made in accordance with the following requirements and shall otherwise comply with section 408(a)(6) and Proposed Regulations section 1.408-8, including the incidental death benefit provisions of Proposed Regulations section 1.401(a)(9)-2, the provisions of which are herein incorporated by reference. 4.02 UNLESS OTHERWISE ELECTED by the time distributions are required to begin to the participant under paragraph 3, or to the surviving spouse under paragraph 4, other than in the case of a life annuity, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the participant and the surviving spouse and shall apply to all subsequent years. The life expectancy of a nonspouse beneficiary may not be recalculated. 4.03 THE PARTICIPANT'S ENTIRE INTEREST IN THE CUSTODIAL ACCOUNT must be, or begin to be, distributed by the participant's required beginning date (April 1 following the calendar year-end in which the participant reaches age 70 1/2). By that date, the participant may elect, in a manner acceptable to the Custodian, to have the balance in the custodial account distributed in: (a) A single-sum payment. (b) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the life of the participant. (c) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the joint and last survivor lives of the participant and his or her designated beneficiary. (d) Equal or substantially equal annual payments over a specified period that may not be longer than the participant's life expectancy. (e) Equal or substantially equal annual payments over a specified period that may not be longer than the joint life and last survivor expectancy of the participant and his or her designated beneficiary. 4.04 IF THE PARTICIPANT DIES before his or her entire interest is distributed to him or her, the entire remaining interest will be distributed as follows: (a) If the participant dies on or after distribution of his or her interest has begun, distribution must continue to be made in accordance with paragraph 3. (b) If the participant dies before distribution of his or her interest has begun, the entire remaining interest will, at the election of the participant or, if the participant has not so elected, at the election of the beneficiary or beneficiaries, either (i) Be distributed by the December 31 of the year containing the fifth anniversary of the participant's death, or (ii) Be distributed in equal or substantially equal payments over the life or life expectancy of the designated beneficiary or beneficiaries starting by December 31 of the year following the year of the participant's death. If, however, the beneficiary is the participant's surviving spouse, then this distribution is not required to begin before December 31 of the year in which the participant would have reached age 70 1/2. (c) Except where distribution in the form of an annuity meeting the requirements of section 408(b)(3) and its related regulations has irrevocably commenced, distributions are treated as having begun on the participant's required beginning date, even though payments may actually have been made before that date. (d) If the participant dies before his or her entire interest has been distributed and if the beneficiary is other than the surviving spouse, no additional cash contributions or rollover contributions may be accepted in the account. 4.05 IN THE CASE OF A DISTRIBUTION OVER LIFE EXPECTANCY in equal or substantially equal annual payments, to determine the minimum annual payment for each year, divide the participant's entire interest in the custodial account as of the close of business on December 31 of the preceding year by the life expectancy of the participant (or the joint life and last survivor expectancy of the participant and the participant's designated beneficiary, or the life expectancy of the designated beneficiary, whichever applies). In the case of distributions under paragraph 3, determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the participant and designated beneficiary as of their birthdays in the year the participant reaches age 70 1/2. In the case of a distribution in accordance with section 404(b)(ii), determine life expectancy using the attained age of the designated beneficiary as of the beneficiary's birthday in the year distributions are required to commence. 4.06 THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements described above. This method permits an individual to satisfy these requirements by taking from one individual retirement account the amount required to satisfy the requirement for another. ARTICLE V 5.01 THE PARTICIPANT AGREES TO PROVIDE THE CUSTODIAN with information necessary for the Custodian to prepare any reports required under sections 408(i) and 408(l)(2) and Regulations section 1.408-5 and 1.408-6. 5.02 THE CUSTODIAN AGREES TO SUBMIT REPORTS to the Internal Revenue Service and the participant as prescribed by the Internal Revenue Service. 5.03 THE CUSTODIAN ALSO AGREES TO PROVIDE THE PARTICIPANT'S EMPLOYER the summary description described in section 408(l)(2) unless this SIMPLE IRA is a transfer SIMPLE lRA. ARTICLE VI 6.01 NOTWITHSTANDING ANY OTHER ARTICLES which may be added or incorporated, the provisions of Articles I through III and this sentence will be controlling. Any additional articles that are not consistent with sections 408(a) and 408(p) and related regulations will be invalid. ARTICLE VII 7.01 THIS AGREEMENT WILL BE AMENDED from time to time to comply with the provisions of the Code and related regulations. Other amendments may be made with the consent of the persons whose signatures appear below. ARTICLE VIII 8.01 APPLICABLE LAW: This Custodial Agreement shall be governed by the laws of the state where the Trust resides. 8.02 ANNUAL ACCOUNTING: The Custodian shall, at least annually, provide the Participant or Beneficiary (in the case of death) with an accounting of such Participant's account. Such accounting shall be deemed to be accepted by the Participant, if the Participant or Beneficiary does not object in writing within 60 days after the mailing of such accounting statement. 8.03 AMENDMENT: The Participant irrevocably delegates to the Custodian the right and power to amend this Custodial Agreement. Except as hereafter provided, the Custodian will give the Participant 30 days prior written notice of any amendment. In case of a retroactive amendment required by law, the Custodian will provide written notice to the Participant of the amendment within 30 days after the amendment is made or, if later, by the time that notice of the amendment is required to be given under regulations or other guidance provided by the IRS. The Participant shall be deemed to have consented to any such amendment unless the Participant notifies the Custodian to the contrary within 30 days after notice to the Participant and requests a distribution or transfer of the balance in the account. 17 8 8.04 RESIGNATION AND REMOVAL OF CUSTODIAN: (a) The Custodian may resign at any time by giving at least 30 days notice to the Participant. The Custodian may resign and appoint a successor trustee or custodian to serve under this agreement or under another governing instrument selected by the successor trustee or custodian by giving the Participant written notice at least 30 days prior to the effective date of such resignation and appointment, which notice shall also include a copy of such other governing instrument, if applicable, and the related disclosure statement. The Participant shall then have 30 days from the date of such notice to either request a complete distribution of the account balance or designate a different successor trustee or custodian. If the Participant does not request distribution of the account or designate a different successor within such 30 days, the Participant shall be deemed to have consented to the appointment of the successor trustee or custodian and the terms of any new governing instrument, and neither the Participant nor the successor shall be required to execute any written document to complete the transfer of the account to the successor trustee or custodian. The successor trustee or custodian may rely on any information, including beneficiary designations, previously provided by the Participant. (b) The Participant may at any time remove the Custodian and replace the Custodian with a successor trustee or custodian of the Participant's choice by giving 30 days written notice to the Custodian. In such event, the Custodian shall then deliver the assets of the account as directed by the Participant. However, the Custodian may retain a portion of the assets of the SIMPLE IRA as a reserve for payment of any anticipated remaining fees and expenses, and shall pay over any remainder of this reserve to the successor trustee or custodian upon satisfaction of such fees and expenses. 8.05 CUSTODIAN'S FEES AND EXPENSES: (a) This Section 8.05 of the Custodial Agreement shall be governed by the requirements of Section 408(p)(7) and IRS Notice 97-6, Section J, and is further explained in the accompanying SIMPLE IRA Disclosure Statement. (b) The Participant agrees to pay the Custodian any and all fees specified in the Custodian's current published fee schedule for establishing and maintaining this SIMPLE IRA, including any fees for distributions from, transfers from, and terminations of this SIMPLE IRA. The Custodian may change its fee schedule at any time by giving the Participant 30 days prior written notice. (c) The Participant agrees to pay any expenses incurred by the Custodian in the performance of its duties in connection with the account. Such expenses include, but are not limited to, administrative expenses, such as legal and accounting fees, and any taxes of any kind whatsoever that may be levied or assessed with respect to such account. (d) All such fees, taxes, and other administrative expenses charged to the account shall be collected either from the assets in the account or from any contributions to or distributions from such account if not paid by the Participant, but the Participant shall be responsible for any deficiency. (e) In the event that for any reason the Custodian is not certain as to who is entitled to receive all or part of the custodial account, the Custodian reserves the right to withhold any payment from the custodial account, to request a court ruling to determine the disposition of the custodial assets, and to charge the custodial account for any expenses incurred in obtaining such legal determination. 8.06 WITHDRAWAL REQUESTS: All requests for withdrawal shall be in writing on the form provided by the Custodian. Such written notice must also contain the reason for the withdrawal and the method of distribution being requested. 8.07 AGE 70 1/2 DEFAULT PROVISIONS: (a) Unless the Custodian (or the Participant, if the Custodian permits) elects otherwise, life expectancies for purposes of calculating the required minimum distribution shall not be recalculated. (b) If the Participant does not choose any of the distribution methods under Section 4.03 of this Custodial Agreement by April 1st following the calendar year in which he/she reaches age 70 1/2, distribution shall be made to the Participant based on such Participant's single life expectancy. 8.08 DEATH BENEFIT DEFAULT PROVISIONS: Unless the Custodian (or the Beneficiary, if the Custodian permits) elects otherwise, life expectancies for purposes of calculating the required minimum death distribution shall not be recalculated. If the Participant dies before his or her required beginning date and the beneficiary does not select a method of distribution described in section 4.04(b)(i) or (ii) by December 31st following the year of death, then distributions will be made pursuant to proposed regulation 1.401(a)(9)-1. 8.09 INVESTMENT PROVISIONS: Pursuant to IRS Notice 97-6, Q&A J-4, if the Custodian is the Designated Financial Institution (DFI) and the Participant timely elects that his or her balance be transferred without cost or penalty to another SIMPLE IRA in accordance with the provisions described in the accompanying SIMPLE IRA Disclosure Statement, the Custodian reserves the right to restrict the participant's choice of investment alternatives as determined by the Custodian. 8.10 RESPONSIBILITIES: Participant agrees that all information and instructions given to the Custodian by the Participant is complete and accurate and that the Custodian shall not be responsible for any incomplete or inaccurate information provided by the Participant or Participant's beneficiary(ies). Participant agrees to be responsible for all tax consequences arising from contributions to and distributions from this Custodial Account and acknowledges that no tax advice has been provided by the Custodian. 8.11 DESIGNATION OF BENEFICIARY: Except as may be otherwise required by State law, in the event of the Participant's death, the balance in the account shall be paid to the beneficiary or beneficiaries designated by the Participant on a beneficiary designation acceptable to and filed with the Custodian. The Participant may change the Participant's beneficiary or beneficiaries at any time by filing a new beneficiary designation with the Custodian. If no beneficiary designation is in effect, if none of the named beneficiaries survive the Participant, or if the Custodian cannot locate any of the named beneficiaries after reasonable search, any balance in the account will be payable to the Participant's estate. ARTICLE IX SELF-DIRECTED SIMPLE IRA PROVISIONS 9.01 INVESTMENT OF CONTRIBUTIONS: At the direction of the Participant, the Custodian shall invest all contributions to the account and earnings thereon in investments acceptable to the Custodian, which may include marketable securities traded on a recognized exchange or "over the counter" (excluding any securities issued by the Custodian), covered call options, certificates of deposit, and other investments to which the Custodian consents, in such amounts as are specifically selected and specified by Participant in orders to the Custodian in such form as may be acceptable to the Custodian, without any duty to diversify and without regard to whether such property is authorized by the laws of any jurisdiction as a trust investment. The Custodian shall be responsible for the execution of such orders and for maintaining adequate records thereof. However, if any such orders are not received as required, or, if received, are unclear in the opinion of the Custodian, all or a portion of the contribution may be held uninvested without liability for loss of income or appreciation, and without liability for interest pending receipt of such orders or clarification, or the contribution may be returned. The Custodian may, but need not, establish programs under which cash deposits in excess of a minimum set by it will be periodically and automatically invested in interest-bearing investment funds. The Custodian shall have no duty other than to follow the written investment directions of the Participant, and shall be under no duty to question said instructions and shall not be liable for any investment losses sustained by the Participant. 9.02 REGISTRATION: All assets of the account shall be registered in the name of the Custodian or of a suitable nominee. The same nominee may be used with respect to assets of other investors whether or not held under agreements similar to this one or in any capacity whatsoever. However, each Participant's account shall be separate and distinct; a separate account therefor shall be maintained by the Custodian, and the assets thereof shall be held by the Custodian in individual or bulk segregation either in the Custodian's vaults or in depositories approved by the Securities and Exchange Commission under the Securities Exchange Act of 1934. 9.03 INVESTMENT ADVISOR: The Participant may appoint an Investment Advisor, qualified under Section 3(38) of the Employee Retirement Income Security Act of 1974, to direct the investment of his SIMPLE IRA. The Participant shall notify the Custodian in writing of any such appointment by providing the Custodian a copy of the instruments appointing the Investment Advisor and evidencing the Investment Advisor's acceptance of such appointment, an acknowledgement by the Investment Advisor that it is a fiduciary of the account, and a certificate evidencing the Investment Advisor's current registration under the Investment Advisor's Act of 1940. The Custodian shall comply with any investment directions furnished to it by the Investment Advisor, unless and until it receives written notification from the Participant that the Investment Advisor's appointment has been terminated. The Custodian shall have no duty other than to follow the written investment directions of such Investment Advisor and shall be under no duty to question said instructions, and the Custodian shall not be liable for any investment losses sustained by the Participant. 9.04 NO INVESTMENT ADVICE: The Custodian does not assume any responsibility for rendering advice with respect to the investment and reinvestment of Participant's account and shall not be liable for any loss which results from Participant's exercise of control over his account. The Custodian and Participant may specifically agree in writing that the Custodian shall render such advice, but the Participant shall still have and exercise exclusive responsibility for control over the investment of the assets of his account, and the Custodian shall not have any duty to question his investment directives. 9.05 PROHIBITED TRANSACTIONS: Notwithstanding anything contained herein to the contrary, the Custodian shall not lend any part of the corpus or income of the account to; pay any compensation for personal services rendered to the account to; make any part of its services available on a preferential basis to; acquire for the account any property, other than cash, from; or sell any property to, any Participant, any member of a Participant's family, or a corporation con- 18 9 trolled by any Participant through the ownership, directly or indirectly, of 50% or more of the total combined voting power of all classes of stock entitled to vote, or of 50% or more of the total value of shares of all classes of stock of such corporation. 9.06 UNRELATED BUSINESS INCOME TAX: If the Participant directs investment of the account in any investment which results in unrelated business taxable income, it shall be the responsibility of the Participant to so advise the Custodian and to provide the Custodian with all information necessary to prepare and file any required returns or reports for the account. As the Custodian may deem necessary, and at the Participant's expense, the Custodian may request a taxpayer identification number for the account, file any returns, reports, and applications for extension, and pay any taxes or estimated taxes owed with respect to the account. The Custodian may retain suitable accountants, attorneys, or other agents to assist it in performing such responsibilities. 9.07 DISCLOSURES AND VOTING: The Custodian shall deliver, or cause to be executed and delivered, to Participant all notices, prospectuses, financial statements, proxies and proxy soliciting materials relating to assets credited to the account. The Custodian shall not vote any shares of stock or take any other action, pursuant to such documents, with respect to such assets except upon receipt by the Custodian of adequate written instructions from Participant. 9.08 MISCELLANEOUS EXPENSES: In addition to those expenses set out in section 8.05 of this plan, the Participant agrees to pay any and all expenses incurred by the Custodian in connection with the investment of the account, including expenses of preparation and filing any returns and reports with regard to unrelated business income, including taxes and estimated taxes, as well as any transfer taxes incurred in connection with the investment or reinvestment of the assets of the account. 9.09 NONBANK TRUSTEE PROVISION: If the Custodian is a nonbank trustee, the Participant shall substitute another trustee or custodian in place of the Custodian upon receipt of notice from the Commissioner of the Internal Revenue Service or his delegate that such substitution is required because the Custodian has failed to comply with the requirements of Income Tax Regulations Section 1.408-2(e), or is not keeping such records, making such returns, or rendering such statements as are required by applicable law, regulations, or other rulings. The successor trustee or custodian shall be a bank, insured credit union, or other person satisfactory to the Secretary of the Treasury pursuant to Section 408(a)(2) of the Code. Upon receipt by the Custodian of written acceptance by its successor of such successor's appointment, Custodian shall transfer and pay over to such successor the assets of the account (less amounts retained pursuant to section 8.04 of the Custodial Agreement) and all records (or copies thereof) of the Custodian pertaining thereto, provided that the successor trustee or custodian agrees not to dispose of any such records without the Custodian's consent. - -------------------------------------------------------------------------------- GENERAL INSTRUCTIONS Section references are to the Internal Revenue Code unless otherwise noted. PURPOSE OF FORM Form 5305-SA is a model custodial account agreement that meets the requirements of sections 408(a) and 408(p) and has been automatically approved by the IRS. A SIMPLE individual retirement account (SIMPLE IRA) is established after the form is fully executed by both the individual (participant) and the Custodian. This account must be created in the United States for the exclusive benefit of the participant or his or her beneficiaries. Individuals may rely on regulations for the Tax Reform Act of 1986 to the extent specified in those regulations. Do not file Form 5305-SA with the IRS. Instead, keep it for your records. For more information on SIMPLE IRAs, including the required disclosures the Custodian must give the participant, get Pub. 590, Individual Retirement Arrangements (IRAs). DEFINITIONS Participant - The participant is the person who establishes the custodial account. Custodian - The Custodian must be a bank or savings and loan association, as defined in section 408(n), or any person who has the approval of the IRS to act as Custodian. TRANSFER SIMPLE IRA This SIMPLE IRA is a "transfer SIMPLE IRA" if it is not the original recipient of contributions under any SIMPLE plan. The summary description requirements of section 408(l)(2) do not apply to transfer SIMPLE IRAs. SPECIFIC INSTRUCTIONS Article IV - Distributions made under this article may be made in a single sum, periodic payment, or a combination of both. The distribution option should be reviewed in the year the participant reaches age 70 1/2 to ensure that the requirements of section 408(a)(6) have been met. Article VIII - Article VIII and any that follow it may incorporate additional provisions that are agreed to by the participant and Custodian to complete the agreement. They may include, for example, definitions, investment powers, voting rights, exculpatory provisions, amendment and termination, removal of the Custodian, Custodian's fees, state law requirements, beginning date of distributions, accepting only cash, treatment of excess contributions, prohibited transactions with the participant, etc. Use additional pages if necessary and attach them to this form. FINANCIAL DISCLOSURE IN GENERAL: IRS regulations require the Custodian to provide you with a financial projected growth of your SIMPLE IRA account based upon certain assumptions. GROWTH IN THE VALUE OF YOUR SIMPLE IRA: Growth in the value of your SIMPLE IRA is neither guaranteed nor projected. The value of your SIMPLE IRA will be computed by totaling the fair market value of the assets credited to your account. At least once a year the Custodian will send you a written report stating the current value of your SIMPLE IRA assets. The Custodian shall disclose separately a description of: (a) The type and amount of each charge; (b) the method of computing and allocating earnings, and (c) any portion of the contribution, if any, which may be used for the purchase of life insurance. CUSTODIAN FEES: The Custodian may charge reasonable fees or compensation for its services and it may deduct all reasonable expenses incurred by it in the administration of your SIMPLE IRA, including any legal, accounting, distribution, transfer, termination or other designated fees. Any charges made by the Custodian will be separately disclosed on an attachment hereto. Such fees may be charged to you or directly to your custodial account. In addition, depending on your choice of investment vehicles, you may incur brokerage commissions attributable to the purchase or sale of assets. 19 10 SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE] RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within seven days after you sign the SIMPLE IRA Plan Application by hand delivering or mailing a written notice to the name and address indicated on the SIMPLE IRA Plan Application. If you revoke your account by mailing a written notice, such notice must be postmarked by the seventh day after you sign the Plan Application. If you revoke your SIMPLE IRA within the seven-day period you will receive a refund of the entire amount of your contributions to the SIMPLE IRA without any adjustment for earnings or any administrative expenses. If you exercise this revocation, we are still required to report certain information to the IRS. GENERAL REQUIREMENTS OF A SIMPLE IRA: 1. All SIMPLE contributions must be made in cash, unless you are making a rollover contribution or transfer, and the Custodian accepts such noncash assets. 2. The only types of contributions permitted to be made to this SIMPLE IRA are salary reduction contributions and employer contributions under the employer's SIMPLE Retirement Plan. 3. The Custodian of your SIMPLE IRA must be a bank, savings and loan association, credit union or a person who is approved to act in such a capacity by the Secretary of the Treasury. 4. No portion of your SIMPLE IRA funds may be invested in life insurance contracts. 5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable at all times. 6. The assets in your SIMPLE IRA may not be commingled with other property except in a common trust fund or common investment fund. 7. You may not invest the assets of your SIMPLE IRA in collectibles (as described in Section 408(m) of the Internal Revenue Code.) A collectible is defined as any work of art, rug or antique, metal or gem, stamp or coin, alcoholic beverage, or any other tangible personal property specified by the IRS. However, if the Custodian permits, specially minted U.S. Gold and Silver bullion coins and certain state-issued coins are permissible SIMPLE IRA investments. 8. Your interest in your SIMPLE IRA must begin to be distributed to you by the April 1st following the calendar year you attain the age of 70 1/2. The methods of distribution, election deadlines and other limitations are described in detail below. 9. For purposes of the SIMPLE Plan rules, in the case of an individual who is not a self-employed individual, compensation means the amount described in section 6051(a)(3) which includes wages, tips and other compensation from the employer subject to income tax withholding under section 3401(a), and amounts described in section 6051(a)(8), including elective contributions made under a SIMPLE plan, and compensation deferred under a section 457 plan. In the case of a self-employed individual, compensation means net earnings from self-employment determined under section 1402(a), prior to subtracting any contributions made under the SIMPLE plan on behalf of the individual. 10. Contributions to a SIMPLE IRA are excludible from federal income tax and not subject to federal income tax withholding when made to the SIMPLE IRA. Salary reduction contributions are subject to FICA, FUTA or RRTA tax when made and must be reported on the employee's Form W-2 wage statement. Matching and nonelective employer contributions made to a SIMPLE IRA are not subject to FICA, FUTA or RRTA and are not required to be reported on Form W-2. 11. A SIMPLE IRA must be established by or on behalf of an employee prior to the first date by which a contribution is required to be deposited into the SIMPLE IRA. ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible Employer, all employees of the employer who received at least $5,000 in compensation from the employer during any two preceding calendar years, whether or not consecutive, and who are reasonably expected to receive at least $5,000 in compensation during the calendar year, must be eligible to participate in the SIMPLE Plan for the calendar year. An employer may impose less restrictive eligibility requirements, such as eliminating or reducing the prior year compensation requirements, the current year compensation requirement, or both, under its SIMPLE Plan. An employer, at its option, may exclude from eligibility employees who are included in a unit of employees covered by an agreement that the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and such employer or employers; in the case of a trust established or maintained pursuant to an agreement that the Secretary of Labor finds to be a collective bargaining agreement between air pilots represented in accordance with Title II of the Railway Labor Act and one or more employees, all employees not covered by that agreement; and employees who are nonresident aliens and who received no earned income from the employer that constitutes income from sources within the United States. PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an employer's SIMPLE Plan, even if he or she also participates in a plan of a different employer for the same year. However, the employee's salary reduction contributions are subject to the limitation of section 402(g), which provides an aggregate limit on the exclusion for elective deferrals for any individual. Also, an eligible employee who participates in an employer's SIMPLE plan and an eligible deferred compensation plan described in section 457(b) is subject to the limitation described in section 457(c). The employee is responsible for monitoring compliance with these limitations. ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including tax-exempt employers and governmental entities) that had no more than 100 employees who earned $5,000 or more in compensation during the preceding calendar year. For purposes of the 100-employee limitation, all employees employed at any time during the calendar year are taken into account, regardless of whether they are eligible to participate in the SIMPLE plan. This means that otherwise excludible employees (i.e., certain union employees, nonresident aliens with no U.S.-source income, and those employees who have not met the plan's minimum eligibility requirements) must be taken into account. SIMPLE PLAN CONTRIBUTIONS: ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) - A salary reduction contribution is a contribution made pursuant to an employee's election to have an amount contributed to his or her SIMPLE IRA, rather than have the amount paid directly to the employee in cash. An eligible employee must be permitted to elect to have salary reduction contributions made at the level specified by the employee, expressed as a percentage of compensation for the year or as a specific dollar amount. The maximum salary reduction contribution per calendar year may not exceed $6,000, subject to cost of living adjustments. Salary reduction contributions may not begin until the eligible employee completes a form provided by the employer designed to permit the employee to elect the salary reduction percentage or specific dollar amount. An employer may not place any restrictions on the amount of an employee's salary reduction contributions (e.g., by limiting the contribution percentage), except to the extent needed to comply with the annual limit. EMPLOYER CONTRIBUTIONS - TWO OPTIONS 1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally required to make a contribution on behalf of each eligible employee in an amount equal to the employee's salary reduction contributions, up to a limit of 3% of the employee's compensation for the entire calendar year. The 3% limit on matching contributions is permitted to be reduced for a calendar year at the election of the employer, but only if: the limit is not reduced below 1%; the limit is not reduced for more than two years out of the five-year period that ends with and includes the year for which the election is effective; and employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which employees can enter into salary reduction agreements as described below. In determining whether the limit was reduced below 3% for a year, any year before the first year in which an employer (or a predecessor employer) maintains a SIMPLE plan will be treated as a year for which the limit was 3%. If an employer chooses to make nonelective contributions for a year in lieu of matching contributions, that year also will be treated as a year for which the limit was 3%. 20 11 2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make nonelective contributions in lieu of matching contributions. These nonelective contributions must be equal to 2% of each eligible employee's compensation for the entire calendar year, regardless of whether the employee elects to make salary reduction contributions for the calendar year. The employer may, but is not required to, limit nonelective contributions to eligible employees who have at least $5,000 (or some lower amount selected by the employer) of compensation for the year. For purposes of this 2% nonelective contribution only, the compensation taken into account must be limited to the amount of compensation under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will be adjusted in accordance with the cost of living. An employer may substitute the 2% nonelective contribution for the matching contribution for a year only if eligible employees are notified within a reasonable period of time before the 60-day election period during which employees can enter into salary reduction agreements that a 2% nonelective contribution will be made instead of a matching contribution. EMPLOYEE ELECTIONS: During the 60-day period immediately preceding January 1st of a calendar year (i.e., November 2 to December 31 of the preceding calendar year), an eligible employee must be given the right to enter into a salary reduction agreement for the calendar year, or to modify a prior agreement (including reducing the amount subject to this agreement to $0). However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may enter into a salary reduction agreement or modify a prior agreement is a 60-day period that includes either the date the employee becomes eligible or the day before that date. For example, if an employer establishes a SIMPLE plan effective as of July 1, 1997, each eligible employee becomes eligible to make salary reduction contributions on that date and the 60-day period must begin no later than July 1 and cannot end before June 30, 1997. During these 60-day periods, employees have the right to modify their salary reduction agreements without restrictions. In addition, for the year in which an employee becomes eligible to make salary reduction contributions, the employee must be able to commence these contributions as soon as the employee becomes eligible, regardless of whether the 60-day period has ended. An employer may, but is not required to, provide additional opportunities or longer periods for permitting eligible employees to enter into salary reduction agreements or to modify prior agreements. An employee must be given the right to terminate a salary reduction agreement for a calendar year at any time during the year even if this is outside a SIMPLE plan's normal election period. The employer's SIMPLE plan may, however, provide that an employee who terminates a salary reduction agreement at any time other than the normal election period is not eligible to resume participation until the beginning of the next calendar year. EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify each employee, immediately before the employee's 60-day election period, of the employee's opportunity to enter into a salary reduction agreement or to modify a prior agreement. If applicable, this notification must disclose an employee's ability to select the financial institution that will serve as the trustee or custodian of the employee's SIMPLE IRA. Such notification must also include the Summary Description required under section 408(l)(2)(B). Such notification must also include whether the employer will be making either matching contributions (including the employer's election to reduce the matching contribution below 3%) or nonelective contributions as previously described. If an eligible employee who is entitled to a contribution under the employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with any financial institution prior to the date on which the contribution is required to be made to the SIMPLE IRA of the employee, the employer may execute the necessary SIMPLE IRA documents on the employee's behalf with a financial institution selected by the employer. The employer must deliver the salary reduction contributions to the financial institution maintaining the SIMPLE IRA as of the earliest date on which the contributions can reasonably be segregated from the employer's general assets, but no later than the close of the 30-day period following the last day of the month in which amounts would otherwise have been payable to the employee in cash. Matching and nonelective employer contributions must be made to the financial institution maintaining the SIMPLE IRA no later than the due date for filing the employer's income tax return, including extensions, for the taxable year that includes the last day of the calendar year for which the contributions are made. ROLLOVERS: ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to this SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover contribution from another SIMPLE IRA is any amount the participant receives from one SIMPLE IRA and redeposits some or all of it into this SIMPLE IRA. The participant is not required to roll over the entire amount received from the first SIMPLE IRA. However, any amount you do not roll over will be taxed at ordinary income tax rates for federal income tax purposes and may also be subject to an additional tax if the distribution is a premature distribution described below. ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE IRA may be rolled over only to another SIMPLE IRA during the two-year period the participant first participated in the employer's SIMPLE plan. Thus, a distribution from a SIMPLE IRA during that two-year period qualifies as a rollover contribution (and is not includible in gross income of the participant) only if the distribution is paid into another SIMPLE IRA and satisfies the other requirements that apply to all IRA rollovers under section 408(d)(3). SIMPLE IRAs may never be rolled into an employer's plan, such as a qualified plan or section 403(b) plan. After this two-year period, a distribution from a SIMPLE IRA may be rolled over to any IRA maintained by the individual. This two-year period begins on the first day on which contributions made by the individual's employer are deposited in the individual's SIMPLE IRA. SPECIAL RULES THAT APPLY TO ROLLOVERS - o The rollover must be completed no later than the 60th day after the day the distribution was received by you. o You may have only one IRA-to-IRA rollover during a 12-consecutive-month period measured from the date you received a distribution of an IRA which was rolled over to another IRA. (See IRS Publication 590 for more information.) o The same property you receive in a distribution must be the same property you roll over into the second IRA. For example, if you receive a distribution from an IRA of property, such as stocks, that same stock must be rolled over into the second IRA. o You are required to make an irrevocable election indicating that this transaction will be treated as a rollover contribution. o You are not required to receive a complete distribution from your IRA in order to make a rollover contribution into another IRA, nor are you required to roll over the entire amount you received from the first IRA. o If you inherit an IRA due to the death of the participant, you may not roll this IRA into your own IRA unless you are the spouse of the decedent. o If you are age 70 1/2 or older and wish to roll over to another IRA, you must first satisfy the minimum distribution requirement for that year and then the rollover of the remaining amount may be made. o Rollover contributions to a SIMPLE IRA may not be made from a qualified plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA. EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000 SIMPLE elective deferral limit) are includible in your gross income in the calendar year of deferral. Income on the excess elective deferrals is includible in your income in the year of withdrawal from the SIMPLE IRA. You should withdraw excess elective deferrals and any allocable income, from your SIMPLE IRA by April 15 following the year to which the deferrals relate. These amounts may not be transferred or rolled over tax-free to another SIMPLE IRA. If you fail to withdraw excess elective deferrals, and any allocable income, by the following April 15th, the excess elective deferrals will be subject to the IRA contribution limitations of sections 219 and 408 of the Code and thus may be considered an excess contribution to your IRA. Such excess deferrals may be subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income on excess elective deferrals is includible in your gross income in the year you withdraw it from your IRA and must be withdrawn by April 15 following the calendar year to which the deferrals relate. Income withdrawn from the IRA after that date may be subject to a 10% tax (or 25% if withdrawn within the first two years of participation) on early distributions. The rules for determining and allocating income attributable to excess elective deferrals and other excess SIMPLE contributions are the same as those governing regular IRA excess contributions. The trustee or custodian of your SIMPLE IRA will inform you of the income allocable to such excess amounts. DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to federal income tax by the payee or distributee, whichever the case may be. When you start withdrawing from your SIMPLE IRA, you may take the distributions in regular payments, random withdrawals or in a single-sum payment. Generally, all amounts distributed to you from your SIMPLE IRA are included in your gross income in the taxable year in which they are received. However, if you have made nondeductible contributions to any regular IRA as permitted under section 21 12 408(o) of the Code, the nontaxable portion of the distribution, if any, will be a percentage based upon the ratio of your unrecovered nondeductible contributions to the aggregate of all IRA balances, including SEP, SIMPLE and rollover contributions, as of the end of the year in which you take the distribution, plus distributions from the account during the year. All taxable distributions from your SIMPLE IRA are taxed at ordinary income tax rates for federal income tax purposes and are not eligible for either capital gains treatment or 5/10 year averaging. An employer may not require an employee to retain any portion of the contribution in the SIMPLE IRA or otherwise impose any withdrawal restrictions. PREMATURE DISTRIBUTIONS - In general, if you are under age 59 1/2 and receive a distribution from your SIMPLE IRA account, a 10% additional income tax will apply to the taxable portion of the distribution, unless the distribution is received due to death; disability; a series of substantially equal periodic payments at least annually over your life expectancy or the joint life expectancy of you and your designated beneficiary; medical expenses that exceed 7.5% of your adjusted gross income; health insurance premiums paid by certain unemployed individuals; a qualifying rollover distribution; or the timely withdrawal of an excess deferral plus income attributable. If you request a distribution in the form of a series of substantially equal payments, and you modify the payments before five years have elapsed and before attaining age 59 1/2, the 10% additional income tax will apply retroactively to the year payments began through the year of such modification. In addition, if you request a distribution from your SIMPLE IRA within your first two years of participation in the SIMPLE plan and none of the exceptions listed above applies to the distribution, the normal 10% additional income tax referred to earlier is increased to 25%. AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS - You are required to begin receiving minimum distributions from your SIMPLE IRA by your required beginning date (the April 1 of the year following the year you attain age 70 1/2). The year you attain age 70 1/2 is referred to as your "first distribution calendar year." Your minimum distribution is based upon the value of your account at the end of the prior year (less any required distributions you received between January 1 and April 1 of the year following your first distribution calendar year) by the joint life expectancy of you and your designated beneficiary. If you do not have a designated beneficiary then the minimum distribution will be based upon your single life expectancy. As you can see, who you designate as beneficiary under your SIMPLE IRA will affect the period over which distributions may be made. If you have more than one primary beneficiary, generally the beneficiary with the shortest life expectancy will be the measuring life expectancy used for determining the period over which distributions will be made. If no beneficiary is named or you name a beneficiary which is not an individual (i.e., your estate), distributions will be based upon your single life expectancy. By the April 1 following your first distribution calendar year, you must make certain elections on a form provided by the Custodian. If no election is made, you will be deemed to have elected to take your distributions over a period not to exceed your single life expectancy. The required distributions for the second distribution calendar year and for each subsequent distribution calendar year must be made by December 31 of such year. Unless otherwise elected by the Custodian (or by you, if the Custodian permits) in determining the amount to be distributed for the second distribution calendar year and subsequent distribution calendar years, your life expectancy (and your designated beneficiary's life expectancy) shall not be recalculated. If the Custodian elects (or you elect, if the Custodian permits) to recalculate your life expectancy or your spouse's life expectancy, you will generally have a longer period of time over which payments will be made and therefore the minimum distribution will be less. CAUTION: If you or your spouse should die, the decedent's life expectancy that is being recalculated is reduced to zero which will reduce the period of distribution to the survivor's single life expectancy. If recalculation is not elected, the death of either person will not have an effect on the payment period. In any distribution calendar year you may take more than the required minimum. However, if you take less than the required minimum with respect to any distribution calendar year, you are subject to a federal excise tax penalty of 50% of the difference between the amount required to be distributed and the amount actually distributed. MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE - Basically, this rule specifies that benefits provided under a retirement plan must be for the primary benefit of a participant rather than for his/her beneficiaries. If your spouse is your sole beneficiary, these special MDIB rules do not apply. The amount required to be distributed under the MDIB rule may in some cases be more than the amount required under the normal age 70 1/2 required minimum distribution rules. If someone other than or in addition to your spouse is a named primary beneficiary, the minimum distribution required is the greater of the amount determined under the regular 70 1/2 rules and the amount determined under the MDIB rules. The minimum amount to be distributed under the MDIB rules is the amount determined by taking the balance in your SIMPLE IRA account and dividing it by a factor taken from an IRS table specified in IRS regulations. The table provides life expectancies for you and a beneficiary who is assumed to be 10 years younger. DEATH DISTRIBUTIONS - If you die after your required beginning date, the balance in your SIMPLE IRA will be distributed in a manner which is at least as rapid as the method of distribution being used on the date of your death. If you die before your required beginning date, the balance in your SIMPLE IRA must generally be distributed within five years from the date of your death. However your beneficiary(ies) may elect to receive the balance in your account over the single life expectancy of your designated beneficiary if distributions begin no later than the end of the year containing the one year anniversary of your death. In addition, if your only beneficiary is your surviving spouse, distributions need not commence until December 31st of the year you would have attained age 70 1/2. PROHIBITED TRANSACTIONS - If you or your beneficiary engage in a prohibited transaction (as defined under Section 4975 of the Internal Revenue Code) with your SIMPLE IRA, it will lose its tax exemption and you must include the value of your account in your gross income for that taxable year. If you pledge any portion of your SIMPLE IRA as collateral for a loan, the amount so pledged will be treated as a distribution and will be included in your gross income for that year. INCOME TAX WITHHOLDING - All withdrawals from your SIMPLE IRA (except a direct transfer) are subject to federal income tax withholding. You may, however, elect not to have withholding apply to your SIMPLE IRA distribution in most cases. If withholding does apply to your distribution, it is at the rate of 10% of the amount of the distribution. DESIGNATED FINANCIAL INSTITUTION "DFI": In general, under section 408(p), an employer must permit an employee to select the financial institution for the SIMPLE IRA to which the employer will make all contributions on behalf of the employee. In this case, the financial institution is referred to as a "Non-DFI." Alternatively, under section 408(p)(7), an employer may require that all SIMPLE contributions initially be made to a single designated financial institution selected by the employer. In this case, the financial institution is referred to as a "DFI." Refer to your employer's SIMPLE Retirement Plan document to determine if the financial institution is a DFI or a Non-DFI. USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" - If an employer requires that all SIMPLE contributions initially be made to a DFI, the following requirements must be met: 1. The employer and the financial institution must agree that the financial institution will be a DFI for the employer's SIMPLE plan; 2. The DFI must agree that, if a participant elects before the expiration of the employee's 60-day election period, the participant's balance will be transferred without cost or penalty to another SIMPLE IRA (or after the two year period no longer applies, to any IRA) to a financial institution selected by the participant; and 3. Each participant is given written notification describing the procedures under which, if a participant so elects, the participant's balance will be transferred without cost or penalty to another SIMPLE IRA (or after the two year period no longer applies, to any IRA) to a financial institution selected by the participant. If the participant elects before the expiration of the 60-day election period to have the balance transferred without cost or penalty as described above, such election is valid only with respect to the balance attributable to SIMPLE contributions for the calendar year following that 60-day election period (or, for the year in which an employee becomes eligible to make salary reduction contributions for the remainder of that year) and subsequent calendar years if such election so provides. If the participant timely elects the transfer of the balance without cost or penalty as described above, the participant's balance must be transferred on a reasonably frequent basis, such as on a monthly basis. If a participant timely elects this transfer without cost or penalty, the Custodian reserves the right to restrict the investment to a specified investment option until transferred, even though a variety of investment options are available with respect to contributions that the participant has not elected to transfer. A transfer is deemed to be made without cost or penalty if no liquidation, transaction, redemption or termination fee, or any commission, load (whether front-end or back-end) or surrender charge or similar fee or charge is imposed with respect to the balance being transferred that the participant has filed a timely election with the DFI. However, the DFI can charge a reasonable annual administrative fee to a SIMPLE IRA from which balances must be transferred in accordance with the participant's timely transfer election. In order to timely elect a transfer without cost or penalty, the participant must indicate such election on the SIMPLE IRA Plan Application attached hereto and must be received by the DFI no later than the expiration of the 60-day election period applicable to the employee. If the participant fails to timely elect such transfers without cost or penalty, the DFI reserves the right to charge any or all fees and expenses described in Section 8.05 of this SIMPLE IRA plan agreement. USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" - If the employer's SIMPLE plan permits the participants to select their own financial institution to serve as trustee or custodian of the SIMPLE IRA, the rules explained above do not apply and the Custodian may charge any and all fees described in Section 8.05 of the SIMPLE IRA plan agreement. 22 13 TRANSFERS DEFINED - A direct transfer is a payment from this SIMPLE IRA directly to another trustee or custodian of a SIMPLE IRA (or, after the two-year period no longer applies, to the trustee or custodian of any IRA). Transfers do not constitute a distribution since you are never in receipt of the funds. The monies are transferred directly to the new trustee or custodian. If you should transfer all or a portion of your SIMPLE IRA to your former spouse's IRA under a divorce decree (or under a written instrument incident to divorce) or separation instrument, you will not be deemed to have made a taxable distribution, but merely a transfer. The portion so transferred will be treated at the time of the transfer as the IRA of your spouse or former spouse. If your spouse is the beneficiary of your SIMPLE IRA, in the event of your death, your spouse may "assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving spouse's IRA. SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any SIMPLE IRA must annually provide to the employer maintaining the SIMPLE plan a Summary Description early enough to allow the employer to meet its notification obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary Description will be provided directly to the employer by the Custodian in the underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a Non-DFI, the Summary Description will be provided directly to the employee by the Custodian. The employee agrees to have the employer complete certain information contained on the Summary Description with respect to the employer's SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on the following page. The Custodian of a "transfer SIMPLE IRA" is not required to provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it is not a SIMPLE IRA to which the employer has made contributions under the SIMPLE plan. PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA must be requested in writing on a form provided to the participant by the Custodian. After the withdrawal form has been completed and executed by the recipient, the form must be either hand delivered to the Custodian during normal business hours or mailed to the Custodian by first class mail, certified or registered mail prepaid through the U.S. Postal Service, or through any means of an expedited delivery service. After receipt of a properly executed withdrawal form, the Custodian will process the distribution as soon as administratively feasible. FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death, your SIMPLE IRA balance will be includible in your gross estate for federal estate tax purposes. However, if your surviving spouse is the beneficiary of your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital deduction available under Section 2056 of the Internal Revenue Code. A transfer of property for federal gift tax purposes does not include an amount which a beneficiary receives from a SIMPLE IRA plan. PENALTIES: If you are under age 59 1/2 and receive a premature distribution from your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions) income tax will apply on the taxable amount of the distribution. If you make an excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an excise tax of 6% is imposed on the excess amount. This tax will apply each year to any part or all of the excess which remains in your account. If you are age 70 1/2 or over or if you should die, and the appropriate required minimum distributions are not made from your SIMPLE IRA, an additional tax of 50% is imposed upon the difference between what should have been distributed and what was actually distributed. For tax years ending before 1/1/97, you will be taxed an additional 15% on any amount you receive and include in income during a calendar year from qualified plans, TSAs and all IRAs which exceeds the greater of $150,000 (unindexed) or $112,500 (indexed for cost of living). Before you receive an excess distribution, you should seek advice from your tax advisor with respect to the application of these rules. For tax years 1997, 1998 and 1999, the 15% excess distribution tax will not apply. In the event of your death, your estate may be subject to a 15% tax on the "excess accumulation" in all of your qualified plans, TSAs and IRAs. You should seek the advice of your own tax advisor with respect to the application of this excess accumulation excise tax. You must file IRS Form 5329 with the Internal Revenue Service for any year an additional tax is due. IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved by the Internal Revenue Service as to form. This is not an endorsement of the plan in operation or of the investments offered. ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE IRAs from your District Office of the Internal Revenue Service. In particular you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements). 23 14 [AIM LOGO APPEARS HERE] SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE) FORM 5304-SIMPLE (DECEMBER 1996) (NOT SUBJECT TO THE DESIGNATED FINANCIAL INSTITUTION RULES) Department of the Treasury Internal Revenue Service - -------------------------------------------------------------------------------- Name of Employer_____________________________________establishes the following SIMPLE plan under section 408(p) of the Internal Revenue Code and pursuant to the instructions contained in this form. ARTICLE I - EMPLOYEE ELIGIBILITY REQUIREMENTS (Complete appropriate box(es) and blanks--see instructions.) 1. GENERAL ELIGIBILITY REQUIREMENTS. The Employer agrees to permit salary reduction contributions to be made in each calendar year to the SIMPLE IRA established by each employee who meets the following requirements (select either 1a or 1b): a / / FULL ELIGIBILITY. All employees are eligible. b / / LIMITED ELIGIBILITY. Eligibility is limited to employees who are described in both (i) and (ii) below: (i) CURRENT COMPENSATION. Employees who are reasonably expected to receive at least $____________ in compensation (not to exceed $5,000) for the calendar year. (ii) PRIOR COMPENSATION. Employees who have received at least $_____________ in compensation (not to exceed $5,000) during any ___________ calendar year(s) (insert 0, 1, or 2) preceding the calendar year. 2. EXCLUDABLE EMPLOYEES. (OPTIONAL) / / The Employer elects to exclude employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining. ARTICLE II - SALARY REDUCTION AGREEMENTS (Complete the box and blank, if appropriate--see instructions.) 1. SALARY REDUCTION ELECTION. An eligible employee may make a salary reduction election to have his or her compensation for each pay period reduced by a percentage. The total amount of the reduction in the employee's compensation cannot exceed $6,000* for any calendar year. 2. TIMING OF SALARY REDUCTION ELECTIONS. a. For a calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible or the day before. b. In addition to the election periods in 2a, eligible employees may make salary reduction elections or modify prior elections ___________________. If the Employer chooses this option, insert a period or periods (e.g., semiannually, quarterly, monthly or daily) that will apply uniformly to all eligible employees.) c. No salary reduction election may apply to compensation that an employee received, or had a right to immediately receive, before execution of the salary reduction election. d. An employee may terminate a salary reduction election at any time during the calendar year. / / If this box is checked, an employee who terminates a salary reduction election not in accordance with 2b may not resume salary reduction contributions during the calendar year. 17 15 ARTICLE III - CONTRIBUTIONS (Complete the blank, if appropriate-see instructions.) 1. SALARY REDUCTION CONTRIBUTIONS. The amount by which the employee agrees to reduce his or her compensation will be contributed by the Employer to the employee's SIMPLE IRA. 2. OTHER CONTRIBUTIONS. a. Matching Contributions (i) For each calendar year, the Employer will contribute a matching contribution to each eligible employee's SIMPLE IRA equal to the employee's salary reduction contributions up to a limit of 3% of the employee's compensation for the calendar year. (ii) The Employer may reduce the 3% limit for the calendar year in (i) only if: (1) The limit is not reduced below 1%; (2) The limit is not reduced for more than two calendar years during the five-year period ending with the calendar year the reduction is effective; and (3) Each employee is notified of the reduced limit within a reasonable period of time before the employees' 60-day election period for the calendar year (described in Article II, item 2a). b. Nonelective Contributions (i) For any calendar year, instead of making matching contributions, the Employer may make nonelective contributions equal to 2% of compensation for the calendar year to the SIMPLE IRA of each eligible employee who has at least $___________ (not more than $5,000) in compensation for the calendar year. No more than $160,000* in compensation can be taken into account in determining the nonelective contribution for each eligible employee. (ii) For any calendar year, the Employer may make 2% nonelective contributions instead of matching contributions only if: (1) Each eligible employee is notified that a 2% nonelective contribution will be made instead of a matching contribution; and (2) This notification is provided within a reasonable period of time before the employees' 60-day election period for the calendar year (described in Article II, item 2a). 3. TIME AND MANNER OF CONTRIBUTIONS. a. The Employer will make the salary reduction contributions (described in 1 above) for each eligible employee to the SIMPLE IRA established at the financial institution selected by that employee no later than 30 days after the end of the month in which the money is withheld from the employee's pay. See instructions. b. The Employer will make the matching or nonelective contributions (described in 2a and 2b above) for each eligible employee to the SIMPLE IRA established at the financial institution selected by that employee no later than the due date for filing the Employer's tax return, including extensions, for the taxable year that includes the last day of the calendar year for which the contributions are made. ARTICLE IV - OTHER REQUIREMENTS AND PROVISIONS 1. CONTRIBUTIONS IN GENERAL. The Employer will make no contributions to the SIMPLE IRAs other than salary reduction contributions (described in Article III, item 1) and matching or nonelective contributions (described in Article III, items 2a and 2b). 2. VESTING REQUIREMENTS. All contributions made under this SIMPLE plan are fully vested and nonforfeitable. 3. NO WITHDRAWAL RESTRICTIONS. The Employer may not require the employee to retain any portion of the contributions in his or her SIMPLE IRA or otherwise impose any withdrawal restrictions. 4. SELECTION OF IRA TRUSTEE. The Employer must permit each eligible employee to select the financial institution that will serve as the trustee, custodian, or issuer of the SIMPLE IRA to which the employer will make all contributions on behalf of that employee. 5. AMENDMENTS TO THIS SIMPLE PLAN. This SIMPLE plan may not be amended except to modify the entries inserted in the blanks or boxes provided in Articles I, II, III, VI, and VII. 6. EFFECTS OF WITHDRAWALS AND ROLLOVERS. a. An amount withdrawn from the SIMPLE IRA is generally includible in gross income. However, a SIMPLE IRA balance may be rolled over or transferred on a tax-free basis to another IRA designed solely to hold funds under a SIMPLE plan. In addition, an individual may roll over or transfer his or her SIMPLE IRA balance to any IRA on a tax-free basis after a two-year period has expired since the individual first participated in a SIMPLE plan. Any rollover or transfer must comply with the requirements under section 408. 18 16 b. If an individual withdraws an amount from a SIMPLE IRA during the two-year period beginning when the individual first participated in a SIMPLE plan and the amount is subject to the additional tax on early distributions under section 72(t), this additional tax is increased from 10% to 25%. ARTICLE V - DEFINITIONS 1. COMPENSATION. a. GENERAL DEFINITION OF COMPENSATION. Compensation means the sum of the wages, tips, and other compensation from the Employer subject to federal income tax withholding [as described in section 6051(a)(3)] and the employee's salary reduction contributions made under this plan, and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the Employer on Form W-2 [as described in section 6051(a)(8)]. b. COMPENSATION FOR SELF-EMPLOYED INDIVIDUALS. For self-employed individuals, compensation means the net earnings from self-employment determined under section 1402(a) prior to subtracting any contributions made pursuant to this plan on behalf of the individual. 2. EMPLOYEE. Employee means a common-law employee of the Employer. The term employee also includes a self-employed individual and a leased employee described in section 414(n) but does not include a nonresident alien who received no earned income from the Employer that constitutes income from sources within the United States. 3. ELIGIBLE EMPLOYEE. An eligible employee means an employee who satisfies the conditions in Article 1, item 1 and is not excluded under Article 1, item 2. 4. SIMPLE IRA. A SIMPLE IRA is an individual retirement account described in section 408(a), or an individual retirement annuity described in section 408(b), to which the only contributions that can be made are contributions under a SIMPLE plan and rollovers or transfers from another SIMPLE IRA. ARTICLE VI - PROCEDURES FOR WITHDRAWAL (The Employer will provide each employee with the procedures for withdrawals of contributions received by the financial institution selected by that employee, and that financial institution's name and address (by attaching that information or inserting it in the space below) unless: (1) that financial institution's procedures are unavailable, or (2) that financial institution provides the procedures directly to the employee. See Employee Notification section in the instructions.) ARTICLE VII - EFFECTIVE DATE This SIMPLE plan is effective __________________________. (See instructions.) Name of Employer ------------------------------------------------------------- By: -------------------------------------------------------------------------- Signature Date Address of Employer ----------------------------------------------------------- Name and Title --------------------------------------------------------------- *This amount will be adjusted to reflect any annual cost-of-living increases announced by the IRS. 19 17 MODEL NOTIFICATION TO ELIGIBLE EMPLOYEES I. OPPORTUNITY TO PARTICIPATE IN THE SIMPLE PLAN You are eligible to make salary reduction contributions to the_________________SIMPLE plan. This notice and the attached summary description provide you with information that you should consider before you decide whether to start, continue, or change your salary reduction agreement. II. EMPLOYER CONTRIBUTION ELECTION For the ____________ calendar year, the Employer elects to contribute to your SIMPLE IRA [employer must select either (1), (2), or (3)]: / / (1) A matching contribution equal to your salary reduction contributions up to a limit of 3% of your compensation for the year; / / (2) A matching contribution equal to your salary reduction contributions up to a limit of ___________% (employer must insert a number from 1 to 3 and is subject to certain restrictions) of your compensation for the year; or / / (3) A nonelective contribution equal to 2% of your compensation for the year (limited to $160,000, adjusted periodically by the IRS) if you are an employee who makes at least $____________ (Employer must insert an amount that is $5,000 or less) in compensation for the year. III. ADMINISTRATIVE PROCEDURES If you decide to start or change your salary reduction agreement, you must complete the salary reduction agreement and return it to __________________________ (Employer should designate a place or individual) by _________________(Employer should insert a date that is not less than 60 days after notice is given). IV. EMPLOYEE SELECTION OF FINANCIAL INSTITUTION You must select the financial institution that will serve as the trustee, custodian, or issuer of your SIMPLE IRA and notify your Employer of your selection. 20 18 PAPERWORK REDUCTION ACT NOTICE You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping. . . . . . . . . . . . . . 3 hr., 38 min. Learning about the law or the form . . . 2 hr., 26 min. Preparing the form . . . . . . . . . . . 47 min.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. DO NOT send this form to this address. Instead, keep it for your records. GENERAL INSTRUCTIONS Section references are to the Internal Revenue Code unless otherwise noted. NOTE: THE INSTRUCTIONS FOR THIS FORM ARE DESIGNED TO ASSIST IN THE ESTABLISHMENT AND ADMINISTRATION OF THE SIMPLE PLAN; THEY ARE NOT INTENDED TO SUPERSEDE ANY PROVISIONS IN THE SIMPLE PLAN. PURPOSE OF FORM Form 5304-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document that an employer may use to establish a SIMPLE plan described in section 408(p), under which each eligible employee is permitted to select the financial institution for his or her SIMPLE IRA. It is important that you keep this form for your records. DO NOT file this form with the IRS. For more information, see Pub. 560, Retirement Plans for the Self- Employed, and Pub. 590, Individual Retirement Arrangements (IRAs). INSTRUCTIONS FOR THE EMPLOYER WHICH EMPLOYERS MAY ESTABLISH AND MAINTAIN A SIMPLE PLAN? You are eligible to establish and maintain a SIMPLE plan only if you meet both of the following requirements: 1. Last calendar year, you had no more than 100 employees (including self-employed individuals) who earned $5,000 or more in compensation from you during the year. If you have a SIMPLE plan but later exceed this 100-employee limit, you will be treated as meeting the limit for the two years following the calendar year in which you last satisfied the limit. If the failure to continue to satisfy the 100-employee limit is due to an acquisition or similar transaction involving your business, special rules apply. Consult your tax advisor to find out if you can still maintain the plan after the transaction. 2. You do not maintain during any part of the calendar year another qualified plan with respect to which contributions are made, or benefits are accrued, for service in the calendar year. For this purpose, a qualified plan [defined in section 219(g)(5)] includes a qualified pension plan, a profit-sharing plan, a stock bonus plan, a qualified annuity plan, a tax-sheltered annuity plan, and a simplified employee pension (SEP) plan. Certain related employers (trades or businesses under common control) must be treated as a single employer for purposes of the SIMPLE requirements. These are: (1) a controlled group of corporations under section 414(b); (2) a partnership or sole proprietorship under common control under section 414(c); or (3) an affiliated service group under section 414(m). In addition, if you have leased employees required to be treated as your own employees under the rules of section 414(n), then you must count all such leased employees for the requirements listed above. 21 19 WHAT IS A SIMPLE PLAN? A SIMPLE plan is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income for your employees. Under a SIMPLE plan, employees may choose whether to make salary reduction contributions to the SIMPLE plan rather than receiving these amounts as part of their regular compensation. In addition, you will contribute matching or nonelective contributions on behalf of eligible employees (see Employee Eligibility Requirements below and Contributions on page 23). All contributions under this plan will be deposited into a SIMPLE individual retirement account or annuity established for each eligible employee with the financial institution selected by each eligible employee (SIMPLE IRA). The information provided below is intended to help you understand and administer the rules of your SIMPLE plan. WHEN TO USE FORM 5304-SIMPLE A SIMPLE plan may be established by using this Model Form or any other document that satisfies the statutory requirements. Thus, you are not required to use Form 5304-SIMPLE to establish and maintain a SIMPLE plan. Further, do not use Form 5304-SIMPLE if: 1. You want to require that all SIMPLE plan contributions initially go to a financial institution designated by you (i.e., you do not want to permit each of your eligible employees to choose a financial institution that will initially receive contributions). However, Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) (for Use With a Designated Financial Institution), may be used in such a case; 2. You want employees who are nonresident aliens receiving no earned income from you that constitutes income from sources within the United States to be eligible under this plan; or 3. You want to establish a SIMPLE 401(k) plan. COMPLETING FORM 5304-SIMPLE Pages 1 and 2 of Form 5304-SIMPLE contain the operative provisions of your SIMPLE plan. This SIMPLE plan is considered adopted when you have completed all appropriate boxes and blanks and it has been executed by you. The SIMPLE plan is a legal document with important tax consequences for you and your employees. You may want to consult with your attorney or tax advisor before adopting this plan. EMPLOYEE ELIGIBILITY REQUIREMENTS (ARTICLE I) Each year for which this SIMPLE plan is effective, you must permit salary reduction contributions to be made by all of your employees who are reasonably expected to receive at least $5,000 in compensation from you during the year, and who received at least $5,000 in compensation from you in any two preceding years. However, you can expand the group of employees who are eligible to participate in the SIMPLE plan by completing the options provided in Article I, items 1a and 1b. To choose full eligibility, check the box in Article I, item 1a. Alternatively, to choose limited eligibility, check the box in Article I, item 1b, and then insert $5,000 or a lower compensation amount (including zero) and two or a lower number of years of service in the blanks in (i) and (ii) of Article I, item 1b. In addition, you can exclude from participation those employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining. You may do this by checking the box in Article I, item 2. SALARY REDUCTION AGREEMENTS (ARTICLE II) As indicated in Article II, item 1, a salary reduction agreement permits an eligible employee to make a salary reduction election to have his or her compensation for each pay period reduced by a percentage (expressed as a percentage or dollar amount). The total amount of the reduction in the employee's compensation cannot exceed $6,000* for any calendar year. TIMING OF SALARY REDUCTION ELECTIONS For a calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible or the day before. * This amount will be adjusted to reflect any annual cost-of-living increases announced by the IRS. 22 20 You can extend the 60-day election periods to provide additional opportunities for eligible employees to make or modify salary reduction elections using the blank in Article II, item 2b. For example, you can provide that eligible employees may make new salary reduction elections or modify prior elections for any calendar quarter during the 30 days before that quarter. You may use (but are not required to) the Model Salary Reduction Agreement to enable eligible employees to make or modify salary reduction elections. Employees must be permitted to terminate their salary reduction elections at any time. They may resume salary reduction contributions if permitted under Article II, item 2b. However, by checking the box in Article II, item 2d, you may prohibit an employee who terminates a salary reduction election outside the normal election cycle from resuming salary reduction contributions during the remainder of the calendar year. CONTRIBUTIONS (ARTICLE III) Only contributions described below may be made to this SIMPLE plan. No additional contributions may be made. SALARY REDUCTION CONTRIBUTIONS As indicated in Article III, item 1, salary reduction contributions consist of the amount by which the employee agrees to reduce his or her compensation. You must contribute the salary reduction contributions to the financial institution selected by each eligible employee. OTHER CONTRIBUTIONS MATCHING CONTRIBUTIONS. In general, you must contribute a matching contribution to each eligible employee's SIMPLE IRA equal to the employee's salary reduction contributions. This matching contribution cannot exceed 3% of the employee's compensation. See Definition of Compensation, below. You may reduce this 3% limit to a lower percentage, but not lower than 1%. You cannot lower the 3% limit for more than two calendar years out of the five-year period ending with the calendar year the reduction is effective. NOTE: If any year in the five-year period described above is a year before you first established any SIMPLE plan, you will be treated as making a 3% matching contribution for that year for purposes of determining when you may reduce the employer matching contribution. In order to elect this option, you must notify the employees of the reduced limit within a reasonable period of time before the applicable 60-day election periods for the year. See Timing of Salary Reduction Elections above. NONELECTIVE CONTRIBUTIONS. Instead of making a matching contribution, you may, for any year, make a nonelective contribution equal to 2% of compensation for each eligible employee who has at least $5,000 in compensation for the year. Nonelective contributions may not be based on more than $160,000* of compensation. In order to elect to make nonelective contributions, you must notify employees within a reasonable period of time before the applicable 60-day election periods for such year. See Timing of Salary Reduction Elections above. NOTE: Insert $5,000 in Article III, item 2b(i) to impose the $5,000 compensation requirement. You may expand the group of employees who are eligible for nonelective contributions by inserting a compensation amount lower than $5,000. EFFECTIVE DATE (ARTICLE VII) Insert in Article VII, the date you want the provisions of the SIMPLE plan to become effective. You must insert January 1 of the applicable year unless this is the first year for which you are adopting any SIMPLE plan. If this is the first year for which you are adopting a SIMPLE plan, you may insert any date between January 1 and October 1, inclusive of the applicable year. Do not insert any date before January 1, 1997. OTHER IMPORTANT INFORMATION ABOUT YOUR SIMPLE PLAN TIMING OF SALARY REDUCTION CONTRIBUTIONS Under the Internal Revenue Code, for all SIMPLE plans, the employer must make the salary reduction contributions to the financial institution selected by each eligible employee for his or her SIMPLE IRA no later than the 30th day of the month following the month in which the *This amount will be adjusted to reflect any annual cost-of-living increases announced by the IRS. 23 21 amounts would otherwise have been payable to the employee in cash. The Department of Labor has indicated that most SIMPLE plans are also subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA). The Department of Labor has informed the IRS that, as a matter of enforcement policy, for these plans, salary reduction contributions must be made to each participant's SIMPLE IRA as of the earliest date on which those contributions can reasonably be segregated from the employer's general assets, but in no event later than the 30-day deadline described above. DEFINITION OF COMPENSATION "Compensation" means the amount described in section 6051(a)(3) [wages, tips, and other compensation from the employer subject to federal income tax withholding under section 3401(a)]. Usually, this is the amount shown in box 1 of Form W-2, Wage and Tax Statement. For further information, see Pub. 15 (Circular E), Employer's Tax Guide. Compensation also includes the salary reduction contributions made under this plan, and, if applicable, compensation deferred under a section 457 plan. In determining an employee's compensation for prior years, the employee's elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract are also included in the employee's compensation. For self-employed individuals, compensation means the net earnings from self-employment determined under section 1402(a) prior to subtracting any contributions made pursuant to this SIMPLE plan on behalf of the individual. EMPLOYEE NOTIFICATION You must notify each eligible employee prior to the employee's 60-day election period described above that he or she can make or change salary reduction elections and select the financial institution that will serve as the trustee, custodian, or issuer of the employee's SIMPLE IRA. In this notification, you must indicate whether you will provide: 1. A matching contribution equal to your employees' salary reduction contributions up to a limit of 3% of their compensation; 2. A matching contribution equal to your employees' salary reduction contributions subject to a percentage limit that is between 1 and 3% of their compensation; or 3. A nonelective contribution equal to 2% of your employees' compensation. You can use the Model Notification to Eligible Employees on page 20 to satisfy these employee notification requirements for this SIMPLE plan. A Summary Description must also be provided to eligible employees at this time. This summary description requirement may be satisfied by providing a completed copy of pages 1 and 2 of Form 5304-SIMPLE (including the information described in Article VI - Procedures for Withdrawal). If you fail to provide the employee notification (including the summary description) described above, you will be liable for a penalty of $50 per day until the notification is provided. If you can show that the failure was due to reasonable cause, the penalty will not be imposed. If the summary description information with respect to the financial institution (i.e., the name and address of the financial institution and its withdrawal procedures) is not available at the time the employee must be given the summary description, you must provide the summary description without this information. In such a case, you will have reasonable cause for not including this information with respect to the financial institution in the summary description, but only if you see to it that this information is provided to the employee as soon as administratively feasible once the financial institution has been selected. REPORTING REQUIREMENTS You are not required to file any annual information returns for your SIMPLE plan, such as Forms 5500, 5500-C/R or 5500-EZ. However, you must report to the IRS which eligible employees are active participants in the SIMPLE plan and the amount of your employees' salary reduction contributions to the SIMPLE plan on Form W-2. These contributions are subject to social security, medicare, railroad retirement and federal unemployment tax. 24 22 DEDUCTING CONTRIBUTIONS Contributions to this SIMPLE plan are deductible in your tax year containing the end of the calendar year for which the contributions are made. Contributions will be treated as made for a particular tax year if they are made for that year and are made by the due date (including extensions) of your income tax return for that year. SUMMARY DESCRIPTION Each year the SIMPLE plan is in effect, the financial institution for the SIMPLE IRA of each eligible employee must provide the employer the information described in section 408(I)(2)(B). This requirement may be satisfied by providing the employer a current copy of Form 5304-SIMPLE (including instructions) together with the financial institution's procedures for withdrawals from SIMPLE IRAs established at that financial institution, including financial institution's name and address. The summary description must be received by the employer in sufficient time to comply with the Employee Notification requirements above. There is a penalty of $50 per day imposed on the financial institution for each failure by the financial institution to provide the summary description described above. However, if the failure was due to reasonable cause, the penalty will not be imposed. 25 23 26 24 [AIM LOGO APPEARS HERE] SUMMARY DESCRIPTION FOR NONDESIGNATED FINANCIAL INSTITUTION Employer must complete the following: ELIGIBILITY REQUIREMENTS All Employees of the Employer shall be eligible to participate under the Plan except: a. Employees included in a unit of employees covered under a collective bargaining agreement described in Section 2.02(a) of the Plan. b. Nonresident alien employees who did not receive U.S. source income described in Section 2.02(b) of the Plan. c. Employees who are not reasonably expected to earn $_____________(not to exceed $5,000) during the Plan Year for which the contribution is being made. d. There are no eligibility requirements. All Employees are eligible to participate upon the later of the plan's effective date or the employee's date of hire. Each Eligible Employee will be eligible to become a Participant after having worked for the Employer during any prior years (not to exceed 2) and received at least $____________ in compensation (not to exceed $5,000), during each of such prior years. WRITTEN ALLOCATION FORMULA The Employer has agreed to provide contributions for the _______________ Plan Year as follows (complete only one choice): a. Matching Contribution The amount of the Participant's Elective Deferral not in excess of 3% of such Participant's Compensation (not to exceed $6,000). b. Matching Contribution The amount of the Participant's Elective Deferral not in excess of _______% (not less than 1% nor more than 3%) of each Participant's Compensation (not to exceed $6,000). c. Nonelective Employer Contribution 2% of each Participant's Compensation. The Employer has designated _________________________________________________ (insert Name & Title) to provide additional information to participants about the Employer's SIMPLE Plan. - -------------------------------------------------------------------------------- GENERAL DISCLOSURE INFORMATION The following information explains what a Savings Incentive Match Plan for Employees ("SIMPLE") is, how contributions are made and how to treat these contributions for tax purposes. For more specific information, refer to the employer's SIMPLE Retirement Plan document itself. For a calendar year, you may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which you first become eligible to make salary reduction contributions, the period during which you may make or modify the election is a 60-day period that includes either the date you become eligible or the day before. If indicated in your Employer's SIMPLE plan, you may have additional opportunities during a calendar year to make or modify your salary reduction election. I. SIMPLE RETIREMENT PLAN AND SIMPLE IRA DEFINED A SIMPLE Retirement Plan is a retirement income arrangement established by your Employer. Under this SIMPLE Plan, you may choose to defer compensation to your own Individual Retirement Account or Annuity ("IRA"). You may base these "elective deferrals" on a salary reduction basis that, at your election, may be contributed to an IRA or received in cash. This type of plan is available only to an employer with 100 or fewer employees who earned at least $5,000 during the prior calendar year. A SIMPLE IRA is a separate IRA plan that you establish with an eligible financial institution for the purpose of receiving contributions under this SIMPLE Retirement Plan. Your Employer must provide you with a copy of the SIMPLE agreement containing eligibility requirements and a description of the basis upon which contributions may be made. All amounts contributed to your IRA belong to you, even after you quit working for your Employer. II. ELECTIVE DEFERRALS - NOT REQUIRED You are not required to make elective deferrals under this SIMPLE Retirement Plan. However, if the Employer is matching your elective deferrals, no Employer contribution will be made on your behalf unless you elect to defer under the plan. III. ELECTIVE DEFERRALS - ANNUAL LIMITATION The maximum amount that you may defer under this SIMPLE Plan for any calendar year is limited to the lesser of the percentage of your compensation that you select or $6,000, subject to cost-of-living increases. If you work for other employers (unrelated to this Employer) who also maintain a salary deferral plan, there is an overall limit on the maximum amount that you may defer in each calendar year to all elective SEPs, cash or deferred arrangements under section 401(k) of the Code, other SIMPLE plans and 403(b) plans regardless of how many employers you may have worked for during the year. This limitation is referred to as the section 402(g) limit. The section 402(g) limit on elective deferrals is currently $9,500 and is indexed according to the cost of living. IV. ELECTIVE DEFERRALS - TAX TREATMENT The amount that you may elect to contribute to your SIMPLE IRA is excludible from gross income, subject to the limitations discussed above, and is not includible as taxable wages on Form W-2. However, these amounts are subject to FICA taxes. V. ELECTIVE DEFERRALS - EXCESS AMOUNTS CONTRIBUTED When "excess elective deferrals" (i.e., amounts in excess of the $6,000 SIMPLE elective deferral limit or the section 402(g) limit) are made, you are responsible for calculating whether you have exceeded these limits in the calendar year. For 1997, the section 402(g) limit for contributions made to all elective deferral plans is $9,500. Excess elective deferrals are calculated on the basis of the calendar year. VI. EXCESS ELECTIVE DEFERRALS - HOW TO AVOID ADVERSE TAX CONSEQUENCES Excess elective deferrals are includible in your gross income in the calendar year of deferral. Income on the excess elective deferrals is includible in your income in the year of withdrawal from the IRA. You should withdraw excess elective deferrals and any allocable income, from your SIMPLE IRA by April 15 following the year to which the deferrals relate. These amounts may not be transferred or rolled over tax-free to another SIMPLE IRA. If you fail to withdraw excess elective deferrals, and any allocable income, by the following April 15th, the excess elective deferrals will be subject to the IRA contribution limitations of sections 219 and 408 of the Code and thus may be considered an excess contribution to your IRA. Such excess deferrals may be subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income on excess elective deferrals is includible in your gross income in the year you withdraw it from your IRA and must be withdrawn by April 15 following the calendar year to which the deferrals relate. 27 25 Income withdrawn from the IRA after that date may be subject to a 10% tax (or 25% if withdrawn within the first two years of participation) on early distributions. VII. INCOME ALLOCABLE TO EXCESS AMOUNTS The rules for determining and allocating income attributable to excess elective deferrals and other excess SIMPLE contributions are the same as those governing regular IRA excess contributions. The trustee or custodian of your SIMPLE IRA will inform you of the income allocable to such excess amounts. VIII. AVAILABILITY OF REGULAR IRA CONTRIBUTION DEDUCTION In addition to any SIMPLE contribution, you may contribute to a separate IRA the lesser of $2,000 or 100% of compensation to an IRA as a regular IRA contribution. However, the amount that you may deduct is subject to various limitations since you will be considered an "active participant" in an employer-sponsored plan. See Pub. 590, "Individual Retirement Arrangement," for more specific information. IX. SIMPLE IRA AMOUNTS - ROLLOVER OR TRANSFER TO ANOTHER IRA You may not roll over or transfer from your SIMPLE IRA any SIMPLE contributions (or income on these contributions) made during the plan year to another IRA (other than a SIMPLE IRA) until the two years following the date you first participated in the SIMPLE plan. Also, any distribution made before this time will be includible in your gross income and may also be subject to a 25% percent additional income tax for early withdrawal. You may, however, remove excess elective deferrals and income allocable to such excess amounts from your SIMPLE IRA before this time, but you may not roll over or transfer these amounts to another IRA. After the two-year restriction no longer applies, you may withdraw, or receive, funds from your SIMPLE IRA, and no more than 60 days later, place such funds in another IRA or SIMPLE IRA. This is called a "rollover" and may not be done without penalty more frequently than at one-year intervals. However, there are no restrictions on the number of times that you may make "transfers" if you arrange to have such funds transferred between the trustees so that you never have possession of the funds. You may not, however, roll over or transfer excess elective deferrals, and income allocable to such excess amounts from your SIMPLE IRA to another IRA. These excess amounts may be reduced only by a distribution to you. X. FILING REQUIREMENTS You do not need to file any additional forms with the IRS because of your participation in your employer's SIMPLE Plan. XI. EMPLOYER TO PROVIDE INFORMATION Your employer must provide you with a copy of the executed SIMPLE agreement, a Summary Description, the form you should use to elect to defer amounts to your SIMPLE IRA, and a statement for each taxable year showing any contribution to your SIMPLE IRA. XII. FINANCIAL INSTITUTION WHERE IRA IS ESTABLISHED TO PROVIDE INFORMATION The financial institution must provide you with a disclosure statement that contains information described in section 1.408-6 of the regulations. The Disclosure Statement that is a part of this Custodian's SIMPLE IRA account documentation must be read in conjunction with this Summary Description for Nondesignated Financial Institutions. The Disclosure Statement contains important information about the SIMPLE plan rules and the contents of such Disclosure Statement are incorporated herein by reference. See Publication 590, "Individual Retirement Arrangements," which is available at most IRS offices, for a more complete explanation of the disclosure requirements. In addition to the disclosure statement, the financial institution is required to provide you with a financial statement each year. It may be necessary to retain and refer to statements for more than one year in order to evaluate the investment performance of your IRA and in order that you will know how to report IRA distributions for tax purposes. 28 EX-99.B14.F 15 FORMS OF REGISTRANT'S ROTH IRA DOCUMENTS 1 EXHIBIT 14(f) [AIM LOGO APPEARS HERE] ROTH IRA APPLICATION TO OPEN YOUR AIM ROTH IRA ACCOUNT. Complete Sections 1-9. Return completed application and check to: A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Phone: 800-959-4246. Minors cannot open an AIM Roth IRA account. - -------------------------------------------------------------------------------- 1 INVESTOR INFORMATION (Please print or type.) Name ---------------------------------------------------------------------- First Name Middle Last Name Address ----------------------------------------------------------------- Street City State ZIP Code Social Security Number Birth Date / / -------------------------- ---- ---- ---- (Required to Open Account) Month Day Year Home Telephone ( ) Work Telephone ( ) ---- ------------------ ---- ------------- - -------------------------------------------------------------------------------- 2 DEALER INFORMATION (To be completed by registered securities dealer) Name of Broker/Dealer Firm ------------------------------------------------ Home Office Address ------------------------------------------------------- Representative Name and Number --------------------------------------------- Authorized Signature of Dealer --------------------------------------------- Branch Address ------------------------------------------------------------ Branch Phone Number ( ) --------- ------------------------ / / Authorized for NAV purchase (If authorized for NAV purchase, other than the Broker, please attach NAV Certification Form) - -------------------------------------------------------------------------------- 3 CONTRIBUTION TYPE / / REGULAR - Contribution for tax year 19 _____ . / / CONVERSION - Represents a conversion from a Traditional IRA account. / / TRANSFER - Transfer from another Roth IRA account. Please complete Roth IRA Asset-Transfer Form. 4 FUND INVESTMENT Indicate Fund(s) and contribution amount(s). MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open a Roth IRA is $250.
Fund Amount of Investment Class of Shares (check one) / / AIM Advisor Flex Fund $_________________ / / Class A / / Class C / / AIM Advisor International Value Fund $________________ / / Class A / / Class C / / AIM Advisor Large Cap Value Fund $________________ / / Class A / / Class C / / AIM Advisor MultiFlex Fund $________________ / / Class A / / Class C / / AIM Advisor Real Estate Fund $________________ / / Class A / / Class C / / AIM Aggressive Growth Fund $________________ Fund currently closed to new investors / / AIM Balanced Fund $________________ / / Class A / / Class B / / Class C / / AIM Blue Chip Fund $________________ / / Class A / / Class B / / Class C
9 2 / / AIM Capital Development Fund $________________ / / Class A / / Class B / / Class C / / AIM Charter Fund $________________ / / Class A / / Class B / / Class C / / AIM Constellation Fund $________________ / / Class A / / Class B / / Class C / / AIM Global Aggressive Growth Fund $________________ / / Class A / / Class B / / Class C / / AIM Global Growth Fund $________________ / / Class A / / Class B / / Class C / / AIM Global Income Fund $________________ / / Class A / / Class B / / Class C / / AIM Global Utilities Fund $________________ / / Class A / / Class B / / Class C / / AIM Growth Fund $________________ / / Class A / / Class B / / Class C / / AIM High Yield Fund $________________ / / Class A / / Class B / / Class C / / AIM Income Fund $________________ / / Class A / / Class B / / Class C / / AIM Intermediate Government Fund $________________ / / Class A / / Class B / / Class C / / AIM International Equity Fund $________________ / / Class A / / Class B / / Class C / / AIM Limited Maturity Treasury Fund $________________ / / Class A / / Class B / / Class C / / AIM Money Market Fund $________________ / / Class A / / Class B / / Class C / / AIM Cash Reserve Shares / / AIM Value Fund $________________ / / Class A / / Class B / / Class C / / AIM Weingarten Fund $________________ / / Class A / / Class B / / Class C Total $________________
If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be purchased. If you are funding your retirement account through a transfer, please indicate the contribution amounts both in this section and in Section 3 of the Asset-Transfer Form. - -------------------------------------------------------------------------------- 5 TELEPHONE EXCHANGE PRIVILEGE Unless indicated below, I authorize A I M Fund Services, Inc., to accept instructions from any person to exchange shares in my account(s) by telephone in accordance with the procedures and conditions set forth in the Fund's current prospectus. / / I DO NOT want the Telephone Exchange Privilege. 6 DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class of shares with the exception of AIM Cash Reserve Shares of the AIM Money Market Fund, which may only be exchanged for Class A shares of another AIM fund.) I have at least $5,000 in shares in my __________________________ Fund, for which no certificates have been issued, and I would like to exchange: $ _________________ into the ______________________________ Fund, Account # ____________________________ ($50 minimum) $__________________ into the ______________________________ Fund, Account # ____________________________ ($50 minimum) $__________________ into the ______________________________ Fund, Account # ____________________________ ($50 minimum)
on a / / monthly / / quarterly basis starting in the month of ______ on or near the / / 10th or / / 25th of the month. - -------------------------------------------------------------------------------- 7 REDUCED SALES CHARGE (optional) RIGHT OF ACCUMULATION (This option is for Class A shares only.) I apply for Right of Accumulation reduced sales charges based on the following accounts in The AIM Family of Funds-Registered Trademark-: Fund(s)/ Account No.(s) _______________________ Social Security No.(s)_________________________________ _______________________ _________________________________ _______________________ _________________________________
LETTER OF INTENT I agree to the Letter of Intent provisions in the Prospectus. I plan to invest during a 13-month period a dollar amount of at least: / / $25,000 / / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000 10 3 8 BENEFICIARY INFORMATION I hereby designate the following beneficiary(ies) to receive the balance in my Roth IRA custodial account upon my death. To be effective, the designation of beneficiary and any subsequent change in designation of beneficiary must be filed with the Custodian prior to my death. The balance of my account shall be distributed in equal amounts to the beneficiary(ies) who survives me. If no beneficiary is designated or no designated beneficiary or contingent beneficiary survives me, the balance in my Roth IRA will be distributed to the legal representatives of my estate. This designation revokes any prior designations. I retain the right to revoke this designation at any time. I hereby certify that there is no legal impediment to the designation of this beneficiary. PRIMARY BENEFICIARY(IES) Name % Relationship ------------------------------ ----- ----------------- Address -------------------------------------------------------------------- Street City State ZIP Code Beneficiary's Social Security Number Birth Date / / --------------- ----- --- ---- Month Day Year Name % Relationship ------------------------------ ----- ----------------- Address -------------------------------------------------------------------- Street City State ZIP Code Beneficiary's Social Security Number Birth Date / / --------------- ----- --- ---- Month Day Year CONTINGENT BENEFICIARY In the event that I die and no primary beneficiary listed above is alive, distribute all Fund accounts in my SIMPLE IRA to the following contingent beneficiary(ies) who survives me, in equal amounts. If more than on, please attach a list. Name % Relationship ------------------------------ ----- ----------------- Address -------------------------------------------------------------------- Street City State ZIP Code Beneficiary's Social Security Number Birth Date / / --------------- ----- --- ---- Month Day Year 9 SERVICE ASSISTANCE Our knowledgeable Client Service Representatives are available to assist you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246. 11 4 10 AUTHORIZATION AND SIGNATURE I hereby establish the A I M Distributors, Inc. Roth Individual Retirement Account (IRA) appointing INVESCO Trust Company as Custodian. I have received and read the current prospectus of the investment company(ies) selected in this agreement and have read and understand the Roth IRA custodial agreement and disclosure statement and consent to the custodial account fees as specified. I understand that a $10 annual Maintenance Fee will be deducted early in each December from my AIM Roth IRA. WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9) Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is required to have the following certification: Under the penalties of perjury I certify by signing this Application as provided below that: 1. The number shown in Section 1 of this Application is my correct Social Security (or Tax Identification) Number, and 2. I am not subject to backup withholding either because (a) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (b) the IRS has notified me that I am no longer subject to backup withholding. (This paragraph (2) does not apply to real estate transactions, mortgage interest paid, the acquisition or abandonment of secured property, contributions to an individual retirement arrangement and payments other than interest and dividends.) YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. In addition, the Fund hereby incorporates by reference into this section of the Application either the IRS instructions for Form W-9 or the substance of those instructions--whichever is incorporated in the Prospectus. SIGNATURE PROVISIONS I, the undersigned Depositor, have read and understand the foregoing Application and the attached material included herein by reference. In addition, I certify that the information which I have provided and the information which is included within the Application and the attached material included herein by reference is accurate including but not limited to the representations contained in the Witholding Information section of this Application above. (The Internal Revenue Service does not require your consent to any provision of this document other than the certifications to avoid backup withholding.) Dated ___ /___ /___ Signature of Roth IRA Shareholder --------------------------------------- 11 MAILING INSTRUCTIONS Make check payable to INVESCO Trust Company. Return Application to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY AIM Fund Services, Inc. AIM Fund Services, Inc. P.O. Box 4739 11 Greenway Plaza, Suite 763 Houston, TX 77210-4739 Houston, TX 77046
12 5 [AIM LOGO APPEARS HERE] ROTH IRA ASSET-TRANSFER FORM USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING ROTH IRA TO AN AIM ROTH IRA. THIS FORM IS NOT TO BE USED FOR CONVERSIONS. Note: Use this form ONLY if you want AIM to request the money directly from another custodian. Complete Sections 1-5. If you do not already have an AIM Roth IRA, you must also submit an AIM Roth IRA Application. AIM will arrange the transfer for you. 1 INVESTOR INFORMATION (Please print or type.) Name ---------------------------------------------------------------------- First Name Middle Last Name Address ----------------------------------------------------------------- Street City State ZIP Code Social Security Number Birth Date / / -------------------------- ---- ---- ---- Month Day Year Home Telephone ( ) Work Telephone ( ) ---- ------------------ ---- ------------- 2 CURRENT TRUSTEE/CUSTODIAN Name of Resigning Trustee/Custodian --------------------------------------- Account Number of Resigning Trustee/Custodian ----------------------------- Address of Resigning Trustee/Custodian ------------------------------------ Street --------------------------------------------------------------------------- City State ZIP Code Attention Telephone ---------------------------------- ------------------ 3 ROTH IRA ACCOUNT INFORMATION Please deposit proceeds in my / / New AIM Roth IRA* / / Existing AIM Roth IRA Account Number __________________
INVESTMENT ALLOCATION: Fund Name ______________________________ Class _________________ % _______________ Fund Name ______________________________ Class _________________ % _______________ Fund Name ______________________________ Class _________________ % _______________
*If this is a new AIM Roth IRA account, you must attach a completed AIM Roth IRA Application. If no class of shares is selected, Class A shares will be purchased with the exception of the AIM Money Market Fund, where AIM Cash Reserve Shares will be purchased. 4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN OPTION 1: Please liquidate from my Roth IRA account listed in Section 2 and transfer the amount indicated below to my Roth IRA with INVESCO Trust Company. Amount to liquidate: / / All / / Partial amount of $_______________ When to liquidate: / / Immediately / / At maturity _____ /_____ /_____ OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund, you may choose to transfer them "in kind.") Please deposit "in kind" the shares of the AIM Fund held in my account to INVESCO Trust Company. NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED. Amount to transfer "in kind" immediately: / / All / / Partial amount of shares____________ 13 6 5 AUTHORIZATION AND SIGNATURE I have established a Roth Individual Retirement Account with the AIM Funds and have appointed INVESCO Trust Company as the successor Custodian. Please accept this as your authorization and instruction to liquidate or transfer in kind the assets noted above, which your company holds for me. Your Signature Date / / ---------------------------------- --- --- ---- Note: Your resigning trustee or custodian may require your signature to be guaranteed. Call that institution for requirements. Name of Bank or Brokerage Firm -------------------------------------------- Signature Guaranteed by --------------------------------------------------- (Name and title) REMAINDER OF FORM TO BE COMPLETED BY AIM 6 CUSTODIAN ACCEPTANCE This is to advise you that INVESCO Trust Company, as custodian, will accept the account identified above for: Depositor's Name Account Number ------------------------------- ----------- This transfer of assets is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt of all or any of the plan assets. No federal income tax is to be withheld from this transfer of assets. Authorized Signature /s/ Illegible Mailing Date / / ----------------------- --- -- --- (INVESCO Trust Company) 7 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN Please attach a copy of this form to the check. Return this completed form and completed Roth IRA application to: INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Make check payable to INVESCO Trust Company. Indicate the AIM account number and the Social Security number of the Roth IRA holder on all documents. [AIM LOGO APPEARS HERE] 14 7
Form 5305-RA ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT Do not file (January 1998) (Under Section 408A of the Internal Revenue Code) with the Internal Revenue Service Department of the Treasury Internal Revenue Services - --------------------------------------------------------------------------------------------------------------------------- Name of depositor Date of birth of depositor Social security number - --------------------------------------------------------------------------------------------------------------------------- Address of depositor Check if Roth Conversion IRA / / Check if Amendment / / - --------------------------------------------------------------------------------------------------------------------------- Name of Custodian Address or principal place of business or custodian - ---------------------------------------------------------------------------------------------------------------------------
The depositor whose name appears above is establishing a Roth individual retirement account (Roth IRA) under section 408A to provide for his or her retirement and for the support of his or her beneficiaries after death. The custodian named above has given the depositor the disclosure statement required under Regulations section 1.408-6. The depositor assigned the custodial account $ ---------------------- The depositor and the custodian make the following agreement: - -------------------------------------------------------------------------------- ARTICLE I 1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except in the case of a rollover contribution described in section 408A(e), the custodian will accept only cash contributions and only up to a maximum amount of $2,000 for any tax year of the depositor. 2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions other than IRA Conversion Contributions made during the same tax year will be accepted. ARTICLE II The $2,000 limit described in Article I is gradually reduced to $0 between certain levels of adjusted gross income (AGI). For a single depositor, the $2,000 annual contribution is phased out between AGI of $95,000 and $110,000; for a married depositor who files jointly, between AGI of $150,000 and $160,000; and for a married depositor who files separately, between $0 and $10,000. In the case of a conversion, the custodian will not accept IRA Conversion Contributions in a tax year if the depositor's AGI for that tax year exceeds $100,000 or if the depositor is married and files a separate return. Adjusted gross income is defined in section 408A(c)(3) and does not include IRA Conversion Contributions. ARTICLE III The depositor's interest in the balance in the custodial account is nonforfeitable. ARTICLE IV 1. No part of the custodial funds may be invested in life insurance contracts, nor may the assets of the custodial account be commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5)). 2. No part of the custodial funds may be invested in collectibles (within the meaning of section 408(m)) except as otherwise permitted by section 408(m)(3), which provides an exception for certain gold, silver, and platinum coins, coins issued under the laws of any state, and certain bullion. ARTICLE V 1. If the depositor dies before his or her entire interest is distributed to him or her and the grantor's surviving spouse is not the sole beneficiary, the entire remaining interest will, at the election of the depositor or, if the depositor has not so elected, at the election of the beneficiary or beneficiaries, either: (a) Be distributed by December 31 of the year containing the fifth anniversary of the depositor's death, or (b) Be distributed over the life expectancy of the designated beneficiary starting no later than December 31 of the following the year of the depositor's death. If distributions do not begin by the date described in (b), distribution method (a) will apply. 2. In case of distribution method 1.(b) above, to determine the minimum annual payment for each year, divide the grantor's entire interest in the trust as of the close of business on December 31 of the preceding year by the life expectancy of the designated beneficiary using the attained age of the designated beneficiary as of the beneficiary's birthday in the year distributions are required to commence and subtract 1 for each subsequent year. 3. If the depositor's spouse is the sole beneficiary on the depositor's date of death, such spouse will then be treated as the depositor. ARTICLE VI 1. The depositor agrees to provide the custodian with information necessary for the custodian to prepare any reports required under sections 408(I) and 408A(d)(3)(E). Regulations sections 1.408-5 and 1.408-6, and under guidance published by the Internal Revenue Service. 2. The custodian agrees to submit reports to the Internal Revenue Service and the depositor prescribed by the Internal Revenue Service. ARTICLE VII Notwithstanding any other articles which may be added or Incorporated, the provisions of Articles I through IV and this sentence will be controlling. Any additional articles that are not consistent with section 408A, the related regulations, and other published guidance will be invalid. ARTICLE VIII This agreement will be amended from time to time to comply with the provisions of the Code, related regulations, and other published guidance. Other amendments may be made with the consent of the persons whose signatures appear below. - -------------------------------------------------------------------------------- 17 Cat No. 25094Y Form 5305-RA (1-98) 8 ARTICLE IX The following information is applicable to Roth IRAs, not Traditional IRAs. The rules regarding Roth IRAs are new. Congress and the Internal Revenue Service are refining the rules, so the following rules and/or their interpretation are subject to change. 1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual Retirement Custodial Account Agreement and the related Roth IRA Application (referred to herein as the "Roth IRA Adoption Agreement"), the Depositor directs the Custodian to invest all custodial account funds after deductions for sales charges and Custodian fees, in shares issued by the investment company or companies selected by the Depositor on the Roth IRA Adoption Agreement, until the Depositor hereafter gives the Custodian contrary instructions pursuant to Article XIII below. The investment companies from which the Depositor may select are enumerated on the applicable list prepared by A I M Distributors, Inc. (the "Distributor"), a copy of which accompanies the Adoption Agreement. Such investment companies are part of "The AIM Family of Funds-Registered Trademark-," which are managed or advised by subsidiaries of A I M Management Group Inc. and any such investment company will hereafter be referred to as "Investment Company." 2. (i) ANNUAL CASH CONTRIBUTIONS: The Depositor may make annual cash contributions to the account within the limits specified in Article I. All contributions shall be hand delivered or mailed to the Custodian by the Depositor, with an indication of the taxable year to which such contribution relates. (ii) ROLLOVER CONTRIBUTIONS: In addition to any annual contributions referred to in Paragraph (i) above, but subject to this Paragraph (ii), the Depositor may contribute to the account, at any time, a rollover contribution of such cash or other property as shall constitute a rollover amount or contribution under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3) or 408A(e) of the Code. The Depositor shall be responsible for determining whether a rollover to a Roth IRA is permissible under the Internal Revenues Code, and the timeliness of any rollover. The Custodian will accept for the account all rollover contributions which consist of cash, and it may, but shall be under no obligation to, accept any other rollover contribution. In the case of rollover contributions composed of assets other than cash, the prospective Depositor shall provide the Custodian with a description of such assets and such other information as the Custodian may reasonably require. The Custodian may accept all or any part of such a rollover contribution if it determines that the assets of which such contribution consists are either in a medium proper for investment hereunder or that the assets can be promptly liquidated for cash. The Custodian may reject any rollover contribution. The Depositor warrants that any rollover contribution to the account consists of cash, the same property received in the distribution or, in the case of amounts distributed to the Depositor from a qualified employer's plan or annuity, the proceeds from the sale of the same property received in the distribution. 3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes, interest and penalties which might accrue or be assessed by reason of any excess or impermissible deposit, and interest, if any, earned thereon. Any contributions made by or on behalf of the Depositor in respect of a taxable year of the Depositor shall be made by or on behalf of the Depositor to the Custodian for deposit in the custodial account within the time period for claiming any income tax deduction for such taxable year. It shall be the sole responsibility of the Depositor to determine the amount of the contributions made hereunder. The Depositor shall execute such forms as the Custodian may require in connection with any contribution hereunder. ARTICLE X 1. THE CUSTODIAN SHALL from time to time, subject to the provisions of Articles IV and V, make distributions out of the custodial account to the Depositor, in such manner and amounts as may be specified in written instructions of the Depositor. All such instructions shall be deemed to constitute a certification by the Depositor that the distribution so directed is one that the Depositor is permitted to receive. A declaration of the Depositor's intention as to the disposition of an amount distributed pursuant to Article V hereof shall be in writing and given to the Custodian. The Custodian shall have no liability with respect to any contribution to the custodial account, any investment of assets in the custodial account or any distribution therefrom pursuant to instructions received from the Depositor or pursuant to this Agreement, or for any consequences to the Depositor arising from such contributions, investments or distributions including, but not limited to, excise and other taxes and penalties which might accrue or be assessed by reason thereof, nor shall the Custodian be under any duty to make any inquiry or investigation with respect thereto. 2. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and penalties which might accrue or be assessed for having failed to make the annual minimum withdrawal required in any year. ARTICLE XI A Depositor shall have the right to designate a beneficiary or beneficiaries to receive any amounts remaining in his account in the event of his death. Any prior beneficiary designation may be changed or revoked at any time by a Depositor by written designation signed by the Depositor on a form acceptable to, and filed with, the Custodian; provided, however, that such designation, or change or revocation of a prior designation shall not become effective until it has been received by the Custodian, nor shall it be effective unless received by the Custodian no later than thirty days before the death of the Depositor, and provided further that the last such designation of beneficiary or change or revocation of beneficiary executed by the Depositor, if received by the Custodian within the time specified, shall control. Unless otherwise provided in the beneficiary designation, amounts payable by reason of the Depositor's death will be paid in equal shares only to the primary beneficiary or beneficiaries who survive the Depositor, or, if no primary beneficiary survives the Depositor, to the contingent beneficiary or beneficiaries who survive the Depositor. If the Depositor had not, by the date of his death, properly designated a beneficiary in accordance with the preceding sentences, or if no designated beneficiary survives the Depositor, then the Depositor's beneficiary shall be the Depositor's estate. ARTICLE XII 1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for performing duties pursuant to this Agreement shall be in such amount as shall be established from time to time. The Depositor agrees to pay the Custodian the fees specified in its current fee schedule and authorizes the Custodian to charge the Depositor's custodian account for the amount of such fees. 2. UPON 30 DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new fee schedule. The Custodian's fees, any income, gift, estate and inheritance taxes and other taxes of any kind whatsoever, including transfer taxes incurred in connection with the investment or reinvestment of the assets of the custodial account, that may be levied or assessed in respect of such assets, and all other administrative expenses incurred by the Custodian in the performance of its duties including fees for legal services rendered to the Custodian, may be charged to the custodial account with the right to liquidate Investment Company shares for this purpose, or at the Custodian's option, shall be billed to the Depositor directly. ARTICLE XIII 1. THIS AGREEMENT SHALL take effect only when accepted and signed by the Custodian. As directed, the Custodian shall then open and maintain a separate custodial account for Depositor and invest the initial contribution hereunder in shares of the Investment Company. Where the Roth IRA Adoption Agreement is checked for spousal accounts, separate custodial accounts will be opened and maintained in each spouse's name. The amounts specified in the Roth IRA Adoption Agreement shall be credited to each spouse's separate custodial account except that no more than $2,000 shall be credited to either custodial account. 2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any such written instructions are not received as required however, or if received, are in the opinion of the Custodian unclear, or if the accompanying contribution exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the Custodian may hold or return all or a portion of the contribution uninvested without liability for loss of income or appreciation, and without liability for interest, pending receipt of written instructions or clarification. 3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on Investment Company shares held in the custodial account shall (unless received in additional such shares) be reinvested in shares of the Investment Company, which shall be credited to the custodial account. If any distribution on such shares may be received at the election of the Depositor in additional such shares or in cash or other property, the Custodian shall elect to receive it in additional Investment Company shares. 4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall be registered in the name of the Custodian (with or without identifying the Depositor) or of its nominees. The Custodian shall deliver, or cause to be executed and delivered, to the Depositor all notices, prospectuses, financial statements, proxies and proxy solicitation materials relating to such Investment Company shares held in the custodial account. The Custodian shall not vote any Investment Company shares except in accordance with the written instructions received from the Depositor. ARTICLE XIV 1. THE CUSTODIAN SHALL keep adequate records of transactions it is required to perform hereunder. Not later than six months after the close of each calendar year or after the Custodian's registration or removal pursuant to Article XV below, the Custodian shall render to the Depositor or the Depositor's legal representative a written report or reports reflecting the transactions effected by it during such period and the assets and liabilities of the custodial account at the close of the period. Sixty days after rendering such report(s), the Custodian shall (to the extent permitted by law) be forever released and discharged from all liability and accountability to anyone with respect to its acts and transactions shown in or reflected by such report(s), except with respect to those as to which the Depositor or the Depositor's legal representative shall have filed written objections with the Custodian within the latter such sixty-day period. 2. THE CUSTODIAN SHALL receive and invest contributions as directed by the Depositor, hold and distribute such investments, and keep adequate records and reports thereon, all in accordance with this Agreement. The parties do not intend to confer any other fiduciary duties of the Custodian, and none shall be implied. The Custodian shall not be liable (and assumes no responsibility) for the 18 9 collection of contributions, the deductibility or propriety of any contribution under this Agreement, or the purposes or propriety of any distribution from the account, which matters are the responsibility of the Depositor or the Depositor's legal representative. 3. THE DEPOSITOR, to the extent permitted by law, shall always fully indemnify the Custodian and save it harmless from any and all liability whatsoever which may arise in connection with this Agreement and matters which it contemplates, except that which arises due to the Custodian's negligence and willful misconduct. The Custodian shall not be obligated or expected to commence or defend any legal action or proceeding in connection with this Agreement or such matters unless agreed upon by the Custodian and Depositor or said legal representative, and unless fully indemnified for so doing to the Custodian's satisfaction. 4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting upon any written order from the Depositor or the Depositor's legal representative or any other notice, request, consent, certificate or other instruments or paper believed by it to be genuine and to have been properly executed, and as long as it acts in good faith in taking or omitting to take any other action in reliance thereon. ARTICLE XV 1. THE CUSTODIAN MAY resign at any time upon 30 days' notice in writing to the Depositor, and may be removed by the Depositor at any time upon thirty days' notice in writing to the Custodian. Upon such resignation or removal, the Depositor shall appoint a successor custodian to serve under this Agreement. Upon receipt by the Custodian of written acceptance of such appointment by the successor custodian, the Custodian shall transfer to such successor the assets of the custodial account and all necessary records (or copies thereof) pertaining thereto, provided that (at the Custodian's request) any successor custodian shall agree not to dispose of any such records without the Custodian's consent. The Custodian is authorized, however, to reserve such assets as it may deem advisable for payment of any other liabilities constituting a charge on or against the assets of the custodial account or on or against the Custodian, with any balance of such reserve remaining after the payment of all such items to be paid over to the successor custodian. 2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such successor custodian. 3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under this Agreement, must be a bank (as defined in Section 408(n) of the Code) or such other person who qualifies with the Internal Revenue Service to serve in the manner prescribed by Code section 408(a)(2) and satisfies the Custodian, upon request, as to such qualification. 4. AFTER THE CUSTODIAN HAS transferred the custodial account assets (including any reserve balance as contemplated above) to the successor custodian, the Custodian shall be relieved of all further liability with respect to this Agreement, the custodial account and the assets thereof. ARTICLE XVI 1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds of the account to the depositor if within 30 days after the resignation or removal of the Custodian pursuant to Article XV above, the Depositor has not appointed a successor custodian which has accepted such appointment unless within that time the Distributor appoints such successor and gives written notice thereof to the Depositor and the Custodian. The Distributor shall have the right, but not the duty, to appoint such a successor. Termination of the custodial account shall be effected by distributing all of the assets therein in cash or in kind to the Depositor in a lump sum, subject to the Custodian's right to reserve funds as provided in said Article XV. 2. UPON TERMINATION of the custodial account in any manner provided for in this Article XVI, this Agreement shall terminate and have no further force and effect, and the Custodian shall be relieved from all further liability with respect to this Agreement, the custodial account and all assets thereof so distributed. ARTICLE XVII 1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this Agreement shall be effective when mailed if sent by first class mail to the Depositor at the Depositor's last known address as shown on the Custodian's records. Any notice required or permitted to be given to the Custodian, shall become effective upon actual receipt by the Custodian at such address as the Custodian shall provide the Depositor from time to time in writing. 2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and administered in accordance with the laws of the State of Colorado. The Custodian and the Depositor hereby waive and agree to waive right to trial by jury in an action or proceeding instituted in respect to this custodial account. The Depositor further agrees that the venue of any litigation between him and the Custodian with respect to the custodial account shall be in the State of Colorado. 3. THIS AGREEMENT IS intended to qualify under section 408A of the Code as a Roth IRA and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with that intent. 4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to regulations promulgated thereunder. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. 5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it specifically agrees to in writing, and no implied covenants or obligations shall be read into this Agreement against the Custodian. The Custodian shall not be liable under this Agreement, except for its own bad faith, gross negligence or willful misconduct. 6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or any payment therefrom shall be assignable, transferable, or subject to sale, mortgage, pledge, hypothecation, communication, anticipation, garnishment, attachment, execution, or levy of any kind and the Custodian shall not recognize any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or anticipate the same, except as required by law. 7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this Agreement from time to time as it deems appropriate, and hereby consents to all such amendments, provided, however, that all such amendments are in compliance with the provisions of the Code and the regulations promulgated thereunder. All such amendments shall be effective as of the date specified in a written notice of amendment which will be sent to the Depositor. INSTRUCTIONS (Section references are to the Internal Revenue Code unless otherwise noted.) PURPOSE OF FORM This model custodial account agreement may be used by an individual who wishes to adopt a Roth IRA under section 408A. When fully executed by the Depositor and the Custodian not later than the time prescribed by law for filing the Federal income tax return for the Depositor's tax year (not including any extensions thereof), a Depositor will have a Roth IRA custodial account which meets the requirements of section 408A. This account must be created in the United States for the exclusive benefit of the Depositor or his/her beneficiaries. DEFINITIONS CUSTODIAN. The Custodian must be a bank or savings and loan association, as defined in section 408(n), or other person who has the approval of the Internal Revenue Service to act as custodian. DEPOSITOR. The Depositor is the person who establishes the custodial account. ROTH IRA FOR NONWORKING SPOUSES Contributions to a Roth IRA custodial account for a non-working spouse must be made to a separate Roth IRA custodial account established by the nonworking spouse. This form may be used to establish the Roth IRA custodial account for the nonworking spouse. An individual's social security number will serve as the identification number of his or her individual retirement account. For more information, obtain a copy of the required disclosure statement from your custodian or get Publication 590, Individual Retirement Arrangements (IRAs). SPECIFIC INSTRUCTIONS ARTICLE IV -- Distribution made under this Article may be made in a single sum, periodic payment, or a combination of both. ARTICLE IX -- This article and any that follow it may incorporate additional provisions that are agreed upon by the Depositor and the Custodian to complete the agreement. These may include, for example: definitions, investment powers, voting rights, exculpatory provisions, amendment and termination, removal of Custodian, Custodian's fees, state law requirements, beginning date of distributions, accepting only cash, treatment of excess contributions, prohibited transactions with the Depositor, etc. Use additional pages if necessary and attach them to this form. Note: This form may be reproduced and reduced in size for adoption to passbook or card purposes. THE AIM FAMILY OF FUNDS-Registered Trademark- ROTH IRA CUSTODIAL ACCOUNT DISCLOSURE STATEMENT Under applicable federal regulations, a custodian of a Roth IRA account is required to furnish each depositor who has established or is establishing a Roth IRA account with a statement which discloses certain information regarding the account. INVESCO Trust Company (hereinafter referred to as the "Custodian") is providing this Disclosure Statement to you in accordance with that requirement, and this Disclosure Statement contains general information about the The AIM 19 10 Family of Funds-Registered Trademark- Roth IRA Custodial Account (hereinafter referred to as "Roth IRA"). This Disclosure Statement should be reviewed in conjunction with both the Roth Individual Retirement Custodial Account agreement (Form 5305 and any attachments thereto, hereinafter referred to as the "Custodial Agreement") and the Adoption Agreement for your Roth IRA. You should review this Disclosure Statement and the Roth IRA documents with your attorney or tax advisor. The Custodian cannot give tax advice or determine whether or not the Roth IRA is appropriate for you. The following information is applicable to Roth IRAs, not Traditional IRAs. The rules regarding Roth IRAs are new. Congress and the Internal Revenue Service are refining the rules, so the following rules and/or their interpretation are subject to change. A. SEVEN DAY RIGHT TO REVOKE YOUR ROTH IRA. You may revoke your Roth IRA at any time within 7 business days after the date the Roth IRA is established, by giving proper notice. For purposes of revocation, it will be assumed that you received the Disclosure Statement no later than the date of your check with which you opened your Roth IRA. Written notice must be hand delivered or sent by first class mail, in which case, the revocation will be effective as of the date the notice is postmarked (or if sent by certified or registered mail, the date of certification or registration). Notice of revocation should be made to: A I M Distributors, Inc., Eleven Greenway Plaza, Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention: Shareholder Services Department, area code (800) 959-4246. If you revoke your Roth IRA, you are entitled to a refund of your entire contribution to the Roth IRA, without adjustment for such items as sales commissions, administrative expenses or fluctuation in market value. If you do not revoke within 7 business days after the establishment of the Roth IRA, you will be deemed to have accepted the terms and conditions of the Roth IRA and cannot later revoke the Roth IRA without certain potential penalties. B. STATUTORY REQUIREMENTS. A Roth IRA is a trust or custodial account created or organized in the United States for your exclusive benefit or that of your beneficiaries. It must be created by a written governing instrument that meets the following requirements: (1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union, savings and loan association or another person eligible to act as trustee or custodian; (2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no contribution will be accepted unless it is in cash or cash equivalent, including, but not by way of limitation, personal checks, cashier's checks, and wire transfers; (3) EXCEPT FOR ROLLOVERS contributions of more than $2,000 for any tax year may not be made; (4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT; (5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life insurance contracts, nor may the assets be commingled with other property except in a common trust fund or common investment fund. Furthermore, as provided in section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"), your Roth IRA may not be invested in "collectibles," such as art works, antiques, metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and silver coins and certain bullion), and certain other types of tangible personal property. An investment in a collectible would be treated as a distribution from your Roth IRA which would be includible in your gross income, and, if you had not attained the age of 59 1/2, the distribution would also be subject to the premature distribution penalty as discussed in Part E(5) below; (6) UNLIKE A TRADITIONAL IRA, YOUR INTEREST IN YOUR ROTH IRA IS NOT REQUIRED TO BE DISTRIBUTED WHEN YOU REACH AGE 70 1/2. C. INVESTMENT OF YOUR ROTH IRA. Under the terms of the Custodial Agreement, your contributions will be invested by the Custodian in full and fractional shares of the investment company or companies that you select. As provided in the Custodial Agreement, you may only invest your Roth IRA Funds in shares of investment companies which are part of "The AIM Family of Funds-Registered Trademark-," which are managed or advised by subsidiaries of A I M Management Group Inc. You will be provided with a list of the investment companies from which you may choose to invest. Subject to the foregoing and to any additional restrictions described in the Custodial Agreement, you have complete control over the investment of your Roth IRA Funds. The Custodian will not provide any form of investment advice or make investment recommendations of any type, so you will make all investment decisions on the basis of information you obtain from other sources. When you make a decision on how you wish to invest Funds held in your Roth IRA, you should provide the Custodian with specific instructions, detailing your investment decision so that the Custodian can effectuate such investments as provided in your Roth IRA Custodial Agreement. If you fail to direct the Custodian as to the Investment of all or any portion of your Roth IRA account, the Custodian shall hold such uninvested amount in your account and shall incur no liability for interest or earnings thereon. All dividends and capital gain distributions received on shares of an investment company held in your Roth IRA will be reinvested in shares of that investment company, if available, which shall be credited to the Custodian account. Detailed information about the shares of the AIM fund(s) you select must be furnished to you in the form of prospectuses governed by rules of the Securities and Exchange Commission. D. LIMITATIONS AND RESTRICTIONS ON ROTH IRA CONTRIBUTIONS AND DEDUCTIONS. Except in the case of rollover contributions (see Part F below), generally you may contribute up to the lesser of $2,000 or 100% of your compensation (earned income) to your Roth IRA for any taxable year. A non-working spouse may contribute up to $2,000 to a separate Roth IRA. Contributions to a Roth IRA are nondeductible, but earnings on a Roth IRA generally are not subject to federal income tax. The $2,000 individual Roth IRA limit is reduced by any deductible or nondeductible contributions you make to a Traditional IRA. You should consult your tax advisor to determine the specific application of such rules to your Roth IRA contributions for any particular taxable year. Contributions to a Roth IRA are not deductible, but earnings on a Roth IRA generally are not subject to federal income tax if they are distributed after the account has been in existence for five years and the distribution is made on account of death, disability, after age 59 1/2, or for certain qualifying events. The $2,000 maximum contribution to a Roth IRA is reduced for taxpayers whose income exceeds $95,000 (single filer) or $150,000 (joint filers) and is phased-out entirely for taxpayers whose income exceeds $110,000 (single) or $160,000 (joint). E. FEDERAL INCOME TAX STATUS OF THE ROTH IRA AND CERTAIN DISTRIBUTIONS. (1) IN GENERAL. Except as described below, your Roth IRA and earnings thereon are exempt from federal income tax at least until distributions are made from the Roth IRA. (2) TAX TREATMENT OF DISTRIBUTIONS FROM A ROTH IRA. Contributions to a Roth IRA are not tax-deductible, but distributions may be received tax-free under certain circumstances. After a Roth IRA account has been maintained for at least five years (whether or not contributions were made for all years), investment earnings may be withdrawn without being subject to federal income tax if the distribution is made after age 59 1/2, in the case of death or disability, or for a first home purchase. A withdrawal for a first home purchase is limited to $10,000 and is available to a person who has not had an ownership interest in a principal residence during the two years ending on the date of purchase. The dollar amount of contributions (but not earnings) to a Roth IRA may be withdrawn without penalty at any time. (3) EXCESS CONTRIBUTIONS. If contributions to your Roth IRA are in excess of the limits stated in Part D above, you will be assessed a 6% nondeductible excise tax on such excess amounts. This tax is payable for each year the excess is permitted to remain in your Roth IRA. However, if the excess contribution and all earnings thereon are returned before the due date for filing your income tax return for the year in which the excess contribution was made, the 6% excise tax will not be assessed. The earnings on such excess contributions that are returned to you will be taxable as ordinary income and will be deemed to have been earned and taxable in the tax year during which the excess contribution was made. In addition, if you are not disabled or have not reached age 59 1/2, the earnings will be subject to the 10% premature withdrawal penalty discussed below. The 6% excess contribution tax may be eliminated for future tax years by withdrawing the excess contribution from your Roth IRA before the due date for filing your tax return for that year or by under-contributing for a subsequent year by an amount equal to the excess contribution. If the total contributions for the year to your Roth IRA are $2,000 or less, you may withdraw any excess contributions after the due date for filing your tax return, including extensions, and not include the amount withdrawn in your gross income. It is not necessary to withdraw the interest or other income earned on the excess. You will have to pay the 6% tax on the excess amount for each year the excess contribution was in the Roth IRA. If less than the maximum amount of contributions has been made in years before the year you make an excess contribution, the prior year's difference may not be used to reduce the excess contribution. Qualified rollover contributions, as described in Part F below, are not considered excess contributions. (4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may be payable, distributions from your Roth IRA that occur before you reach age 59 1/2 (except in the event of disability, death, rollover, or as a qualifying distribution), will be assessed a 10% additional income tax on the amount distributed which is includible in your gross income. However, the additional 10% income tax will not be imposed if the distribution is one of a scheduled series of level payments to be made over your life or life expectancy or over the joint lives or joint life expectancies of you and your beneficiary. Amounts treated as distributions from the Roth IRA because of pledging the Roth IRA as described below, or prohibited transactions as described below, will also be considered premature distributions if they occur before you reach age 59 1/2 (assuming you are not disabled). (5) PLEDGING THE ROTH IRA. If you pledge your Roth IRA as security for a 20 11 loan, the portion so pledged is treated as being distributed to you in that year. In addition to any regular income tax that may be payable on the distribution, the premature distribution penalty as discussed above may also be applicable. (6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a prohibited transaction, as described in section 4975 of the Code with respect to your Roth IRA, your Roth IRA will lose its exemption from tax and you must include the fair market value of your Roth IRA in your gross income for the year during which the prohibited transaction occurred. In addition to any regular income tax that may be payable, the premature distribution penalty as discussed above may also be applicable. (7) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. You should consult your tax advisor with respect to the application of community property laws on estate and gift tax issues relating to your Roth IRA. (8) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of distributions from your Roth IRA, if any, is subject to federal income tax withholding unless you elect not to have withholding applied. If you elect not to have withholding applied to taxable distributions from your IRA, or if insufficient federal income tax is withheld from any distribution, you may be responsible for payment of estimated taxes, as well as for penalties under the estimated tax rules, if withholding and estimated tax payments were not sufficient. Additional information regarding withholding and the necessary election forms will be provided no later than at the time a distribution is requested. F. ROLLOVER CONTRIBUTIONS. A rollover is a contribution of cash or other assets from one retirement program to another. There are two kinds of rollover contributions to an IRA. In one, you contribute amounts distributed to you from one IRA to another IRA. With the other type, you contribute amounts distributed to you from your employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable IRA contribution which is not subject to the limits on regular contributions discussed in Part D above. However, you may not deduct a rollover contribution to your IRA on your tax return. If you receive a distribution from the qualified plan of your employer or former employer, the distribution must be an "eligible rollover distribution" in order for you to be able to roll all or part of the distribution over to your IRA. Your employer or former employer will give you the opportunity to roll over the distribution directly from the plan to the IRA. If you elect, instead, to receive the distribution, you must deposit it into the IRA within 60 days after you receive it. An "eligible rollover distribution" is any distribution from a qualified plan that would be taxable other than (1) a distribution that is one of a series of periodic payments for an employee's life or over a period of 10 years or more, (2) a required distribution after you attain age 70 1/2 and (3) certain corrective distributions. The proceeds of a Roth IRA may be rolled over only to another Roth IRA. A Roth IRA may accept the proceeds of a tax-qualified plan or a traditional IRA, but any taxable portion of such a rollover shall be subject to federal income tax. Similarly, a Traditional IRA may be redesignated as a Roth IRA, with the taxable portion of the converted IRA being subject to federal income tax at the time of conversion. In the case of such a rollover or conversion during 1998, the amount required to be included in income shall be spread ratably over four years. G. AMENDMENTS. The Custodian of your Roth IRA may amend the agreements establishing your Roth IRA at any time. The Custodian will comply with the amendment procedures set forth in your Custodial Agreement. H. FINANCIAL DISCLOSURE. Because the value of assets held in your Roth IRA is subject to market fluctuation, the value of your Roth IRA can neither be guaranteed nor projected. There is no assurance of growth in the value of your Roth IRA or guarantee of investment results. You will, however, be provided with periodic statements of your Roth IRA, including current market values of investments. Certain fees will be charged by the Custodian in connection with your Roth IRA. Such fees are disclosed on the Custodian's fee schedule, a copy of which has been provided to you. Upon thirty days' prior written notice, the Custodian may substitute a new fee schedule. Any fees or other expenses incurred in connection with your Roth IRA will be deducted from your Roth IRA (with liquidation of Fund Shares, if necessary), or at the Custodian's option, such fees or expenses may be billed to you directly. For its services to the various funds, in The AIM Family of Funds-Registered Trademark-, INVESCO Trust Company receives a custodian fee. This fee is in addition to fees it receives for acting as Custodian under the Roth IRA. INVESCO Trust Company and A I M Distributors, Inc., also will receive additional fees for performing specific services with respect to the various funds in the AIM Family of Funds. Any such fees will be fully disclosed to you. Potential investors should obtain a copy of the current Prospectus relating to the fund(s) selected for investment prior to making an investment. Also, copies of the Statement of Additional Information relating to such fund(s) will be provided upon your request to A I M Distributors, Inc. I. MISCELLANEOUS. Each year you will be provided a statement(s) of account which will give the amount of contributions to the Roth IRA, the year to which each contribution relates, and the total value of the Roth IRA as of the end of the year. Information relating to contributions and distributions must be reported annually to the Internal Revenue Service and to you. You must also file Form 5329 (Return for Individual Retirement Savings Arrangement) with the Internal Revenue Service for each taxable year during which you are assessed any penalty or tax as discussed in Part E above. Further information about Roth IRAs can be obtained from any district office of the Internal Revenue Service or from the Custodian. All provisions in this Disclosure Statement are subject to the Code and to the regulations promulgated thereunder. This Disclosure Statement constitutes a nontechnical restatement and summary of certain provisions of the Code which may affect your Roth IRA. This is not a legal document. Your legal rights and obligations are governed by the federal tax laws and regulations and your Custodial Agreement and Adoption Agreement with the Custodian. The Depositor has assigned the Roth IRA custodial account ______ dollars ($______) in cash. The Depositor has assigned the Roth IRA custodial account ______ dollars ($______) in cash. - -------------------------------------------------------------------------------- Depositor's signature Date - -------------------------------------------------------------------------------- Custodian's signature Date - -------------------------------------------------------------------------------- Witness (Use only if signature of the Depositor or the Custodian is required to be witnessed.) 21 EX-99.B15.B 16 FORM OF SHAREHOLDER SERVICE AGREEMENT 1 EXHIBIT 15(b) SHAREHOLDER SERVICE AGREEMENT [LOGO APPEARS HERE] FOR SALE OF SHARES A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS This Shareholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each of the AIM-managed mutual funds (or designated classes of such funds) listed on Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the "Plan") adopted pursuant to said Rule. This Agreement, being made between A I M Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the undersigned authorized dealer, defines the services to be provided by the authorized dealer for which it is to receive payments pursuant to the Plan adopted by each of the Funds. The Plan and the Agreement have been approved by a majority of the directors of each of the Funds, including a majority of the directors who are not interested persons of such Funds, and who have no direct or indirect financial interest in the operation of the Plan or related agreements (the "Dis-interested Directors"), by votes cast in person at a meeting called for the purpose of voting on the Plan. Such approval included a determination that in the exercise of their reasonable business judgement and in light of their fiduciary duties, there is a reasonable likelihood that the Plan will benefit such Fund and its shareholders. 1 To the extent that you provide distribution-related continuing personal shareholder services to customers who may, from time to time, directly or beneficially own shares of the Funds, including but not limited to, distributing sales literature, answering routine customer inquiries regarding the Funds, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Fund's shares, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares and providing such other services as the Funds or the customer may reasonably request, we, solely as agent for the Funds, shall pay you a fee periodically or arrange for such fee to be paid to you. 2 The fee paid with respect to each Fund will be calculated at the end of each payment period (as indicated in Schedule A) for each business day of the Fund during such payment period at the annual rate set forth in Schedule A as applied to the average net asset value of the shares of such Fund purchased or acquired through exchange on or after the Plan Calculation Date shown for such Fund on Schedule A. Fees calculated in this manner shall be paid to you only if your firm is the dealer of record at the close of business on the last business day of the applicable payment period, for the account in which such shares are held (the "Subject Shares"). In cases where Distributors has advanced payment to you of the first year's fee for shares sold at net asset value and subject to contingent deferred sales charge, no additional payments will be made to you during the first year the Subject Shares are held. 3 The total of the fees calculated for all of the Funds listed on Schedule A for any period with respect to which calculations are made shall be paid to you within 45 days after the close of such period. 4 We reserve the right to withhold payment with respect to the Subject Shares purchased by you and redeemed or repurchased by the Fund or by us as Agent within seven (7) business days after the date of our confirmation of such purchase. We reserve the right at any time to impose minimum fee payment requirements before any periodic payments will be made to you hereunder. 5 This Agreement does not require any broker-dealer to provide transfer agency and recordkeeping related services as nominee for its customers. 6 You shall furnish us and the Funds with such information as shall reasonably be requested either by the directors of the Funds or by us with respect to the fees paid to you pursuant to this Agreement. 7 We shall furnish the directors of the Funds, for their review on a quarterly basis, a written report of the amounts expended under the Plan by us and the purposes for which such expenditures were made. 8 Neither you nor any of your employees or agents are authorized to make any representation concerning shares of the Funds except those contained in the then current Prospectus for the Funds, and you shall have no authority to act as agent for the Funds or for Distributors. 7/97 2 9 We may enter into other similar Shareholder Service Agreements with any other person without your consent. 10 This Agreement and Schedule A may be amended at any time without your consent by Distributors mailing a copy of an amendment to you at the address set forth below. Such amendment shall become effective on the date specified in such amendment unless you elect to terminate this Agreement within thirty (30) days of your receipt of such amendment. 11 This Agreement may be terminated with respect to any Fund at any time without payment of any penalty by the vote of a majority of the directors of such Fund who are Dis-interested Directors or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates either the Selected Dealer Agreement between your firm and us or the Fund's Distribution Plan, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act. 12 The provisions of the Distribution Agreement between any Fund and us, insofar as they relate to the Plan, are incorporated herein by reference. This Agreement shall become effective upon execution and delivery hereof and shall continue in full force and effect as long as the continuance of the Plan and this related Agreement are approved at least annually by a vote of the directors, including a majority of the Dis-interested Directors, cast in person at a meeting called for the purpose of voting thereon. All communications to us should be sent to the address of Distributors as shown at the bottom of this Agreement. Any notice to you shall be duly given if mailed or telegraphed to you at the address specified by you below. 13 You represent that you provide to your customers who own shares of the Funds personal services as defined from time to time in applicable regulations of the National Association of Securities Dealers, Inc., and that you will continue to accept payments under this Agreement only so long as you provide such services. 14 This Agreement shall be construed in accordance with the laws of the State of Texas. A I M DISTRIBUTORS, INC. Date:________________ By: X____________________________________________ The undersigned agrees to abide by the foregoing terms and conditions. Date:________________ By: X____________________________________________ Signature ____________________________________________ Print Name Title ____________________________________________ Dealer's Name ____________________________________________ Address ____________________________________________ City State Zip Please sign both copies and return one copy of each to: A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 7/97 3 SCHEDULE "A" [LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT A I M Distributors, Inc.
Fund Fee Rate* Plan Calculation Date - ------------------------------------------------------------------------------------------ AIM Advisor Flex Fund A Shares 0.25 August 4, 1997 AIM Advisor Flex Fund C Shares 1.00** August 4, 1997 AIM Advisor International Value Fund A Shares 0.25 August 4, 1997 AIM Advisor International Value Fund C Shares 1.00** August 4, 1997 AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997 AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997 AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997 AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997 AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997 AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997 AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992 AIM Asian Growth Fund A Shares 0.25 November 3, 1997 AIM Asian Growth Fund B Shares 0.25 November 3, 1997 AIM Asian Growth Fund C Shares 1.00** November 3, 1997 AIM Balanced Fund A Shares 0.25 October 18, 1993 AIM Balanced Fund B Shares 0.25 October 18, 1993 AIM Balanced Fund C Shares 1.00** August 4, 1997 AIM Blue Chip Fund A Shares 0.25 June 3, 1996 AIM Blue Chip Fund B Shares 0.25 October 1, 1996 AIM Blue Chip Fund C Shares 1.00** August 4, 1997 AIM Capital Development Fund A Shares 0.25 July 17, 1996 AIM Capital Development Fund B Shares 0.25 October 1, 1996 AIM Capital Development Fund C Shares 1.00** August 4, 1997 AIM Charter Fund A Shares 0.25 November 18, 1986 AIM Charter Fund B Shares 0.25 June 15, 1995 AIM Charter Fund C Shares 1.00** August 4, 1997 AIM Constellation Fund A Shares 0.25 September 9, 1986 AIM Constellation Fund B Shares 0.25 November 3, 1997 AIM Constellation Fund C Shares 1.00** August 4, 1997 AIM European Development Fund A Shares 0.25 November 3, 1997 AIM European Development Fund B Shares 0.25 November 3, 1997 AIM European Development Fund C Shares 1.00** November 3, 1997 AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994 AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994 AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997 AIM Global Growth Fund A Shares 0.50 September 15, 1994 AIM Global Growth Fund B Shares 0.25 September 15, 1994 AIM Global Growth Fund C Shares 1.00** August 4, 1997 AIM Global Income Fund A Shares 0.50 September 15, 1994
10/97 4 SCHEDULE "A" [LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT A I M Distributors, Inc.
Fund Fee Rate* Plan Calculation Date - --------------------------------------------------------------------------------------- AIM Global Income Fund B Shares 0.25 September 15, 1994 AIM Global Income Fund C Shares 1.00** August 4, 1997 AIM Global Utilities Fund A Shares 0.25 July 1, 1992 AIM Global Utilities Fund B Shares 0.25 September 1, 1993 AIM Global Utilities Fund C Shares 1.00** August 4, 1997 AIM Growth Fund A Shares 0.25 July 1, 1992 AIM Growth Fund B Shares 0.25 September 1, 1993 AIM Growth Fund C Shares 1.00** August 4, 1997 AIM High Yield Fund A Shares 0.25 July 1, 1992 AIM High Yield Fund B Shares 0.25 September 1, 1993 AIM High Yield Fund C Shares 1.00** August 4, 1997 AIM Income Fund A Shares 0.25 July 1, 1992 AIM Income Fund B Shares 0.25 September 1, 1993 AIM Income Fund C Shares 1.00** August 4, 1997 AIM Intermediate Government Fund A Shares 0.25 July 1, 1992 AIM Intermediate Government Fund B Shares 0.25 September 1, 1993 AIM Intermediate Government Fund C Shares 1.00** August 4, 1997 AIM International Equity Fund A Shares 0.25 May 21, 1992 AIM International Equity Fund B Shares 0.25 September 15, 1994 AIM International Equity Fund C Shares 1.00** August 4, 1997 AIM Limited Maturity Treasury Fund 0.15 December 2, 1987 AIM Money Market Fund A Shares 0.25 October 18, 1993 AIM Money Market Fund B Shares 0.25 October 18, 1993 AIM Money Market Fund C Shares 1.00** August 4, 1997 AIM Cash Reserve Shares 0.25 October 18, 1993 AIM Municipal Bond Fund A Shares 0.25 July 1, 1992 AIM Municipal Bond Fund B Shares 0.25 September 1, 1993 AIM Municipal Bond Fund C Shares 1.00** August 4, 1997 AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992 AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992 AIM Value Fund A Shares 0.25 July 1, 1992 AIM Value Fund B Shares 0.25 October 18, 1993 AIM Value Fund C Shares 1.00** August 4, 1997
10/97 5
Fund Fee Rate* Plan Calculation Date - --------------------------------------------------------------------------------------- AIM Weingarten Fund A Shares 0.25 September 9, 1986 AIM Weingarten Fund B Shares 0.25 June 15, 1995 AIM Weingarten Fund C Shares 1.00** August 4, 1997
* Frequency of Payments: Quarterly, B and C share payments begin after an initial 12 month holding period. Where the broker dealer or financial institution waives the 1% up-front commission on Class C shares, payments commence immediately. ** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75% (0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge, as those terms are defined under the rules of the National Association of Securities Dealers, Inc. Minimum Payments: $50 (with respect to all funds in the aggregate.) No payment pursuant to this Schedule is payable to a dealer, bank or other service provider for the first year with respect to sales of $1 million or more, at no load, in cases where A I M Distributors, Inc. has advanced the service fee to the dealer, bank or other service provider. 10/97 EX-99.B15.C 17 FORM OF BANK SHAREHOLDER SERVICE AGREEMENT 1 EXHIBIT 15(c) [LOGO APPEARS HERE] BANK SHAREHOLDER A I M Distributors, Inc. SERVICE AGREEMENT We desire to enter into an Agreement with A I M Distributors, Inc. (the "Company") acting as agent for the "AIM Funds", for servicing of our agency clients who are shareholders of, and the administration of such shareholder accounts in the shares of the AIM Funds (hereinafter referred to as the "Shares"). Subject to the Company's acceptance of this Agreement, the terms and conditions of this Agreement shall be as follows: 1 We shall provide continuing personal shareholder and administration services for holders of the Shares who are also our clients. Such services to our clients may include, without limitation, some or all of the following: answering shareholder inquiries regarding the Shares and the AIM Funds; performing subaccounting; establishing and maintaining shareholder accounts and records; processing and bunching customer purchase and redemption transactions; providing periodic statements showing a shareholder's account balance and the integration of such statements with those of other transactions and balances in the shareholder's other accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy statements, reports and notices to our clients who are holders of Shares; and such other administrative services as you reasonably may request, to the extent we are permitted by applicable statute, rule or regulations to provide such services. We represent that we shall accept fees hereunder only so long as we continue to provide personal shareholder services to our clients. 2 Shares purchased by us as agents for our clients will be registered (choose one) (in our name or in the name of our nominee) (in the names of our clients). The client will be the beneficial owner of the Shares purchased and held by us in accordance with the client's instructions and the client may exercise all applicable rights of a holder of such Shares. We agree to transmit to the AIM Funds' transfer agent in a timely manner, all purchase orders and redemption requests of our clients and to forward to each client any proxy statements, periodic shareholder reports and other communications received from the Company by us on behalf of our clients. The Company agrees to pay all out-of-pocket expenses actually incurred by us in connection with the transfer by us of such proxy statements and reports to our clients as required by applicable law or regulation. We agree to transfer record ownership of a client's Shares to the client promptly upon the request of a client. In addition, record ownership will be promptly transferred to the client in the event that the person or entity ceases to be our client. 3 Within five (5) business days of placing a purchase order we agree to send (i) a cashiers check to the Company, or (ii) a wire transfer to the AIM Funds' transfer agent, in an amount equal to the amount of all purchase orders placed by us on behalf of our clients and accepted by the Company. 4 We agree to make available to the Company, upon the Company's request, such information relating to our clients who are beneficial owners of Shares and their transactions in such Shares as may be required by applicable laws and regulations or as may be reasonably requested by the Company. The names of our customers shall remain our sole property and shall not be used by the Company for any other purpose except as needed for servicing and information mailings in the normal course of business to holders of the Shares. 5 We shall provide such facilities and personnel (which may be all or any part of the facilities currently used in our business, or all or any personnel employed by us) as may be necessary or beneficial in carrying out the purposes of this Agreement. 6 Except as may be provided in a separate written agreement between the Company and us, neither we nor any of our employees or agents are authorized to assist in distribution of any of the AIM Funds' shares except those contained in the then current Prospectus applicable to the Shares; and we shall have no authority to act as agent for the Company or the AIM Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors, Inc. will be a party, nor will they be represented as a party, to any agreement that we may enter into with our clients. 7/97 2 7 In consideration of the services and facilities described herein, we shall receive from the Company on behalf of the AIM Funds an annual service fee, payable at such intervals as may be set forth in Schedule A hereto, of a percentage of the aggregate average net asset value of the Shares owned beneficially by our clients during each payment period, as set forth in Schedule A hereto. We understand that this Agreement and the payment of such service fees has been authorized and approved by the Boards of Directors/Trustees of the AIM Funds, and is subject to limitations imposed by the National Association of Securities Dealers, Inc. In cases where the Company has advanced payments to us of the first year's fee for shares sold with a contingent deferred sales charge, no payments will be made to us during the first year the subject Shares are held. 8 The AIM Funds reserve the right, at their discretion and without notice, to suspend the sale of any Shares or withdraw the sale of Shares. 9 We understand that the Company reserves the right to amend this Agreement or Schedule A hereto at any time without our consent by mailing a copy of an amendment to us at the address set forth below. Such amendment shall become effective on the date specified in such amendment unless we elect to terminate this Agreement within thirty (30) days of our receipt of such amendment. 10 This Agreement may be terminated at any time by the Company on not less than 15 days' written notice to us at our principal place of business. We, on 15 days' written notice addressed to the Company at its principal place of business, may terminate this Agreement, said termination to become effective on the date of mailing notice to us of such termination. The Company's failure to terminate for any cause shall not constitute a waiver of the Company's right to terminate at a later date for any such cause. This Agreement shall terminate automatically in the event of its assignment, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the Investment Company Act of 1940, as amended. 11 All communications to the Company shall be sent to it at Eleven Greenway Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be duly given if mailed or telegraphed to us at this address shown on this Agreement. 12 This Agreement shall become effective as of the date when it is executed and dated below by the Company. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Texas. A I M DISTRIBUTORS, INC. Date:________________ By: X____________________________________________ The undersigned agrees to abide by the foregoing terms and conditions. Date:________________ By: X____________________________________________ Signature ____________________________________________ Print Name Title ____________________________________________ Dealer's Name ____________________________________________ Address ____________________________________________ City State Zip Please sign both copies and return one copy of each to: A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 7/97 3 SCHEDULE "A" TO BANK [LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT A I M Distributors, Inc.
Fund Fee Rate* Plan Calculation Date - ------------------------------------------------------------------------------------------ AIM Advisor Flex Fund A Shares 0.25 August 4, 1997 AIM Advisor Flex Fund C Shares 1.00** August 4, 1997 AIM Advisor International Value Fund A Shares 0.25 August 4, 1997 AIM Advisor International Value Fund C Shares 1.00** August 4, 1997 AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997 AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997 AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997 AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997 AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997 AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997 AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992 AIM Asian Growth Fund A Shares 0.25 November 3, 1997 AIM Asian Growth Fund B Shares 0.25 November 3, 1997 AIM Asian Growth Fund C Shares 1.00** November 3, 1997 AIM Balanced Fund A Shares 0.25 October 18, 1993 AIM Balanced Fund B Shares 0.25 October 18, 1993 AIM Balanced Fund C Shares 1.00** August 4, 1997 AIM Blue Chip Fund A Shares 0.25 June 3, 1996 AIM Blue Chip Fund B Shares 0.25 October 1, 1996 AIM Blue Chip Fund C Shares 1.00** August 4, 1997 AIM Capital Development Fund A Shares 0.25 June 17, 1996 AIM Capital Development Fund B Shares 0.25 October 1, 1996 AIM Capital Development Fund C Shares 1.00** August 4, 1997 AIM Charter Fund A Shares 0.25 November 18, 1986 AIM Charter Fund B Shares 0.25 June 15, 1995 AIM Charter Fund C Shares 1.00** August 4, 1997 AIM Constellation Fund A Shares 0.25 September 9, 1986 AIM Constellation Fund B Shares 0.25 November 3, 1997 AIM Constellation Fund C Shares 1.00** August 4, 1997 AIM European Development Fund A Shares 0.25 November 3, 1997 AIM European Development Fund B Shares 0.25 November 3, 1997 AIM European Development Fund C Shares 1.00** November 3, 1997 AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994 AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994 AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997 AIM Global Growth Fund A Shares 0.50 September 15, 1994 AIM Global Growth Fund B Shares 0.25 September 15, 1994 AIM Global Growth Fund C Shares 1.00** August 4, 1997 AIM Global Income Fund A Shares 0.50 September 15, 1994
10/97 4 SCHEDULE "A" TO BANK [LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT A I M Distributors, Inc.
Fund Fee Rate* Plan Calculation Date - ---------------------------------------------------------------------------------------- AIM Global Income Fund B Shares 0.25 September 15, 1994 AIM Global Income Fund C Shares 1.00** August 4, 1997 AIM Global Utilities Fund A Shares 0.25 July 1, 1992 AIM Global Utilities Fund B Shares 0.25 September 1, 1993 AIM Global Utilities Fund C Shares 1.00** August 4, 1997 AIM Growth Fund A Shares 0.25 July 1, 1992 AIM Growth Fund B Shares 0.25 September 1, 1993 AIM Growth Fund C Shares 1.00** August 4, 1997 AIM High Yield Fund A Shares 0.25 July 1, 1992 AIM High Yield Fund B Shares 0.25 September 1, 1993 AIM High Yield Fund C Shares 1.00** August 4, 1997 AIM Income Fund A Shares 0.25 July 1, 1992 AIM Income Fund B Shares 0.25 September 1, 1993 AIM Income Fund C Shares 1.00** August 4, 1997 AIM Intermediate Government Fund A Shares 0.25 July 1, 1992 AIM Intermediate Government Fund B Shares 0.25 September 1, 1993 AIM Intermediate Government Fund C Shares 1.00** August 4, 1997 AIM International Equity Fund A Shares 0.25 May 21, 1992 AIM International Equity Fund B Shares 0.25 September 15, 1994 AIM International Equity Fund C Shares 1.00** August 4, 1997 AIM Limited Maturity Treasury Fund 0.15 December 2, 1987 AIM Money Market Fund A Shares 0.25 October 18, 1993 AIM Money Market Fund B Shares 0.25 October 18, 1993 AIM Money Market Fund C Shares 1.00** August 4, 1997 AIM Cash Reserve Shares 0.25 October 18, 1993 AIM Municipal Bond Fund A Shares 0.25 July 1, 1992 AIM Municipal Bond Fund B Shares 0.25 September 1, 1993 AIM Municipal Bond Fund C Shares 1.00** August 4, 1997 AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992 AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992 AIM Value Fund A Shares 0.25 July 1, 1992 AIM Value Fund B Shares 0.25 October 18, 1993 AIM Value Fund C Shares 1.00** August 4, 1997
10/97 5
Fund Fee Rate* Plan Calculation Date - --------------------------------------------------------------------------------------- AIM Weingarten Fund A Shares 0.25 September 9, 1986 AIM Weingarten Fund B Shares 0.25 June 15, 1995 AIM Weingarten Fund C Shares 1.00** August 4, 1997
* Frequency of Payments: Quarterly, B and C share payments begin after an initial 12 month holding period. Where the broker dealer or financial institution waives the 1% up-front commission on Class C shares, payments commence immediately. ** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75% (0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge, as those terms are defined under the rules of the National Association of Securities Dealers, Inc. Minimum Payments: $50 (with respect to all funds in the aggregate.) No payment pursuant to this Schedule is payable to a dealer, bank or other service provider for the first year with respect to sales of $1 million or more, at no load, in cases where A I M Distributors, Inc. has advanced the service fee to the dealer, bank or other service provider. 10/97 EX-99.B15.D1 18 FORM OF AGENCY PRICING AGREEMENT (CLASS A SHARES) 1 EXHIBIT 15(d)(1) AGENCY PRICING AGREEMENT (THE AIM FAMILY OF FUNDS--Registered Trademark--) This Agreement is entered into as of the____ of ____________, 1997, between _______________________(the "Plan Provider") and A I M Distributors, Inc. (the "Distributor"). RECITAL Plan Provider acts as a trustee and/or servicing agent for defined contribution plans and/or deferred compensation plans (the "Plans") and invests and reinvests such Plans' assets as specified by an investment advisor, sponsor or administrative committee of the Plan (a "Plan Representative") generally upon the direction of Plan beneficiaries (the "Participants"). Plan Provider and Distributor desire to facilitate the purchase and redemption of shares (the "Shares") of the funds listed on Exhibit A hereto (the "Fund" or "Funds"), registered investment companies distributed by Distributor, on behalf of the Plans, through one or more accounts (not to exceed one per Plan) in each Fund (individually an "Account" and collectively the "Accounts"), subject to the terms and conditions of this Agreement. Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in accordance with Exhibit A hereto. AGREEMENT 1. SERVICES Plan Provider shall provide shareholder and administration services for the Plans and/or their Participants, including, without limitation: answering questions about the Funds; assisting in changing dividend options, account designations and addresses; establishing and maintaining shareholder accounts and records; and assisting in processing purchase and redemption transactions (the "Services"). Plan Provider shall comply with all applicable laws, rules and regulations, including requirements regarding prospectus delivery and maintenance and preservation of records. To the extent allowed by law, Plan Provider shall provide Distributor with copies of all records that Distributor may reasonably request. Distributor or its affiliate will recognize each Plan as an unallocated account in each Fund, and will not maintain separate accounts in each Fund for each Participant. Except to the extent provided in Section 3, all Services performed by Plan Provider shall be as an independent contractor and not as an employee or agent of Distributor or any of the Funds. Plan Provider and Plan Representatives, and not Distributor, shall take all necessary action so that the transactions contemplated by this Agreement shall not be "Prohibited Transactions" under section 406 of the Employee Retirement Income Security Act of 1974, or section 4975 of the Internal Revenue Code. 2. PRICING INFORMATION Each Fund or its designee will furnish Plan Provider on each business day that the New York Stock Exchange is open for business ("Business Day"), with (i) net asset value information as of the close of trading (currently 4:00 p.m. Eastern Time) on the New York 2 Stock Exchange or as at such later times at which a Fund's net asset value is calculated as specified in such Fund's prospectus ("Close of Trading"), (ii) dividend and capital gains information as it becomes available, and (iii) in the case of income Funds, the daily accrual or interest rate factor (mil rate). The Funds shall use their best efforts to provide such information to Plan Provider by 6:00 p.m. Central Time on the same Business Day. Distributor or its affiliate will provide Plan Provider (a) daily confirmations of Account activity within five Business Days after each day on which a purchase or redemption of Shares is effected for the particular Account, (b) if requested by Plan Provider, quarterly statements detailing activity in each Account within fifteen Business Days after the end of each quarter, and (c) such other reports as may be reasonably requested by Plan Provider. 3. ORDERS AND SETTLEMENT If Plan Provider receives instructions in proper form from Participants or Plan Representatives before the Close of Trading on a Business Day, Plan Provider will process such instructions that same evening. On the next Business Day, Plan Provider will transmit orders for net purchases or redemptions of Shares to Distributor or its designee by 9:00 a.m. Central Time and wire payment for net purchases by 2:00 p.m. Central Time. Distributor or its affiliate will wire payment for net redemptions on the Business Day following the day the order is executed for the Accounts. In doing so, Plan Provider will be considered the Funds' agent, and Shares will be purchased and redeemed as of the Business Day on which Plan Provider receives the instructions. Plan Provider will record time and date of receipt of instructions and will, upon request, provide such instructions and other records relating to the Services to Distributor's auditors. If Plan Provider receives instructions in proper form after the Close of Trading on a Business Day, Plan Provider will treat the instructions as if received on the next Business Day. 4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS Plan Provider and its agents shall limit representations concerning a Fund or Shares to those contained in the then current prospectus of such Fund, in current sales literature furnished by Distributor to Plan Provider, in publicly available databases, such as those databases created by Standard & Poor's and Morningstar, and in current sales literature created by Plan Provider and submitted to and approved in writing by Distributor prior to its use. 5. USE OF NAMES Plan Provider and its affiliates will not, without the prior written approval of Distributor, make public references to A I M Management Group Inc. or any of its subsidiaries, or to the Funds. For purposes of this provision, the public does not include Plan Providers' representatives who are actively engaged in promoting the Funds. Any brochure or other communication to the public that mentions the Funds shall be submitted to Distributor for written approval prior to use. Plan Provider shall provide copies of its regulatory filings that include any reference to A I M Management Group Inc. or its subsidiaries or the Funds to Distributor. If Plan Provider or its affiliates should make unauthorized references or representations, Plan Provider agrees to indemnify and hold harmless the Funds, A I M Management Group -2- 3 Inc. and its subsidiaries from any claims, losses, expenses or liability arising in any way out of or connected in any way with such references or representations. 6. TERMINATION (a) This Agreement may be terminated with respect to any Fund at any time without any penalty by the vote of a majority of the directors of such Fund who are "disinterested directors", as that term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"), or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates either the Fund's Distribution Plan, or any related agreement thereunder, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act. (b) Either party may terminate this Agreement upon ninety (90) days' prior written notice to the other party at the address specified below. 7. INDEMNIFICATION (a) Plan Provider agrees to indemnify and hold harmless the Distributor, its affiliates, the Funds, the Funds' investment advisors, and each of their directors, officers, employees, agents and each person, if any, who controls them within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), (the "Distributor Indemnitees") against any losses, claims, damages, liabilities or expenses to which a Distributor Indemnitee may become subject insofar as those losses, claims, damages, liabilities or expenses or actions in respect thereof, arise out of or are based upon (i) Plan Provider's negligence or willful misconduct in performing the Services, (ii) any breach by Plan Provider of any material provision of this Agreement, or (iii) any breach by Plan Provider of a representation, warranty or covenant made in this Agreement; and Plan Provider will reimburse the Distributor Indemnitee for any legal or other expenses reasonably incurred, as incurred, by them in connection with investigating or defending such loss, claim or action. This indemnity agreement will be in addition to any liability which Plan Provider may otherwise have. (b) Distributor agrees to indemnify and hold harmless Plan Provider and its affiliates, and each of its directors, officers, employees, agents and each person, if any, who controls Plan Provider within the meaning of the Securities Act (the "Plan Provider Indemnitees") against any losses, claims, damages, liabilities or expenses to which a Plan Provider Indemnitee may become subject insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or Prospectus of a Fund, or the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make statements therein not misleading, (ii) any breach by Distributor of any material provision of this Agreement, (iii) Distributor's negligence or willful misconduct in carrying out its duties and responsibilities under this Agreement, or (iv) any breach by Distributor of a representation, warranty or covenant made in this Agreement; and Distributor will reimburse the Plan Provider Indemnitees for any -3- 4 legal or other expenses reasonably incurred, as incurred, by them, in connection with investigating or defending any such loss, claim or action. This indemnity agreement will be in addition to any liability which Distributor may otherwise have. (c) If any third party threatens to commence or commences any action for which one party (the "Indemnifying Party") may be required to indemnify another person hereunder (the "Indemnified Party"), the Indemnified Party shall promptly give notice thereof to the Indemnifying Party. The Indemnifying Party shall be entitled, at its own expense and without limiting its obligations to indemnify the Indemnified Party, to assume control of the defense of such action with counsel selected by the Indemnifying Party which counsel shall be reasonably satisfactory to the Indemnified Party. If the Indemnifying Party assumes the control of the defense, the Indemnified Party may participate in the defense of such claim at its own expense. Without the prior written consent of the Indemnified Party, which consent shall not be withheld unreasonably, the Indemnifying Party may not settle or compromise the liability of the Indemnified Party in such action or consent to or permit the entry of any judgment in respect thereof unless in connection with such settlement, compromise or consent each Indemnified Party receives from such claimant an unconditional release from all liability in respect of such claim. 8. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas applicable to agreements fully executed and to be performed therein. 9. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS Each party represents that it is free to enter into this Agreement and that by doing so it will not breach or otherwise impair any other agreement or understanding with any other person, corporation or other entity. Each party represents that it has full power and authority under applicable law, and has taken all action necessary to enter into and perform this Agreement and the person executing this Agreement on its behalf is duly authorized and empowered to execute and deliver this Agreement. Additionally, each party represents that this Agreement, when executed and delivered, shall constitute its valid, legal and binding obligation, enforceable in accordance with its terms. Plan Provider further represents, warrants, and covenants that: (a) it is registered as a transfer agent pursuant to Section 17A of the Securities Exchange Act of 1934, as amended (the "1934 Act"), or is not required to be registered as such; (b) the arrangements provided for in this Agreement will be disclosed to the Plan Representatives; and (c) it is registered as a broker-dealer under the 1934 Act or any applicable state securities laws, or, including as a result of entering into and performing the services set forth in this Agreement, is not required to be registered as such. -4- 5 Distributor further represents, warrants and covenants, that: (a) it is registered as a broker-dealer under the 1934 Act and any applicable state securities laws; and (b) the Funds' advisors are registered as investment advisors under the Investment Advisers Act of 1940, the Funds are registered as investment companies under the 1940 Act and Fund Shares are registered under the Securities Act. 10. MODIFICATION This Agreement and Exhibit A may be amended at any time by Distributor without Plan Provider's consent by Distributor mailing a copy of an amendment to Plan Provider at the address set forth below. Such amendment shall become effective thirty (30) days from the date of mailing unless this Agreement is terminated by the Plan Provider within such thirty (30) days. 11. ASSIGNMENT This Agreement shall not be assigned by a party hereto, without the prior written consent of the other parties hereto, except that a party may assign this Agreement to an affiliate having the same ultimate ownership as the assigning party without such consent. 12. SURVIVAL The provisions of Sections 1, 5 and 7 shall survive termination of this Agreement. -5- 6 IN WITNESS WHEREOF, the undersigned have executed this Agreement by their duly authorized officers as of the date first above written. ______________________________________ (PLAN PROVIDER) By:___________________________________ Print Name:___________________________ Title:________________________________ Address: _____________________________ ______________________________________ ______________________________________ A I M DISTRIBUTORS, INC. (DISTRIBUTOR) By:___________________________________ Print Name:___________________________ Title:________________________________ 11 Greenway Plaza Suite 100 Houston, Texas 77210 -6- 7 EXHIBIT A For the term of this Agreement, Distributor, or its affiliates, shall pay Plan Provider the following amounts for each of the following Funds with respect to the average daily net asset value of the Class A Shares of the Plans' balances for the prior quarter:
FUND ANNUAL FEE - ---------- ---------- AIM Advisor Funds, Inc. - ----------------------- AIM Advisor Flex Fund .25% AIM Advisor Income Fund .25% AIM Advisor International Value Fund .25% AIM Advisor Large Cap Value Fund .25% AIM Advisor MultiFlex Fund .25% AIM Advisor Real Estate Fund .25% AIM Equity Funds, Inc. - ---------------------- AIM Aggressive Growth Fund * .25% AIM Blue Chip Fund .25% AIM Capital Development Fund .25% AIM Charter Fund .25% AIM Constellation Fund .25% AIM Weingarten Fund .25% AIM Funds Group - --------------- AIM Balanced Fund .25% AIM Global Utilities Fund .25% AIM Growth Fund .25% AIM High Yield Fund .25% AIM Income Fund .25% AIM Intermediate Government Fund .25% AIM Municipal Bond Fund .25% AIM Value Fund .25% AIM International Funds, Inc. - ----------------------------- AIM Asian Growth Fund .25% AIM European Development Fund .25% AIM Global Aggressive Growth Fund .25% AIM Global Growth Fund .25% AIM Global Income Fund .25% AIM International Equity Fund .25% AIM Investment Securities Funds - ------------------------------- AIM Limited Maturity Treasury Fund .15%
Distributor or its affiliates shall calculate the amount of quarterly payment and shall deliver to Plan Provider a quarterly statement showing the calculation of the quarterly amounts payable to Plan Provider. Distributor reserves the right at any time to impose minimum fee payment requirements before any quarterly payments will be made to Plan Provider. Payment to Plan Provider shall occur within 30 days following the end of each quarter. All parties agree that the payments referred to herein are for record keeping and administrative services only and are not for legal, investment advisory or distribution services. Minimum Payments: $50 (with respect to all Funds in the aggregate.) ** AIM Aggressive Growth Fund is currently closed to new investors. EX-99.B15.E 19 SERVICE AGMT. FOR BROKERS & BANK TRUST DEPARTMENTS 1 EXHIBIT 15(e) A I M DISTRIBUTORS, INC. [LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT A I M Distributors, Inc. (BROKERS FOR BANK TRUST DEPARTMENTS) _____________, 19___ A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 Gentlemen: We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM Distributors") as agent on behalf of the funds listed on Schedule A hereto (the "Funds"), for the servicing of our clients who are shareholders of, and the administration of accounts in, the Funds. We understand that this Shareholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds, under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is subject to applicable rules of the National Association of Securities Dealers, Inc. ("NASD"). This Agreement defines the services to be provided by us for which we are to receive payments pursuant to the Plan. The Plan and the Agreement have been approved by a majority of the directors or trustees of the applicable Fund, including a majority of directors or trustees who are not interested persons of the applicable Fund, and who have no direct or indirect financial interest in the operation of the Plan or related agreements, by votes cast in person at a meeting called for the purpose of voting on the Plan. Such approval included a determination by the directors or trustees of the applicable Fund, in the exercise of their reasonable business judgement and in light of their fiduciary duties, that there is a reasonable likelihood that the Plan will benefit the Fund and the holders of its Shares. The terms and conditions of this Agreement shall be as follows: 1. To the extent that we provide continuing personal shareholder services and administrative support services to our customers who may from time to time own shares of the Funds of record or beneficially, including but not limited to, forwarding sales literature, answering routine customer inquiries regarding the Funds, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Funds' shares, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares of the Funds and providing such other services as AIM Distributors or the customer may reasonably request, you shall pay us a fee periodically. We represent that we shall accept fees hereunder only so long as we continue to provide such personal shareholder services. 2. We agree to transmit to AIM Distributors in a timely manner, all purchase orders and redemption requests of our clients and to forward to each client all proxy statements, periodic 2 Shareholder Service Agreement Page 2 (Brokers for Bank Trust Departments) shareholder reports and other communications received from AIM Distributors by us relating to shares of the Funds owned by our clients. AIM Distributors, on behalf of the Funds, agrees to pay all out-of-pocket expenses actually incurred by us in connection with the transfer by us of such proxy statements and reports to our clients as required under applicable laws or regulations. 3. We agree to transfer to AIM Distributors in a timely manner as set forth in the applicable prospectus, federal funds in an amount equal to the amount of all purchase orders placed by us and accepted by AIM Distributors. In the event that AIM Distributors fails to receive such federal funds on such date (other than through the fault of AIM Distributors), we shall indemnify the applicable Fund and AIM Distributors against any expense (including overdraft charges) incurred by the applicable Fund and/or AIM Distributors as a result of the failure to receive such federal funds. 4. We agree to make available upon AIM Distributors's request, such information relating to our clients who are beneficial owners of Fund shares and their transactions in such shares as may be required by applicable laws and regulations or as may be reasonably requested by AIM Distributors. 5. We agree to transfer record ownership of a client's Fund shares to the client promptly upon the request of a client. In addition, record ownership will be promptly transferred to the client in the event that the person or entity ceases to be our client. 6. Neither we nor any of our employees or agents are authorized to make any representation to our clients concerning the Funds except those contained in the then current prospectuses applicable to the Funds, copies of which will be supplied to us by AIM Distributors; and we shall have no authority to act as agent for any Fund or AIM Distributors. Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor will they be represented as a party, to any agreement that we may enter into with our clients and neither a Fund nor AIM shall participate, directly or indirectly, in any compensation that we may receive from our clients in connection with our acting on their behalf with respect to this Agreement. 7. In consideration of the services and facilities described herein, we shall receive a maximum annual service fee and asset-based sales charge, payable monthly, as set forth on Schedule A hereto. We understand that this Agreement and the payment of such service fees and asset-based sales charge has been authorized and approved by the Board of Directors or Trustees of the applicable Fund, and that the payment of fees thereunder is subject to limitations imposed by the rules of the NASD. 8. AIM Distributors reserves the right, in its discretion and without notice, to suspend the sale of any Fund or withdraw the sale of shares of a Fund, or upon notice to us, to amend this Agreement. We agree that any order to purchase shares of the Funds placed by us after notice of any amendment to this Agreement has been sent to us shall constitute our agreement to any such amendment. 9. All communications to AIM Distributors shall be duly given if mailed to 3 Shareholder Service Agreement Page 3 (Brokers for Bank Trust Departments) A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Any notice to us shall be duly given if mailed to us at the address specified by us in this Agreement or to such other address as we shall have designated in writing to AIM Distributors. 10. This Agreement may be terminated at any time by AIM Distributors on not less than 60 days' written notice to us at our principal place of business. We, on 60 days' written notice addressed to AIM Distributors at its principal place of business, may terminate this Agreement. AIM Distributors may also terminate this Agreement for cause on violation by us of any of the provisions of this Agreement, said termination to become effective on the date of mailing notice to us of such termination. AIM Distributors's failure to terminate for any cause shall not constitute a waiver of AIM Distributors's right to terminate at a later date for any such cause. This Agreement may be terminated with respect to any Fund at any time by the vote of a majority of the directors or trustees of such Fund who are disinterested directors or by a vote of a majority of the Fund's outstanding shares, on not less than 60 days' written notice to us at our principal place of business. This Agreement will be terminated by any act which terminates the Selected Dealer Agreement between us and AIM Distributors or a Fund's Distribution Plan, and in any event, shall terminate automatically in the event of its assignment by us, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act. 11. We represent that our activities on behalf of our clients and pursuant to this Agreement either (i) are not such as to require our registration as a broker-dealer in the state(s) in which we engage in such activities, or (ii) we are registered as a broker-dealer in the state(s) in which we engage in such activities. We represent that we are registered as a broker-dealer with the NASD if required under applicable law. 12. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Texas. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute the same instrument. This Agreement shall not relieve us or AIM Distributors from any obligations either may have under any other agreements between us. 13. This Agreement shall become effective as of the date when it is executed and dated by AIM Distributors. 4 Shareholder Service Agreement Page 4 (Brokers for Bank Trust Departments) The undersigned agrees to abide by the foregoing terms and conditions. ----------------------------------- (Firm Name) ----------------------------------- (Address) ----------------------------------- City/State/Zip/County By: ---------------------------- Name: ------------------------------ Title: ---------------------------- Dated: ----------------------------- ACCEPTED: A I M DISTRIBUTORS, INC. By: ---------------------------- Name: ---------------------------- Title: ---------------------------- Dated: ---------------------------- Please sign both copies and return to: A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 5 Shareholder Service Agreement Page 5 (Brokers for Bank Trust Departments) SCHEDULE A Funds Fees AIM Advisor Funds, Inc. AIM Advisor Flex Fund AIM Advisor International Value Fund AIM Advisor Large Cap Value Fund AIM Advisor MultiFlex Fund AIM Advisor Real Estate Fund AIM Equity Funds, Inc. AIM Blue Chip Fund AIM Capital Development Fund AIM Charter Fund (Retail Class) AIM Constellation Fund (Retail Class) AIM Weingarten Fund (Retail Class) *AIM Aggressive Growth Fund AIM Funds Group AIM Balanced Fund AIM Global Utilities Fund AIM Growth Fund AIM High Yield Fund AIM Income Fund AIM Intermediate Government Fund AIM Money Market Fund AIM Municipal Bond Fund AIM Value Fund AIM International Funds, Inc. AIM Asian Growth Fund AIM European Development Fund AIM International Equity Fund AIM Global Aggressive Growth Fund AIM Global Growth Fund AIM Global Income Fund AIM Investment Securities Funds AIM Limited Maturity Treasury Fund AIM Tax-Exempt Funds, Inc. AIM High Income Municipal Fund AIM Tax-Exempt Cash Fund AIM Tax-Exempt Bond Fund of Connecticut - --------- * Shares of AIM Aggressive Growth Fund may only be sold to current shareholders who maintain open accounts in AIM Aggressive Growth Fund. 6 A I M DISTRIBUTORS, INC. SHAREHOLDER SERVICE AGREEMENT [LOGO APPEARS HERE] A I M Distributors, Inc. (BANK TRUST DEPARTMENTS) _________________, 19_____ A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 Gentlemen: We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM Distributors") as agent on behalf of the funds listed on Schedule A hereto (the "Funds"), for the servicing of our clients who are shareholders of, and the administration of accounts in, the Funds. We understand that this Shareholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds, under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is subject to applicable rules of the National Association of Securities Dealers, Inc. ("NASD"). This Agreement defines the services to be provided by us for which we are to receive payments pursuant to the Plan. The Plan and the Agreement have been approved by a majority of the directors or trustees of the applicable Fund, including a majority of directors or trustees who are not interested persons of the applicable Fund, and who have no direct or indirect financial interest in the operation of the Plan or related agreements, by votes cast in person at a meeting called for the purpose of voting on the Plan. Such approval included a determination by the directors or trustees of the applicable Fund, in the exercise of their reasonable business judgement and in light of their fiduciary duties, that there is a reasonable likelihood that the Plan will benefit the Fund and the holders of its Shares. The terms and conditions of this Agreement shall be as follows: 1. To the extent that we provide continuing personal shareholder services and administrative support services to our customers who may from time to time own shares of the Funds of record or beneficially, including but not limited to, forwarding sales literature, answering routine customer inquiries regarding the Funds, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Funds' shares, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares of the Funds and providing such other services as AIM Distributors or the customer may reasonably request, you shall pay us a fee periodically. We represent that we shall accept fees hereunder only so long as we continue to provide such personal shareholder services. 2. We agree to transmit to AIM Distributors in a timely manner, all purchase orders and redemption requests of our clients and to forward to each client all proxy statements, periodic shareholder reports and other communications received from AIM Distributors by us relating 7 Shareholder Service Agreement Page 2 (Bank Trust Departments) to shares of the Funds owned by our clients. AIM Distributors, on behalf of the Funds, agrees to pay all out-of- pocket expenses actually incurred by us in connection with the transfer by us of such proxy statements and reports to our clients as required under applicable laws or regulations. 3. We agree to make available upon AIM Distributors's request, such information relating to our clients who are beneficial owners of Fund shares and their transactions in such shares as may be required by applicable laws and regulations or as may be reasonably requested by AIM Distributors. 4. We agree to transfer record ownership of a client's Fund shares to the client promptly upon the request of a client. In addition, record ownership will be promptly transferred to the client in the event that the person or entity ceases to be our client. 5. Neither we nor any of our employees or agents are authorized to make any representation to our clients concerning the Funds except those contained in the then current prospectuses applicable to the Funds, copies of which will be supplied to us by AIM Distributors; and we shall have no authority to act as agent for any Fund or AIM Distributors. Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor will they be represented as a party, to any agreement that we may enter into with our clients and neither a Fund nor AIM shall participate, directly or indirectly, in any compensation that we may receive from our clients in connection with our acting on their behalf with respect to this Agreement. 6. In consideration of the services and facilities described herein, we shall receive a maximum annual service fee and asset-based sales charge, payable monthly, as set forth on Schedule A hereto. We understand that this Agreement and the payment of such service fees and asset-based sales charge has been authorized and approved by the Board of Directors or Trustees of the applicable Fund, and that the payment of fees thereunder is subject to limitations imposed by the rules of the NASD. 7. AIM Distributors reserves the right, in its discretion and without notice, to suspend the sale of any Fund or withdraw the sale of shares of a Fund, or upon notice to us, to amend this Agreement. We agree that any order to purchase shares of the Funds placed by us after notice of any amendment to this Agreement has been sent to us shall constitute our agreement to any such amendment. 8. All communications to AIM Distributors shall be duly given if mailed to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Any notice to us shall be duly given if mailed to us at the address specified by us in this Agreement or to such other address as we shall have designated in writing to AIM Distributors. 9. This Agreement may be terminated at any time by AIM Distributors on not less than 60 days' written notice to us at our principal place of business. We, on 60 days' written notice addressed to AIM Distributors at its principal place of business, may terminate this Agreement. AIM Distributors may also terminate this Agreement for cause on violation by us of any of the provisions of this Agreement, said termination to become effective on the date of mailing notice to us of such termination. AIM Distributors's failure to terminate for any cause shall not constitute a waiver of AIM Distributors's right to terminate at a later date for 8 Shareholder Service Agreement Page 3 (Bank Trust Departments) any such cause. This Agreement may be terminated with respect to any Fund at any time by the vote of a majority of the directors or trustees of such Fund who are disinterested directors or by a vote of a majority of the Fund's outstanding shares, on not less than 60 days' written notice to us at our principal place of business. This Agreement will be terminated by any act which terminates the Agreement for Purchase of Shares of The AIM Family of Funds--Registered Trademark-- between us and AIM Distributors or a Fund's Distribution Plan, and in any event, it shall terminate automatically in the event of its assignment by us, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act. 10. We represent that our activities on behalf of our clients and pursuant to this Agreement either (i) are not such as to require our registration as a broker-dealer in the state(s) in which we engage in such activities, or (ii) we are registered as a broker-dealer in the state(s) in which we engage in such activities. We represent that we are registered as a broker-dealer with the NASD if required under applicable law. 11. This Agreement and the Agreement for Purchase of Shares of The AIM Family of Funds--Registered Trademark-- through Bank Trust Departments constitute the entire agreement between us and AIM Distributors and supersede all prior oral or written agreements between the parties hereto. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute the same instrument. 12. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Texas. 13. This Agreement shall become effective as of the date when it is executed and dated by AIM Distributors. 9 Shareholder Service Agreement Page 4 (Bank Trust Departments) The undersigned agrees to abide by the foregoing terms and conditions. ---------------------------------- (Firm Name) ---------------------------------- (Address) ---------------------------------- City/State/Zip/County By: --------------------------- Name: ----------------------------- Title: --------------------------- Dated: ---------------------------- ACCEPTED: A I M DISTRIBUTORS, INC. By: --------------------------------- Name: --------------------------------- Title: --------------------------------- Dated: --------------------------------- Please sign both copies and return to: A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173 10 Shareholder Service Agreement Page 5 (Bank Trust Departments) SCHEDULE A Funds Fees AIM Advisor Funds, Inc. AIM Advisor Flex Fund AIM Advisor International Value Fund AIM Advisor Large Cap Value Fund AIM Advisor MultiFlex Fund AIM Advisor Real Estate Fund AIM Equity Funds, Inc. AIM Blue Chip Fund AIM Capital Development Fund AIM Charter Fund (Retail Class) AIM Constellation Fund (Retail Class) AIM Weingarten Fund (Retail Class) AIM Aggressive Growth Fund* AIM Funds Group AIM Balanced Fund AIM Global Utilities Fund AIM Growth Fund AIM High Yield Fund AIM Income Fund AIM Intermediate Government Fund AIM Money Market Fund AIM Municipal Bond Fund AIM Value Fund AIM International Funds, Inc. AIM Asian Growth Fund AIM European Development Fund AIM Global Aggressive Growth Fund AIM Global Growth Fund AIM Global Income Fund AIM International Equity Fund AIM Investment Securities Funds AIM Limited Maturity Treasury Fund AIM Tax-Exempt Funds, Inc. AIM High Income Municipal Fund AIM Tax-Exempt Cash Fund AIM Tax-Exempt Bond Fund of Connecticut - ---------- * Shares of AIM Aggressive Growth Fund may only be sold to current shareholders who maintain open accounts in AIM Aggressive Growth Fund. EX-99.B15.F 20 VARIABLE GROUP ANNUITY CONTRACTHOLDER SVC. AGMT. 1 EXHIBIT 15(f) EXHIBIT C VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT This Variable Group Annuity Conractholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant to said Rule. This Agreement, being made between A I M Distributors, Inc. ("Distributors") and the authorized insurance company, sets forth the terms for the provision of specialized services to holders of Group Annuity Contracts (the "Contracts") issued by insurance company separate accounts to employers for their pension, stock bonus or profit-sharing plans qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Plans"), where amounts contributed under such plans are invested pursuant to the Contracts in shares of one or more of the series portfolios of the AIM - managed mutual funds (or designated classes of such funds) (the "Fund(s)") listed in Appendix A, attached hereto, which may be amended from time to time by Distributors. Distributors' role in these arrangements will be solely as agent for the Funds. 1. To the extent you provide specialized services to holders of Contracts who have selected the Fund(s) for purposes of their Group Annuity Contracts ("Contractholders") you will receive payment pursuant to the distribution plan adopted by each of the Funds. Such services to Group Contractholders may include, without limitation, some or all of the following: answering inquiries regarding the Fund(s); performing sub-accounting for Contractholders; establishing and maintaining Contractholder accounts and records; processing and bunching purchase and redemption transactions; providing periodic statements of Contract account balances; forwarding such reports and notices to Contractholders relative to the Fund(s) as we deem necessary; generally, facilitating communications with Contractholders concerning investments in the Fund(s) on behalf of Plan participants; and performing such other administrative services as we deem to be necessary or desirable, to the extent permitted by applicable statute, rule or regulation. You represent that you will accept a fee hereunder only so long as you continue to provide personal services to Contractholders. 2. Shares of the Fund(s) purchased by you will be registered in your name and you may exercise all applicable rights of a holder of such Shares. You agree to transmit to the Funds, in a timely manner, all purchase orders and redemption requests and to forward to each of your Contractholders as you deem necessary, periodic shareholder reports and other communications received from the Funds. 3. You agree to wire to the Fund(s)' custodian bank, within three (3) business days of the placing of a purchase order, federal funds in an amount equal to the amount of all purchase orders placed by you on behalf of your Contractholders and accepted by the Funds (net of any redemption orders placed by you on behalf of your Contractholders). C-1 2 4. You shall provide such facilities and personnel (which may be all or any part of the facilities currently used in your business, or all or any personnel employed by you) as may be necessary or beneficial in carrying out the purposes of this Agreement. 5. Except as may be provided in a separate written agreement between Distributors and you, neither you nor any of your employees or agents are authorized to assist in the distribution of any shares of the Fund(s) to the public or to make any representations to Contractholders concerning the Fund(s) except those contained in the then current prospectus applicable to the Fund(s). Neither the Funds, A I M Advisors, Inc. ("Advisors"), Distributors nor any of their affiliates will be a party, nor will they be represented as a party, to any Group Annuity Contract agreement between you and the Contractholders nor shall the Funds, Advisors, Distributors or any of their affiliates participate, directly or indirectly, in any compensation that you may receive from Contractholders and their Plans' participants. 6. In consideration of the services and facilities described herein, you shall receive an annual fee, payable quarterly, as set forth in Appendix A, of the aggregate average net asset value of shares of the Fund(s) owned by you during each quarterly period for the benefit of Contractholders' Plans' participants. You understand that this Agreement and the payment of such distribution fees have been authorized and approved by the Boards of Directors/Trustees of the Fund(s). You further understand that this Agreement and the fees payable hereunder are subject to limitations imposed by applicable rules of the National Association of Securities Dealers, Inc. 7. The Funds reserve the right, at their discretion and without notice, to suspend the sale of their shares or to withdraw the sale of their shares. 8. This Agreement may be amended at any time without your consent by mailing a copy of an amendment to you at the address set forth below. Such amendment shall become effective on the date set forth in such amendment unless you terminate this Agreement as set forth below within thirty (30) days of your receipt of such amendment. 9. This Agreement may be terminated at any time by us on not less than 60 days' written notice to you at your principal place of business. You may terminate this Agreement on 60 days' written notice addressed to us at our principal place of business. We may also terminate this Agreement for cause on violation by you of any of the provisions of this Agreement, said termination to become effective on the date of mailing notice to you of such termination. Our failure to terminate for any cause shall not constitute a waiver of our right to terminate at a later date for any such cause. This Agreement may be terminated with respect to any Fund at any time without payment of any penalty by the vote of a majority of the directors/trustees of such Fund who are Dis-interested Directors/Trustees, as defined in the 1940 Act, or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates either the Fund's Distribution Agreement with us, the Selected Dealer Agreement between your firm and us or the Fund's Distribution Plan, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act. C-2 3 10. All communications to us shall be sent to 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Any notice to you shall be duly given if mailed, telegraphed or sent by facsimile to you at the address shown on this Agreement. 11. This Agreement shall become effective as of the date when it is executed and dated below by us. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Texas. A I M DISTRIBUTORS, INC. Date: By: ------------------- ---------------------------- Signature ---------------------------- Print Name The undersigned agrees to abide by the foregoing terms and conditions. Date: ------------------- ---------------------------- (Firm Name) ---------------------------- (Address) ---------------------------- (City) / (State) / (County) By: ------------------------- Name: ----------------------- Title: ----------------------- C-3 4 APPENDIX A TO VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
Fund Fee Rate* - ---- --------- AIM Advisor Funds, Inc. (Class A Shares Only) - --------------------------------------------- AIM Advisor Flex Fund .25% AIM Advisor International Value Fund .25% AIM Advisor Large Cap Value Fund .25% AIM Advisor MultiFlex Fund .25% AIM Advisor Real Estate Fund .25% AIM Equity Funds, Inc. (Class A Shares Only) - -------------------------------------------- AIM Aggressive Growth Fund** .25% AIM Blue Chip Fund .25% AIM Capital Development Fund .25% AIM Charter Fund .25% AIM Constellation Fund .25% AIM Weingarten Fund .25% AIM Funds Group (Class A Shares Only) - ------------------------------------- AIM Balanced Fund .25% AIM Global Utilities Fund .25% AIM Growth Fund .25% AIM High Yield Fund .25% AIM Income Fund .25% AIM Intermediate Government Fund .25% AIM Municipal Bond Fund .25% AIM Value Fund .25% AIM International Funds, Inc. (Class A Shares Only) - --------------------------------------------------- AIM Asian Growth Fund .25% AIM European Development Fund .25% AIM Global Aggressive Growth Fund .25% AIM Global Growth Fund .25% AIM Global Income Fund .25% AIM International Equity Fund .25% AIM Investment Securities Funds (Class A Shares) - ------------------------------------------------ AIM Limited Maturity Treasury Fund .15%
*Frequency of Payments: Quarterly **AIM Aggressive Growth Fund is currently closed to new investors. C-4 EX-27.1 21 FDS - AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS A
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATON FROM THE AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS A SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 1 AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS A SHARES 12-MOS OCT-31-1997 OCT-31-1997 1,987,194,427 2,461,010,253 31,306,895 86,472 19,307,806 2,511,711,426 11,143,700 0 11,387,747 22,531,447 0 2,116,538,293 145,228,354 110,157,420 (36,158) 0 (101,414,669) 0 474,092,513 2,489,179,979 17,106,552 2,731,848 0 (46,266,061) (26,427,661) (61,191,114) 272,401,591 184,782,816 0 0 0 0 72,886,350 (37,815,416) 0 762,646,003 (14,054) (32,181,471) 0 0 19,996,061 0 46,327,510 1,175,400,376 15.76 (0.15) 1.67 0.00 0.00 0.00 17.28 1.75 0 0
EX-27.2 22 FDS - AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS B
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS B SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 2 AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS B SHARES 12-MOS OCT-31-1997 OCT-31-1997 1,987,194,427 2,461,010,253 31,306,895 86,472 19,307,806 2,511,711,426 11,143,700 0 11,387,747 22,531,447 0 2,116,538,293 145,228,354 110,157,420 (36,158) 0 (101,414,669) 0 474,092,513 2,489,179,979 17,106,552 2,731,848 0 (46,266,061) (26,427,661) (61,191,114) 272,401,591 184,782,816 0 0 0 0 72,886,350 (37,815,416) 0 762,646,003 (14,054) (32,181,471) 0 0 19,996,061 0 46,327,510 1,117,630,574 15.58 (0.24) 1.66 0.00 0.00 0.00 17.00 2.30 0 0
EX-27.3 23 FDS - AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS C
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS C SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 3 AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS C SHARES 12-MOS OCT-31-1997 OCT-31-1997 1,987,194,427 2,461,010,253 31,306,895 86,472 19,307,806 2,511,711,426 11,143,700 0 11,387,747 22,531,447 0 2,116,538,293 145,228,354 110,157,420 (36,158) 0 (101,414,669) 0 474,092,513 2,489,179,979 17,106,552 2,731,848 0 (46,266,061) (26,427,661) (61,191,114) 272,401,591 184,782,816 0 0 0 0 72,886,350 (37,815,416) 0 762,646,003 (14,054) (32,181,471) 0 0 19,996,061 0 46,327,510 2,556,355 18.39 (0.04) (1.35) 0.00 0.00 0.00 17.00 2.36 0 0
EX-27.4 24 FDS - AIM GLOBAL GROWTH FUND CLASS A
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL GROWTH FUND CLASS A SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 4 AIM GLOBAL GROWTH FUND CLASS A SHARES 12-MOS OCT-31-1997 OCT-31-1997 327,440,754 387,536,280 18,591,292 35,039 7,667,754 413,830,365 6,828,079 0 2,761,544 9,589,623 0 334,919,809 24,499,270 16,771,148 (14,582) 0 9,241,432 0 60,094,083 404,240,742 4,455,134 506,016 0 (6,974,885) (2,013,735) 11,895,254 37,072,703 46,954,222 0 0 0 0 12,770,329 (5,042,207) 0 167,421,570 7,538 (662,207) 0 0 2,895,282 0 6,983,212 155,717,515 14.20 (0.04) 2.49 0.00 0.00 0.00 16.65 1.76 0 0
EX-27.5 25 FDS - AIM GLOBAL GROWTH FUND CLASS B
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL GROWTH FUND CLASS B SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 5 AIM GLOBAL GROWTH FUND CLASS B SHARES 12-MOS OCT-31-1997 OCT-31-1997 327,440,754 387,536,280 18,591,292 35,039 7,667,754 413,830,365 6,828,079 0 2,761,544 9,589,623 0 334,919,809 24,499,270 16,771,148 (14,582) 0 9,241,432 0 60,094,083 404,240,742 4,455,134 506,016 0 (6,974,885) (2,013,735) 11,895,254 37,072,703 46,954,222 0 0 0 0 12,770,329 (5,042,207) 0 167,421,570 7,538 (662,207) 0 0 2,895,282 0 6,983,212 184,750,715 14.05 (0.11) 2.45 0.00 0.00 0.00 16.39 2.29 0 0
EX-27.6 26 FDS - AIM GLOBAL GROWTH FUND CLASS C
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL GROWTH FUND CLASS C SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 6 AIM GLOBAL GROWTH FUND CLASS C SHARES 12-MOS OCT-31-1997 OCT-31-1997 327,440,754 387,536,280 18,591,292 35,039 7,667,754 413,830,365 6,828,079 0 2,761,544 9,589,623 0 334,919,809 24,499,270 16,771,148 (14,582) 0 9,241,432 0 60,094,083 404,240,742 4,455,134 506,016 0 (6,974,885) (2,013,735) 11,895,254 37,072,703 46,954,222 0 0 0 0 12,770,329 (5,042,207) 0 167,421,570 7,538 (662,207) 0 0 2,895,282 0 6,983,212 628,292 17.39 (0.03) (0.97) 0.00 0.00 0.00 16.39 2.29 0 0
EX-27.7 27 FDS - AIM GLOBAL INCOME FUND CLASS A
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL INCOME FUND CLASS A SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 7 AIM GLOBAL INCOME FUND CLASS A SHARES 12-MOS OCT-31-1997 OCT-31-1997 53,006,761 54,823,384 1,598,889 27,398 57,391 56,507,062 0 0 219,943 219,943 0 54,262,086 5,153,153 3,568,259 (10,921) 0 263,067 0 1,772,887 56,287,119 31,675 3,826,335 0 (728,640) 3,129,370 397,245 794,339 4,320,954 0 (3,174,002) (554,536) 0 2,945,818 (1,648,355) 287,431 17,573,349 123,655 330,414 0 0 346,653 0 1,033,150 27,582,444 10.85 0.72 0.21 (0.72) (0.13) 0.00 10.93 1.25 0 0
EX-27.8 28 FDS - AIM GLOBAL INCOME FUND CLASS B
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL INCOME FUND CLASS B SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 8 AIM GLOBAL INCOME FUND CLASS B SHARES 12-MOS OCT-31-1997 OCT-31-1997 53,006,761 54,823,384 1,598,889 27,398 57,391 56,507,062 0 0 219,943 219,943 0 54,262,086 5,153,153 3,568,259 (10,921) 0 263,067 0 1,772,887 56,287,119 31,675 3,826,335 0 (728,640) 3,129,370 397,245 794,339 4,320,954 0 (3,174,002) (554,536) 0 2,945,818 (1,648,355) 287,431 17,573,349 123,655 330,414 0 0 346,653 0 1,033,150 21,915,481 10.84 0.67 0.21 (0.67) (0.13) 0.00 10.92 1.76 0 0
EX-27.9 29 FDS - AIM GLOBAL INCOME FUND CLASS C
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL INCOME FUND CLASS C SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 9 AIM GLOBAL INCOME FUND CLASS C SHARES 12-MOS OCT-31-1997 OCT-31-1997 53,006,761 54,823,384 1,598,889 27,398 57,391 56,507,062 0 0 219,943 219,943 0 54,262,086 5,153,153 3,568,259 (10,921) 0 263,067 0 1,772,887 56,287,119 31,675 3,826,335 0 (728,640) 3,129,370 397,245 794,339 4,320,954 0 (3,174,002) (554,536) 0 2,945,818 (1,648,355) 287,431 17,573,349 123,655 330,414 0 0 346,653 0 1,033,150 98,262 10.76 0.15 0.17 (0.13) (0.03) 0.00 10.92 1.76 0 0
EX-27.10 30 FDS - AIM INTERNATIONAL EQUITY FUND CLASS A
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM INTERNATIONAL EQUITY FUND CLASS A SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 10 AIM INTERNATIONAL EQUITY FUND CLASS A SHARES 12-MOS OCT-31-1997 OCT-31-1997 1,836,302,147 2,223,990,442 63,215,609 101,873 43,045,352 2,330,353,276 49,044,157 0 12,281,355 61,325,512 0 1,897,861,942 137,323,365 96,446,729 5,863,515 0 22,453,519 0 387,755,826 2,269,027,764 29,139,495 4,617,214 0 (33,428,455) 328,254 (16,556,015) 193,195,060 17,697,299 0 (1,250,230) (43,174,394) 0 128,263,180 (90,130,409) 2,743,865 792,278,296 1,113,111 42,949,270 0 0 18,284,107 0 34,204,989 1,416,524,861 15.37 0.04 1.68 (0.02) (0.43) 0.00 16.64 1.47 0 0
EX-27.11 31 FDS - AIM INTERNATIONAL EQUITY FUND CLASS B
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM INTERNATIONAL EQUITY FUND CLASS B SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 11 AIM INTERNATIONAL EQUITY FUND CLASS B SHARES 12-MOS OCT-31-1997 OCT-31-1997 1,836,302,147 2,223,990,442 63,215,609 101,873 43,045,352 2,330,353,276 49,044,157 0 12,281,355 61,325,512 0 1,897,861,942 137,323,365 96,446,729 5,863,515 0 22,453,519 0 387,755,826 2,269,027,764 29,139,495 4,617,214 0 (33,428,455) 328,254 (16,556,015) 193,195,060 176,967,299 0 (1,250,230) (43,174,394) 0 128,263,180 (90,130,409) 2,743,865 792,278,296 1,113,111 42,949,270 0 0 18,284,107 0 34,204,989 558,130,289 15.13 (0.09) 1.66 0.00 (0.43) 0.00 16.27 2.25 0 0
EX-27.12 32 FDS - AIM INTERNATIONAL EQUITY FUND CLASS C
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM INTERNATIONAL EQUITY FUND CLASS C SHARES OCTOBER 31, 1997 ANNUAL REPORT. 0000880859 AIM INTERNATIONAL FUNDS, INC. 12 AIM INTERNATIONAL EQUITY FUND CLASS C SHARES 12-MOS OCT-31-1997 OCT-31-1997 1,836,302,147 2,223,990,442 63,215,609 101,873 43,045,352 2,330,353,276 49,044,157 0 12,281,355 61,325,512 0 1,897,861,942 137,323,365 96,446,729 5,863,515 0 22,453,519 0 387,755,826 2,269,027,764 29,139,495 4,617,214 0 (33,428,455) 328,254 (16,556,015) 193,195,060 176,967,299 0 (1,250,230) (43,174,394) 0 128,263,180 (90,130,409) 2,743,865 792,278,296 1,113,111 42,949,270 0 0 18,284,107 0 34,204,989 5,564,501 17.64 (0.02) (1.35) 0.00 0.00 0.00 16.27 2.27 0 0
-----END PRIVACY-ENHANCED MESSAGE-----