1
As filed with the Securities and Exchange Commission on May 11, 2001
Securities Act Registration No. __________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-effective Amendment No. ____ Post-effective Amendment No. ____ (Check
appropriate box or boxes)
AIM SERIES TRUST
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza
Suite 100
Houston, TX 77046
--------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (713)626-1919
Name and Address of Agent for Service: Copy to:
CAROL F. RELIHAN, ESQUIRE THOMAS H. DUNCAN, ESQUIRE
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza 1225 17th Street
Suite 100 Suite 2300
Houston, TX 77046 Denver, CO 80202
Approximate Date of Proposed Public Offering: As soon as practicable after
the Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing will become effective on June 13, 2001
pursuant to Rule 488.
The title of the securities being registered is AIM Global Trends Fund
Class A shares, Class B shares and Class C shares. No filing fee is due in
reliance on Section 24(f) of the Investment Company Act of 1940.
2
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
a Portfolio of
AIM INVESTMENT FUNDS
11 Greenway Plaza, Suite 100
Houston, Texas 77046
June __, 2001
Dear Shareholder:
A special meeting of the shareholders of AIM Investment Funds will be held
on August 17, 2001. At that meeting, you will be asked to elect as trustees of
AIM Investment Funds the individuals that are identified in this combined proxy
statement and prospectus. The Board of Trustees recommends that you vote FOR the
election of those trustees.
The enclosed combined proxy statement and prospectus also seeks your
approval of a proposed combination of AIM Global Consumer Products and Services
Fund with AIM Global Trends Fund. AIM Global Consumer Products and Services Fund
("Consumer Products") is an investment portfolio of AIM Investment Funds, a
Delaware business trust. AIM Global Trends Fund ("Global Trends") is an
investment portfolio of AIM Series Trust, which is also a Delaware business
trust.
The investment objectives of Global Trends and Consumer Products are
identical. A I M Advisors, Inc. serves as the investment adviser to both funds
and uses the same criteria in selecting individual securities for purchase by
the funds. As discussed in the accompanying document, the combination of the two
funds is being proposed because the asset bases of both funds are decreasing and
their holdings, investment policies and performance are similar. The combination
of the two funds will create a larger fund that will provide a more stable asset
base for investment management. The accompanying document describes the proposed
transaction and compares the investment policies, operating expenses and
performance history of Global Trends and Consumer Products in more detail. You
should review the enclosed materials carefully.
Shareholders of Consumer Products are being asked to approve an Agreement
and Plan of Reorganization by and among AIM Investment Funds, AIM Series Trust,
Global Investment Portfolio and A I M Advisors, Inc., which will govern the
reorganization of Consumer Products into Global Trends. After careful
consideration, the Board of Trustees of AIM Investment Funds recommends that you
vote FOR the proposal.
3
Your vote is important. Please take a moment after reviewing the enclosed
materials to sign and return your proxy card in the enclosed postage paid return
envelope. If we do not hear from you after a reasonable amount of time, you may
receive a telephone call from our proxy solicitor, Georgeson Shareholder
Communications, Inc., reminding you to vote your shares. You may also vote your
shares on the internet at http://www.aimfunds.com by following the instructions
that appear on the enclosed proxy insert.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
4
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
a Portfolio of
AIM Investment Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 17, 2001
TO THE SHAREHOLDERS OF AIM Global Consumer Products and Services Fund
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of AIM
Investment Funds ("AIF") will be held at 11 Greenway Plaza, Suite 100, Houston,
TX 77046-1173 on August 17, 2001, at 3:00 p.m., local time. At the Special
Meeting, shareholders of AIM Global Consumer Products and Services Fund
("Consumer Products"), an investment portfolio of AIF, will be asked to consider
the following proposals:
1. To elect twelve trustees of AIF, each of which will serve until his or
her successor is elected and qualified.
2. To approve an Agreement and Plan of Reorganization (the "Agreement")
by and among AIF, acting on behalf of Consumer Products, AIM Series
Trust ("AST"), acting on behalf of AIM Global Trends Fund ("Global
Trends"), Global Investment Portfolio, acting on behalf of the Global
Consumer Products and Services Portfolio ("Consumer Products
Portfolio") and A I M Advisors, Inc. The Agreement provides for the
combination of Consumer Products with Global Trends (the
"Reorganization"). Pursuant to the agreement, Consumer Products will
redeem all of the shares of the Consumer Products Portfolio that it
owns, and will receive all of the investment securities held by
Consumer Products Portfolio. All of the assets of Consumer Products
will be transferred to Global Trends, Global Trends will assume all of
the liabilities of Consumer Products, and AIM Series Trust will issue
Class A shares of Global Trends to Consumer Products Class A
shareholders, Class B shares of Global Trends to Consumer Products
Class B shareholders, and Class C shares of Global Trends to Consumer
Products Class C shareholders. The value of a Consumer Products
shareholder's account with Global Trends immediately after the
reorganization will be the same as the value of such shareholder's
account with Consumer Products immediately prior to the
reorganization.
3. To transact any other business, not currently contemplated, that may
properly come before the Special Meeting, in the discretion of the
proxies or their substitutes.
Shareholders of record as of the close of business on May 30, 2001,
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof.
Shareholders are requested to execute and return promptly in the enclosed
envelope the accompanying proxy, which is being solicited by the management of
AIF. You may also vote your shares through a website established for that
purpose by following the instructions on the enclosed proxy insert. Your vote is
important for the purpose of ensuring a quorum at the Special Meeting. Proxies
may be revoked at any time before they are exercised by executing and submitting
a revised proxy, by giving written notice of revocation to AST or by voting in
person at the Special Meeting.
/s/ CAROL F. RELIHAN
Carol F. Relihan
Vice President and Secretary
June ___, 2001
5
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
A PORTFOLIO OF
AIM INVESTMENT FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 454-0327
AIM GLOBAL TRENDS FUND
A PORTFOLIO OF
AIM SERIES TRUST
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 454-0327
COMBINED PROXY STATEMENT AND PROSPECTUS
DATED: JUNE __, 2001
This document is being furnished in connection with a special meeting of
shareholders of AIM Investment Funds ("AIF"), a Delaware business trust, to be
held on August 17, 2001 (the "Special Meeting"). At the Special Meeting, the
shareholders of AIF are being asked to elect trustees. The Board of Trustees of
AIF recommends that you vote for the election of the trustees named in this
combined proxy statement and prospectus.
The shareholders of AIM Global Consumer Products and Services Fund
("Consumer Products"), an investment portfolio of AIF, will also be asked at the
Special Meeting to consider and approve an Agreement and Plan of Reorganization
(the "Agreement") by and among AIF, acting on behalf of Consumer Products, AIM
Series Trust ("AST"), acting on behalf of AIM Global Trends Fund ("Global
Trends"), Global Investment Portfolio, acting on behalf of Global Consumer
Products and Services Portfolio, and A I M Advisors, Inc. ("AIM Advisors"). The
Agreement provides for the combination of Consumer Products with Global Trends
(the "Reorganization"). The Board of Trustees of AIF has unanimously approved
the Agreement and Reorganization as being in the best interest of the
shareholders of Consumer Products.
Consumer Products invests all of its investable assets in the Global
Consumer Products and Services Portfolio ("Consumer Products Portfolio").
Consumer Products Portfolio is a subtrust or "series" of Global Investment
Portfolio, an open-end management investment company. Consumer Products
Portfolio has an investment objective that is identical to Consumer Products'
investment objective. As of the date of this combined proxy statement and
prospectus, Consumer Products is the only investor in the Consumer Products
Portfolio.
Pursuant to the Agreement, Consumer Products will effect a redemption of
its shares of Consumer Products Portfolio and will receive all of the investment
securities then held by Consumer Products Portfolio. Then, all of the assets of
Consumer Products will be transferred to Global Trends, Global Trends will
assume all of the liabilities of Consumer Products, and AIM Series Trust will
issue Class A shares of Global Trends to Consumer Products Class A shareholders,
Class B shares of Global Trends to Consumer Products Class B shareholders, and
Class C shares of Global Trends to Consumer Products Class C shareholders. The
value of each
6
Consumer Products shareholder's account with Global Trends immediately after the
Reorganization will be the same as the value of such shareholder's account with
Consumer Products immediately prior to the Reorganization. The Reorganization
has been structured as a tax-free transaction. No initial sales charge will be
imposed in connection with the Reorganization.
Global Trends is a series portfolio of AST, an open-end, series management
investment company. The investment objective of Global Trends is the same as the
investment objective of Consumer Products. Both funds seek to achieve long-term
growth of capital. However, Global Trends' investment policies allow it to
invest in a broader range of investment securities than Consumer Products. See
"Comparison of Investment Objectives and Policies."
This Combined Proxy Statement and Prospectus ("Proxy Statement/Prospectus")
sets forth the information that a shareholder of Consumer Products should know
before voting on the Agreement. It should be read and retained for future
reference.
The current Prospectus of Global Trends, dated May 1, 2001 (the "Global
Trends Prospectus"), together with the related Statement of Additional
Information also dated May 1, 2001, are on file with the Securities and Exchange
Commission (the "SEC") and are incorporated by reference herein. The Prospectus
of Consumer Products dated March 1, 2001 (the "Consumer Products Prospectus"),
and the related Statement of Additional Information also dated March 1, 2001,
have been filed with the SEC and are incorporated by reference herein. A copy of
the Global Trends Prospectus is attached as Appendix II to this Proxy
Statement/Prospectus. The SEC maintains a website at http://www.sec.gov that
contains the prospectuses and statements of additional information described
above, material incorporated by reference, and other information about AST and
AIF. These documents are also available without charge by writing to A I M Fund
Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, or by calling (800)
347-4246. Additional information about Global Trends and Consumer Products may
also be obtained on the internet at http://www.aimfunds.com.
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 PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
7
TABLE OF CONTENTS
PAGE
----
INTRODUCTION...................................................................1
PROPOSAL 1: ELECTION OF TRUSTEES OF AIM INVESTMENT FUNDS.......................3
Nominees for Trustee..................................................3
The Responsibilities of the Board.....................................7
Reasons for Election of Trustees at the Present Time..................7
Length of Service by the Trustees on the Board........................8
Ways in Which the Board Represents Your Interests.....................9
Committees of the Board...............................................9
Board Meetings ......................................................10
Compensation of the Trustees ........................................10
AIM Funds Retirement Plan for Eligible Trustees/Directors ...........11
Deferred Compensation Agreements ....................................12
Compensation of AIF Officers ........................................13
Auditors ............................................................13
The Board's Recommendation on Proposal 1 ............................13
PROPOSAL NO. 2 APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION...............14
Synopsis......................................................................14
The Reorganization...................................................14
Reasons for the Reorganization.......................................14
Comparison of Global Trends and Consumer Products....................15
Risk Factors..................................................................21
Comparison of Investment Objectives and Policies..............................22
Investment Objectives of Consumer Products and Global Trends.........22
Investment Policies of Global Trends.................................22
Investment Policies of Consumer Products.............................23
Investment Restrictions..............................................24
Portfolio Management.................................................24
Management's Discussion and Analysis of Performance..................25
Financial Highlights..........................................................25
Additional Information About the Agreement....................................29
Terms of the Reorganization..........................................29
The Reorganization...................................................29
Board Considerations.................................................29
Other Terms..........................................................32
Federal Tax Consequences.............................................33
Accounting Treatment.................................................35
i
8
Additional Information About Global Trends and Consumer Products..............35
Rights of Shareholders........................................................36
Ownership of Consumer Products and Global Trends Shares.......................36
Significant Holders..................................................36
Ownership of Officers and Directors/Trustees.........................38
Capitalization................................................................38
Legal Matters.................................................................39
Information Filed With the Securities and Exchange Commission.................39
APPENDIX I .................................Agreement and Plan of Reorganization
APPENDIX II .........................................Prospectus of Global Trends
APPENDIX III .................Global Trends Discussion & Analysis of Performance
APPENDIX IV ..................................Changes to Investment Restrictions
ii
9
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, Invest with DISCIPLINE, Invierta
con DISCIPLINA, La Familia AIM de Fondos, and La Familia AIM de Fondos and
Design are registered service marks, and AIM Bank Connection and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
iii
10
INTRODUCTION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of AIF from the shareholders of
Consumer Products for use at the Special Meeting of Shareholders to be held at
11 Greenway Plaza, Suite 100, Houston, TX 77046, on August 17, 2001, at 3:00
p.m., local time (such meetings and any adjournments thereof are referred to as
the "Special Meeting").
All properly executed and unrevoked proxies received in time for the
Special Meeting will be voted in accordance with the instructions contained
therein. If no instructions are given, shares represented by proxies will be
voted FOR the election of directors and the proposal to approve the Agreement
and in accordance with management's recommendation on other matters. The
presence in person or by proxy of one-third of the outstanding shares of
beneficial interest in Consumer Products at the Special Meeting will constitute
a quorum. If a quorum is present, the affirmative vote of a plurality of votes
cast is necessary to elect trustees, and approval of the Agreement requires the
affirmative vote of a majority of the shares cast by shareholders of Consumer
Products. Abstentions and broker non-votes will be counted as shares present at
the Special Meeting for quorum purposes, but will not be considered votes cast
at the Special Meeting. Broker non-votes arise from a proxy returned by a broker
holding shares for a customer which indicates that the broker has not been
authorized by the customer to vote on a proposal. Any person giving a proxy has
the power to revoke it at any time prior to its exercise by executing a
superseding proxy or by submitting a notice of revocation to the Secretary of
AIF. In addition, although mere attendance at the Special Meeting will not
revoke a proxy, a shareholder present at the Special Meeting may withdraw his
proxy and vote in person. Shareholders may also transact any other business not
currently contemplated that may properly come before the Special Meeting in the
discretion of the proxies or their substitutes.
Shareholders of record as of the close of business on May 30, 2001 (the
"Record Date"), are entitled to vote at the Special Meeting. On the Record Date,
there were __________ Class A shares, _____ Class B shares, and ________ Class C
shares of Consumer Products outstanding. Each share is entitled to one vote for
each full share held, and a fractional vote for a fractional share held.
AIF has engaged the services of Georgeson Shareholder Communications, Inc.
("GSC") to assist it in the solicitation of proxies for the Special Meeting. AIF
expects to solicit proxies principally by mail, but AIF or GSC may also solicit
proxies by telephone, facsimile or personal interview. AIF's officers will not
receive any additional or special compensation for any such solicitation. The
cost of shareholder solicitation is anticipated to be approximately $123,000.
The costs associated with the proxies and their solicitation will be borne by
the funds. However, A I M Advisors, Inc. ("AIM Advisors") has agreed to
reimburse expenses and waive certain of its fees so that the expense caps for
Global Trends and Consumer Products will not be exceeded. As a result, it is
expected that AIM Advisors will effectively bear all of the transaction expenses
for Global Trends and Consumer Products will bear all of its own transaction
expenses.
1
11
AIF intends to mail this Proxy Statement/Prospectus and the accompanying
proxy on or about June __, 2001.
2
12
PROPOSAL 1: ELECTION OF TRUSTEES OF AIM INVESTMENT FUNDS
All of the shareholders of AIF will vote on the election of trustees. There
are shareholders of other series of shares of AIF that, along with the
shareholders of Consumer Products, constitute all of the shareholders of AIF.
NOMINEES FOR TRUSTEE
For election of trustees at the meeting, the Board has approved the
nomination of: Frank S. Bayley, Bruce L. Crockett, Owen Daly II, Albert R.
Dowden, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham,
Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley and Louis S. Sklar, each
to serve as trustee until his or her successor is elected and qualified.
The proxies will vote for the election of these nominees unless you
withhold authority to vote for any or all of them in the proxy. Each of the
nominees has indicated that he or she is willing to serve as trustee. If any or
all of the nominees should become unavailable for election due to events not now
known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the trustees who are not interested persons of AIF, as
defined in the Investment Company Act of 1940, as amended, (the "1940 Act") (the
"independent trustees"), may recommend.
Messrs. Graham and Bayley and Miss Quigley are currently trustees of AIF
and of AIM Growth Series, AIM Series Trust and AIM Floating Rate Fund
(collectively, with their series portfolios, the "AIM Group I Funds"). Messrs.
Crockett, Daly, Dowden, Dunn, Fields, Frischling, Mathai-Davis, Pennock and
Sklar are not currently trustees of AIF or the other AIM Group I Funds, but each
serves as a director/trustee of the following open-end management investment
companies advised or managed by AIM Advisors: AIM Advisor Funds, AIM Equity
Funds, AIM Funds Group, AIM International Funds, Inc., AIM Investment Securities
Funds, AIM Special Opportunities Funds, AIM Summit Fund, AIM Tax-Exempt Funds,
AIM Variable Insurance Funds, Short-Term Investments Co., Short-Term Investments
Trust and Tax-Free Investments Co. (these investment companies and their series
portfolios, if any, are referred to collectively as the "AIM Group II Funds,"
the AIM Group I Funds and the AIM Group II Funds together constitute the "AIM
Funds"). Mr. Graham also serves as Chairman, President and a director/trustee of
the AIM Group II Funds. Mr. Bayley and Miss Quigley are expected to be appointed
directors/trustees of the AIM Group II Funds. No trustee or nominee is a party
adverse to AIF or any of its affiliates in any material pending legal
proceedings, nor does any trustee or nominee have an interest materially adverse
to AIF.
3
13
The following table sets forth information concerning the nominees:
NAME, ADDRESS AND PRINCIPAL OCCUPATION(S) DURING PAST 5
AGE(VERIFY) TRUSTEE SINCE YEARS
**Frank S. Bayley (61) AIM Investment Partner, law firm of Baker & McKenzie;
Two Embarcadero Center Funds: 5/30/87 Director and Co-Chairman, C.D. Stimson
Suite 2400 Company (a private investment company);
San Francisco, CA 94111 AIM Growth Trustee, The Badgley Funds; and Trustee of
Series: 7/30/85 the AIM Group I Funds.
AIM Series
Trust: 8/11/97
Bruce L. Crockett (57) N/A Chairman, Crockett Technologies Associates
906 Frome Lane (consulting firm), DataPipe.com, NetSat28,
McLean, VA 22102 Teletronics; and Director, ACE Limited
(insurance company), Databid.com, IBNET,
Multi-cast Technologies (internet video
streaming), Para-Protect Services, Inc.
(information systems security), University
of Rochester Board of Trustees. Formerly,
Director, President and Chief Executive
Officer, COMSAT Corporation; and Chairman,
Board of Governors of INTELSAT
(international communications company).
Director/Trustee of the AIM Group II Funds.
***Owen Daly II (76) N/A Formerly, Director, Cortland Trust, Inc.
Six Blythewood Road (investment company), CF& I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation. Director/Trustee of the AIM
Group II Funds.
4
14
NAME, ADDRESS AND PRINCIPAL OCCUPATION(S) DURING PAST 5
AGE(VERIFY) TRUSTEE SINCE YEARS
Albert R. Dowden (59) N/A Chairman of the Board of Directors, Cortland
1815 Central Park Drive Trust, Inc. (investment company) and DHJ Media,
P.O. Box 774000 - PMB #222 Inc.; and Director, Magellan Insurance Company.
Steamboat Springs, CO 80477 Formerly, Director, President and Chief
Executive Officer, Volvo Group North America,
Inc.; Senior Vice President, AB Volvo; and
Director, The Hertz Corporation, Genmar
Corporation (boat manufacturer), National Media
Corporation and Annuity and Life Re (Holdings),
Ltd. Member of Advisory Board of Rotary Power
International. Director/Trustee of the AIM Group
II Funds.
Edward K. Dunn, Jr. (66) N/A Director, Aegon USA Inc. (a subsidiary of Aegon
2 Hopkins Plaza, N.V.); Chairman of the Board of Directors,
8th Floor, Suite 805 Mercantile Mortgage Corporation; Formerly, Vice
Baltimore, MD 21201 Chairman of the Board of Directors and President
and Chief Operating Officer, Mercantile-Safe
Deposit & Trust Co.; and President, Mercantile
Bankshares. Director/Trustee of the AIM Group II
Funds.
Jack M. Fields (49) N/A Chief Executive Officer, Texana Global, Inc.
434 New Jersey Avenue, S.E. (foreign trading company) and Twenty First
Washington, D.C. 20003 Century Group, Inc. (a governmental affairs
company); and Director, Telscape International
and Administaff. Formerly, Member of the U.S.
House of Representatives. Director/Trustee of
AIM Group II Funds.
****Carl Frischling (64) N/A Partner, Kramer Levin Naftalis & Frankel LLP
919 Third Avenue (law firm); Director, Cortland Funds and Lazard
New York, NY 10022 Funds. Director/Trustee of the AIM Group II
Funds.
5
15
NAME, ADDRESS AND PRINCIPAL OCCUPATION(S) DURING PAST 5
AGE(VERIFY) TRUSTEE SINCE YEARS
*Robert H. Graham (54) AIM Investment Director, President and Chief Executive
11 Greenway Plaza Funds: 8/31/98 Officer, A I M Management Group Inc.; Director
Suite 100 and President, A I M Advisors, Inc.; Director
Houston, TX 77046-1173 AIM Growth and Senior Vice President, A I M Capital
Series: 8/31/98 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc. and Fund Management
AIM Series Company; and Director and Chief Executive
Trust: 8/31/98 Officer, Managed Products, AMVESCAP PLC (parent
of AIM and global investment management firm).
Director/Trustee of the AIM Group I Funds and
the AIM Group II Funds.
Prema Mathai-Davis (50) N/A Director, Covenant House, Marymount School, New
370 East 76th Street York Hall of Science; Member, Visiting
New York, NY 10021 Committee, Harvard University Graduate School of
Education, New School University; Formerly,
Chief Executive Officer, YWCA of the USA;
Commissioner, New York City Department of the
Aging; and Commissioner, New York City
Metropolitan Transportation Authority.
Director/Trustee of the AIM Group II Funds.
Lewis F. Pennock (58) N/A Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825 Director/Trustee of the AIM Group II Funds.
Houston, TX 77057
**Ruth H. Quigley (66) AIM Investment Private investor; President, Quigley,
1055 California Street Funds: 5/30/87 Friedlander & Co., Inc. (a financial advisory
San Francisco, CA 94108 services firm) from 1984 to 1986; and Trustee
AIM Growth Series: of the AIM Group I Funds.
1/18/77
AIM Series Trust:
8/11/97
6
16
NAME, ADDRESS AND PRINCIPAL OCCUPATION(S) DURING PAST 5
AGE(VERIFY) TRUSTEE SINCE YEARS
Louis S. Sklar (61) Executive Vice President, Development and
The Williams Tower Operations, Hines Interests Limited Partnership
50th Floor (real estate development). Director/Trustee of
2800 Post Oak Blvd. the AIM Group II Funds.
Houston, TX 77056
* Mr. Graham is an interested person of AIM Advisors and the AIM Funds, as
defined in the 1940 Act, primarily because of his positions with AIM and its
affiliated companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM Advisors.
** Dates of service based on predecessor funds.
*** The Board has extended Mr. Daly's retirement date to December 31, 2001.
**** Mr. Frischling is counsel to the independent directors/trustees of the AIM
Group II Funds.
THE RESPONSIBILITIES OF THE BOARD
The Board is responsible for the general oversight of the business of AIF.
The Board periodically reviews the investment performance of AIF's investment
portfolios, including Consumer Products, as well as the quality of other
services provided to AIF and its shareholders by each of AIF's service
providers, including AIM Advisors and its affiliates. At least annually, the
Board review the fees paid by AIF for these services and the overall level of
the operating expenses of AIF's investment portfolios.
REASONS FOR ELECTION OF TRUSTEES AT THE PRESENT TIME
Four trustees currently serve on the Board of AIF. Mr. C. Derek
Anderson has announced his intention to retire in 2001 to pursue other business
interests. This would result in only three trustees remaining on the Board.
The Board has determined that it would be beneficial to have a board
larger than three members. Expansion of the Board requires shareholder approval
because, under the 1940 Act, the Board may fill vacancies or appoint new
trustees only if, immediately thereafter, at least two-thirds of the trustees
will have been elected by shareholders.
The Nominating Committee of the Board has met to discuss Board
candidates and has recommended that the persons who currently serve as
independent directors/trustees of the AIM Group II Funds be nominated for
election as trustees of AIF. In making such recommendation, the Nominating
Committee took into consideration the knowledge, diversification of background
and experience of the directors/trustees of the AIM Group II Funds. The
Nominating Committee also considered other benefits of consolidating the boards
of the AIM Group I Funds and the AIM Group II Funds, including uniform
oversight and standardization of policies. The Nominating Committee also noted
that administrative efficiencies may result from board consolidation, since
having two separate boards results in duplication of fund expenses and
management time in connection with administrative tasks related to board
matters. The Nominating Committee also concluded that consolidating the boards
would result in a per-fund decrease in trustee costs to each series portfolio of
AIF, since directors'/trustees' fees would be allocated across all funds
included in The AIM Family of Funds--Registered Trademark--.
In connection with the consolidation of the boards, it is expected
that Mr. Bayley and Miss Quigley would be appointed to the boards of the AIM
Group II Funds.
AIM Advisors supports the Board's decision to consolidate the boards
of trustees of AIM Group I Funds and AIM Group II Funds.
7
17
LENGTH OF SERVICE BY THE TRUSTEES ON THE BOARD
Trustees generally hold office until their successors are elected and
qualified. Pursuant to a policy adopted by the Board, each duly elected or
appointed independent trustee may continue to serve as a trustee until December
31 of the year in which the trustee turns 72. Independent trustees who were 65
or older and serving on the board of one or more of the AIM Funds when the
policy was initially adopted in 1992 for the AIM Group II Funds may continue to
serve until December 31 of the year in which the trustee turns 75. A trustee of
the trust may resign or be removed for cause by a vote of the holders of a
majority of the outstanding shares of that trust at any time. A majority of the
Board may extend from time to time the retirement date of a trustee. The Board
has agreed to extend the retirement date of Mr. Daly, who had he been a trustee
of AIF, otherwise would have retired December 31, 2000, to December 31, 2001. In
making this
8
18
decision, the Board took into account Mr. Daly's experience and active
participation as a director and trustee of the AIM Group II Funds.
WAYS IN WHICH THE BOARD REPRESENTS YOUR INTERESTS
The Board seeks to represent shareholder interests by:
o reviewing the investment performance of AIF's investment portfolios
with the investment portfolios' portfolio managers and senior
management of AIM Advisors;
o reviewing the quality of the various other services provided to AIF
and its shareholders by each of AIF's service providers, including AIM
Advisors and its affiliates;
o reviewing the fees paid to AIM Advisors and its affiliates to ensure
that such fees remain reasonable and competitive with those of other
mutual funds, while at the same time providing sufficient resources to
continue to provide high-quality services in the future;
o monitoring potential conflicts between AIF and AIM Advisors and its
affiliates to help ensure that AIF's investment portfolios continue to
be managed in the best interests of its shareholders; and
o monitoring potential conflicts among Funds to help ensure that
shareholders continue to realize the benefits of participation in a
large and diverse family of funds.
COMMITTEES OF THE BOARD
The standing Committees of the Board are the Audit Committee and the
Nominating Committee. The members of each Audit Committee and Nominating
Committee are Miss Quigley and Messrs. Anderson and Bayley. The Audit Committee
is responsible for:
o considering management's recommendations of independent accountants
for AIF and evaluating such accountants' independence, performance and
fees;
o reviewing and coordinating audit plans prepared by AIF's independent
accountants; and
o reviewing financial statements contained in periodic reports to
shareholders with AIF's independent accountants and management.
9
19
The Nominating Committee is responsible for:
o considering and nominating individuals to stand for election as
independent trustees;
o reviewing from time to time the compensation payable to the
independent trustees; and
o making recommendations to the Board regarding matters related to
compensation.
Each Nominating Committee will consider nominees recommended by a
shareholder to serve as trustees, provided (i) that such person is a shareholder
of record at the time he or she submits such names and is entitled to vote at
the meeting of shareholders at which trustees will be elected, and (ii) that the
Nominating Committee or the Board, as applicable, shall make the final
determination of persons to be nominated.
BOARD MEETINGS
The Board typically conducts regular meetings eight (VERIFY) times a year.
In addition, the Board or any Committee may hold special meetings by telephone
or in person to discuss specific matters that may require action prior to the
next regular meeting.
During the fiscal year ended October 31, 2000 for AIF, the Board held [7]
meetings, the Audit Committee held __ meetings, and the Nominating Committee
held __ meetings. All of the current trustees and Committee members then serving
attended at least 75% of the meetings of each Board or applicable Committee, if
any, held during the most recent fiscal year.
COMPENSATION OF THE TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board or any Committee attended. Each trustee who is not also an
officer of AIF is compensated for his or her services according to a fee
schedule which recognizes the fact that such trustee also serves as a trustee or
director of some or all of the AIM Funds. Each such trustee receives a fee,
allocated among the funds for which he or she serves as a trustee/director,
which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued for
each trustee:
RETIREMENT TOTAL
BENEFITS ACCRUED COMPENSATION
AGGREGATE COMPENSATION BY ALL AIM FROM
TRUSTEE FROM AIF(1) FUNDS(2) ALL AIM FUNDS(3)
------- ---------------------- ---------------- ----------------
Robert H. Graham $ 0 N/A $ 0
Frank S. Bayley $ 65,351 N/A $105,000
Ruth H. Quigley $ 65,351 N/A $105,000
Bruce L. Crockett $ 0 $60,951 $111,500
10
20
Owen Daly II $ 0 $ 97,195 [______]
Albert R. Dowden $ 0 $ 0 $ 13,435
Edward K. Dunn, Jr. $ 0 $ 22,138 $111,500
Jack M. Fields $ 0 $ 23,019 $108,500
Carl Frischling(4) $ 0 $107,507 $111,500
Prema Mathai-Davis $ 0 $ 22,606 $111,500
Lewis F. Pennock $ 0 $ 67,995 $111,500
Louis S. Sklar $ 0 $ 87,538 $111,500
(1) Data reflects aggregate compensation received from AIF for the fiscal year
ended October 31, 2000.
(2) Data reflects retirement benefits accrued by the directors/trustees of the
AIM Group II Funds for the calendar year ended December 31, 2000. The
trustees of the AIM Group I Funds currently accrue no retirement benefits.
Upon the consolidation of the Boards of the AIM Group I Funds and the AIM
Group II Funds, the trustees of the AIM Group I Funds will begin accruing
retirement benefits.
3) Mr. Graham, Mr. Bayley and Miss Quigley serve as trustees for the four
AIM Group I Funds; Mr. Graham and the remaining nominees serve as
trustees/directors of the twelve AIM Group II Funds. Data reflects total
compensation earned during the calendar year ended December 31, 2000.
(4) During the calendar year ended December 31, 2000, the AIM Group II Funds
paid $545,540 in legal fees for services rendered by Kramer Levin Naftalis
& Frankel LLP to the independent directors/trustees of the AIM Group II
Funds. Mr. Frischling is a partner in the firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE TRUSTEES/DIRECTORS
Effective as of the date on which the Boards of Trustees/Directors of the
AIM Group I Funds and the AIM Group II Funds are combined, each AIM Group I Fund
will adopt the retirement plan currently in effect for the AIM Group II Funds.
Each trustee of an AIM Fund who has at least five years of credited service as a
trustee will be entitled to receive an annual retirement benefit. These
retirement benefits are payable quarterly for a period of up to ten years. The
retirement benefit will equal a maximum of 75% of the trustee's annual retainer
paid or accrued by any participating AIM Fund to such trustee during the
twelve-month period prior to retirement and based on the number of such
trustee's years of service (not to exceed ten
11
21
years). A death benefit is also available under the retirement plan that
provides a surviving spouse with a quarterly installment of 50% of a deceased
trustee's retirement benefits for up to ten years. A trustee must have attained
the age of 65 (55 in the event of death or disability) to receive any retirement
benefit.
Table 1 below shows estimated credited years of service under the
Retirement Plan for each participating trustee as of December 31, 2000.
TABLE 1
TRUSTEE ESTIMATED CREDITED YEARS OF SERVICE
- ------- -----------------------------------
Frank S. Bayley
Bruce L. Crockett 14
Owen Daly II 14
Albert R. Dowden 0
Edward K. Dunn, Jr. 3
Jack M. Fields 4
Carl Frischling 23
Prema Mathai-Davis 2
Lewis F. Pennock 19
Ruth H. Quigley
Louis S. Sklar 11
- ----------
Table 2 below shows the aggregate estimated annual benefits payable by all
AIM Funds upon retirement for specified years of service.
TABLE 2
NUMBER OF YEARS OF SERVICE ESTIMATED ANNUAL BENEFITS
WITH THE AIM FUNDS UPON RETIREMENT
- -------------------------- -------------------------
10 $75,000
9 $67,500
8 $60,000
7 $52,500
6 $45,000
5 $37,500
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (the
deferring trustees) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring trustees may elect to defer receipt of
up to 100% of their compensation payable by AIF, assuming their election to the
Board, and such amounts are placed into a deferral account.
12
22
Currently, the deferring trustees may select various AIM Funds in which all or
part of their deferral accounts shall be deemed to be invested. Distributions
from the deferring trustees' accounts will be paid in cash, in generally equal
quarterly installments over a period of five (5) or ten (10) years (depending on
the agreement) beginning on the date the deferring trustee's retirement benefits
commence under the plan. The Board, in its sole discretion, may accelerate or
extend the distribution of such deferral accounts after the deferring trustee's
retirement benefits commence under the plan. AIF's Board of Trustees may, in its
sole discretion, accelerate or extend the distribution of such deferral accounts
after the deferring trustee's termination of service as a trustee of AIF. If a
deferring trustee dies prior to the distribution of amounts in his or her
deferral account, the balance of the deferral account will be distributed to his
or her designated beneficiary. The agreements are not funded and, with respect
to the payments of amounts held in the deferral accounts, the deferring trustees
have the status of unsecured creditors of AIF and of each other AIM Fund from
which they are deferring compensation.
COMPENSATION OF AIF OFFICERS
AIF does not pay its officers for the services they provide to AIF and its
investment portfolios. Instead, the officers, who are also officers or employees
of AIM Advisors or its affiliates, are compensated by A I M Management Group
Inc. or its affiliates.
AIM GLOBAL CONSUMER PRODUCTS & SERVICES FUND INTO AIM GLOBAL TRENDS FUND
AUDITORS
The firm of PricewaterhouseCoopers LLP has been selected as independent
accountants for each of the nine portfolios of AIF, including Consumer Products.
PricewaterhouseCoopers LLP, in accordance with Independence Standards Board
Standard No. 1, has confirmed to the Board of AIF that they are independent
accountants with respect to AIF and each of its portfolios.
The independent accountants examine annual financial statements for AIF and
provide other non-audit and tax-related services to AIF. The independent
accountants also provide certain non-audit services to AIM Advisors and its
affiliates. The Board of AIF has considered whether the non-audit services
provided by PricewaterhouseCoopers LLP to AIF and AIM Advisors and its
affiliates who provide services to AIF are compatible with maintaining the
independence of PricewaterhouseCoopers LLP in its audit of the portfolios of
AIF.
FUND RELATED FEES
AUDIT FEES. For the fiscal year ended October 31, 2000, AIF paid
approximately $391,562 in fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of annual financial statements for the
nine series portfolios of AIF.
ALL OTHER FEES. For the fiscal year ended October 31, 2000,
PricewaterhouseCoopers LLP was also paid by AIF approximately $26,500 for
tax-related services rendered to the nine series portfolios of AIF.
NON-FUND RELATED FEES
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There
were no fees billed for financial information systems design and implementation
services rendered by PricewaterhouseCoopers LLP to AIM Advisors and its
affiliates that provide services to AIF during the fiscal year ended October 31,
2000.
ALL OTHER FEES. The aggregate fees billed for all other non-audit
services rendered by PricewaterhouseCoopers LLP to AIM Advisors and its
affiliates who provide services to AIF was approximately $792,000 for the fiscal
year ended October 31, 2000.
THE BOARD'S RECOMMENDATION ON PROPOSAL 1
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 1.
13
23
PROPOSAL NO. 2
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
SYNOPSIS
THE REORGANIZATION
The Reorganization will result in the combination of Consumer Products with
Global Trends. Global Trends is a portfolio of AST, a Delaware business trust.
Consumer Products is a portfolio of AIF, a Delaware business trust.
Consumer Products invests all of its investable assets in Consumer Products
Portfolio. If shareholders of Consumer Products approve the Agreement and other
closing conditions are satisfied, Consumer Products will redeem its shares of
Consumer Products Portfolio and will receive all of the investment securities
then held by Consumer Products Portfolio. Then all of the assets of Consumer
Products will be transferred to Global Trends, Global Trends will assume all of
the liabilities of Consumer Products, and AIM Series Trust will issue Class A
shares of Global Trends to Consumer Products' Class A shareholders, Class B
shares of Global Trends to Consumer Products' Class B shareholders, and Class C
shares of Global Trends to Consumer Products' Class C shareholders. The shares
of Global Trends issued in the Reorganization will have an aggregate net asset
value equal to the value of Consumer Products' net assets transferred to Global
Trends. Consumer Products shareholders will not pay any initial sales charge for
shares of Global Trends received in connection with the Reorganization. The
value of each shareholder's account with Global Trends immediately after the
Reorganization will be the same as the value of such shareholder's account with
Consumer Products immediately prior to the Reorganization. A copy of the
Agreement is attached as Appendix I to this Proxy Statement/Prospectus. See
"Additional Information About the Agreement" below.
Consumer Products will receive an opinion of Ballard Spahr Andrews &
Ingersoll, LLP, to the effect that the Reorganization will constitute a tax-free
reorganization for Federal income tax purposes. Thus, shareholders will not have
to pay Federal income taxes as a result of the Reorganization. See "Additional
Information About the Agreement - Federal Tax Consequences" below.
REASONS FOR THE REORGANIZATION
The Board of Trustees of AIF, including the independent trustees, has
determined that the reorganization of Consumer Products into Global Trends is in
the best interests of Consumer Products and its shareholders and that the
interests of the shareholders of Consumer Products will not be diluted as a
result of the Reorganization.
The reorganization is being proposed because both funds' asset bases are
decreasing and their holdings, investment policies and performance are similar.
While the total operating expenses of Global Trends under its contractual
arrangements, expressed as a percentage of average daily net assets, are
slightly higher than the total operating expenses of Consumer Products, the
combined assets of the two funds will create economies of scale which will lower
14
24
Global Trends' operating expense ratios. As of March 31, 2000, Consumer Products
had net assets of approximately $220.4 million, and Global Trends had net assets
of approximately $53.0 million. As of March 31, 2001, Consumer Products had net
assets of approximately $157.2 million, and Global Trends had net assets of
approximately $35.7 million. The combined assets of the two funds should provide
AIM Advisors with a more stable base for investment management.
In making its determination, the Board of Trustees noted that the two funds
have the same investment objective, and AIM Advisors provides investment
management services for both funds. The board also noted that as of February 28,
2001, substantially all of the assets of Global Trends and Consumer Products
were invested in the same securities.
COMPARISON OF GLOBAL TRENDS AND CONSUMER PRODUCTS
Investment Objective and Policies
The investment objective of Global Trends is the same as the investment
objective of Consumer Products - long term growth of capital.
Global Trends seeks to provide long-term growth of capital by investing,
normally, at least 65% of its total assets in equity securities of issuers in
the following global industry sectors:
o Consumer products and services,
o Financial services,
o Health care,
o Infrastructure,
o Natural resources, and
o Telecommunications and technology
Consumer Products seeks to provide long-term growth of capital by investing
all of its investable assets in Consumer Products Portfolio, which in turn
invests at least 65% of its total assets in equity securities of domestic and
foreign consumer products and services companies.
In analyzing specific companies for possible investment for both funds, AIM
Advisors ordinarily look for several of the following characteristics: above
average per share earnings growth, high return on invested capital, a healthy
balance sheet, sound financial and accounting policies and overall financial
strength, strong competitive advantages, effective research and product
development and marketing, development of new technologies, efficient service,
pricing flexibility, strong management, and general operating characteristics
that will enable the companies to compete successfully in their respective
markets. Although Global Trends may invest in a broader range of market sectors,
Consumer Products' prospectus definition of
15
25
"consumer products and services" is very broad and up to 35% of Consumer
Products' portfolio may be invested in other types of securities. As a result,
as of February 28, 2001, there existed an almost total overlap of portfolio
holdings between Global Trends and Consumer Products.
The annual turnover rate for the investments made by Global Trends was 260%
for the fiscal year ended December 31, 2000. That rate of portfolio turnover
will result in higher transaction costs for, and may result in additional taxes
for shareholders of, Global Trends. However, Consumer Products' annual turnover
rate for the investments in Consumer Products Portfolio for the fiscal year
ended October 31, 2000 was 259%.
Investment Advisory Services
AIM Advisors serves as investment adviser to Global Trends. AIM Advisors
also serves as investment adviser to Consumer Products. The shareholders of
Global Trends have been asked to approve certain changes to its investment
advisory agreement with AIM Advisors. See "Additional Information About Global
Trends and Consumer Products."
Performance
Average annual total returns for the periods indicated for Class A shares
of Consumer Products and Global Trends, including sales charges, are shown
below. Past performance cannot guarantee comparable future results.
Global Trends Consumer Products
Class A Shares Class A Shares
-------------- -----------------
1 Year Ended December 31, 2000 -12.29% -13.22%
3 Years Ended December 31, 2000 13.39% 14.96%
5 Years Ended December 31, 2000 or since
Inception* 11.20% 19.82%
- ----------
* Inception date for Global Trends is September 15, 1997.
Expenses
A comparison of annual operating expenses as a percentage of net assets
("Expense Ratio"), based on the fiscal year ended October 31, 2000 for the Class
A, Class B and Class C shares of Consumer Products and for the fiscal year ended
December 31, 2000 for the Class A, Class B and Class C shares of Global Trends
are shown below. Pro forma estimated Expense Ratios of Global Trends giving
effect to the Reorganization are also provided.
16
26
AIM GLOBAL CONSUMER AIM GLOBAL AIM GLOBAL TRENDS
PRODUCTS AND SERVICES FUND(1) TRENDS FUND FUND PRO FORMA ESTIMATED
----------------------------- ---------------------------- ----------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------- ------- ------- ------- ------- ------- ------- ------- -------
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum sales load
imposed on purchase
of shares (as a
percentage of
offering price) 4.75% None None 4.75% None None 4.75% None None
Deferred Sales Load
(as a percentage of
original purchase
price or redemption
proceeds, as
applicable) None(2) 5.00% 1.00% None(2) 5.00% 1.00% None(2) 5.00% 1.00%
ANNUAL OPERATING
EXPENSES (AS A % OF
NET ASSETS)
Management fees......... 0.97% 0.97% 0.97% 0.98% 0.98% 0.98% 0.97% 0.97% 0.97%
Distribution and/or
Service (12b-1) Fees.... 0.50% 1.00% 1.00% 0.50% 1.00% 1.00% 0.50% 1.00% 1.00%
Other expenses.......... 0.35% 0.35% 0.35% 0.66% 0.66% 0.66% 0.39% 0.39% 0.39%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses................ 1.82% 2.32% 2.32% 2.14% 2.64% 2.64% 1.86% 2.36% 2.36%
---- ---- ---- ---- ---- ---- ---- ---- ----
Fee waiver(3)........... 0.00% 0.00% 0.00% 0.14% 0.14 0.14% 0.00% 0.00% 0.00%
Net expenses............ 1.82% 2.32% 2.32% 2.00% 2.50% 2.50% 1.86% 2.36% 2.36%
==== ==== ==== ==== ==== ==== ==== ==== ====
(1) This fee table and the expense examples below reflect the expenses of both
Consumer Products and the Consumer Products Portfolio.
(2) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(3) AIM Advisors has contractually agreed to limit total fund operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary items) on Class A, Class B and Class C shares of both
Consumer Products and Global Trends to 2.00%, 2.50% and 2.50%,
respectively, for a period of one year from the date of consummation of the
Reorganization.
17
27
Hypothetical Example of Effect of Expenses
An investor would have directly or indirectly paid the following expenses
on a $10,000 investment under the existing and estimated fees and expenses
stated above, assuming a 5% annual return.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
------ ------ ------ ------
AIM Global Consumer Products and Services Fund
Class A shares(1) ....................................... $651 $1,020 $1,413 $2,511
Class B shares:
Assuming complete redemption at end of period(2) .... $735 $1,024 $1,440 $2,531
Assuming no redemption .............................. $235 $ 724 $1,240 $2,531
Class C shares:
Assuming complete redemption at end of period(2) .... $335 $ 724 $1,240 $2,656
Assuming no redemption .............................. $235 $ 724 $1,240 $2,656
AIM Global Trends Fund
Class A shares(1) ....................................... $682 $1,113 $1,570 $2,830
Class B shares:
Assuming complete redemption at end of period(2) .... $767 $1,120 $1,600 $2,853
Assuming no redemption .............................. $267 $ 820 $1,400 $2,853
Class C shares:
Assuming complete redemption at end of period ....... $367 $ 820 $1,400 $2,973
Assuming no redemption .............................. $267 $ 820 $1,400 $2,973
Combined Fund
Class A shares(1) ....................................... $655 $1,032 $1,433 $2,551
Class B shares:
Assuming complete redemption at end of period(2) .... $739 $1,036 $1,460 $2,572
Assuming no redemption .............................. $239 $ 736 $1,260 $2,572
Class C shares
Assuming complete redemption at end of period(2) .... $339 $ 736 $1,260 $2,696
Assuming no redemption .............................. $239 $ 736 $1,260 $2,696
- ----------
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable CDSC.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUNDS' ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN
THE EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE SEC
APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF AND
DOES NOT REPRESENT THE FUNDS' PROJECTED OR ACTUAL PERFORMANCE.
The actual expenses attributable to each class of a fund's shares will
depend upon, among other things, the level of average net assets and the extent
to which a fund incurs variable expenses, such as transfer agency costs.
18
28
Sales Charges
No sales charges are applicable to shares of Global Trends received in
connection with the Reorganization.
Global Trends Class A shares, which will be issued to Consumer Products
Class A shareholders pursuant to the Agreement, are sold at net asset value plus
an initial sales charge of 4.75%. Global Trends Class B 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 from the date such shares were purchased. Global Trends Class C Shares are
offered at net asset value, without an initial sales charge, and are subject to
a maximum contingent deferred sales charge of 1% on certain redemptions made
within one year from the date such shares are purchased.
Global Trends pays AIM Distributors fees at an annual rate of 0.50% of the
average daily net assets attributable to Class A shares and 1.00% of the average
daily net assets attributable to the Class B shares and Class C shares for
distribution services. For more information, see the discussion under the
heading "Shareholder Information-Distribution and Service (12b-1) Fees" in the
Global Trends Prospectus attached as Appendix II to this Proxy
Statement/Prospectus.
The Class A shares of Consumer Products are sold at net asset value plus an
initial sales charge of 4.75%. Consumer Products Class B 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 from the date such shares were purchased. Consumer Products Class C shares
are offered at net asset value, without an initial sales charge, and are subject
to a maximum contingent deferred sales charge of 1% on certain redemptions made
within one year from the date such shares were purchased.
Consumer Products pays AIM Distributors at an annual rate of 0.50% of the
average daily net assets attributable to Class A shares and 1.00% of the average
daily net assets attributable to the Class B shares and Class C shares for
distribution services.
Distribution; Purchase, Exchange and Redemption
Shares of Global Trends and Consumer Products are both distributed by AIM
Distributors. Purchase and redemption procedures are the same for both funds.
Generally, shares of both funds may be exchanged for shares of other funds
within The AIM Family of Funds--Registered Trademark--of the same class.
Further Information
Additional information concerning Global Trends is contained in this Proxy
Statement/Prospectus and in the current prospectus for Global Trends that is
attached hereto as Appendix II. Further information concerning Consumer Products
can be found in its prospectus
19
29
which has been made part of this Proxy Statement/Prospectus by reference. See
the cover page for information on how to receive further information.
20
30
RISK FACTORS
COMPARATIVE RISKS
Global Trends and Consumer Products are subject to substantially similar
investment risks. The investment policies of Global Trends allow it to invest in
a wider variety of industry sectors. Global Trends' greater diversity may make
it less susceptible to downturns in specific industry sectors.
RISKS ASSOCIATED WITH GLOBAL TRENDS
Global Trends invests primarily in equity securities. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. Because
Global Trends focuses its investments in particular industries, an investment in
the fund may be more volatile than that of other investment companies that do
not concentrate their investments in such a manner. The value of the shares of
Global Trends will be especially susceptible to factors affecting the industries
in which it focuses. In particular, each of the industries is subject to
governmental regulation that may have a material effect on the products and
services offered by companies in that industry.
The prices of foreign securities may be further affected by other factors,
including:
CURRENCY EXCHANGE RATES. The dollar value of Global Trends' foreign
investments will be affected by changes in the exchange rates between the dollar
and the currencies in which those investments are traded.
POLITICAL AND ECONOMIC CONDITIONS. The value of Global Trends' foreign
investments may be adversely affected by political and social instability in
their home countries and by changes in economic or taxation policies in those
countries.
REGULATIONS. Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
MARKETS. The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid and
more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign
companies located in developing countries more than those in countries with
mature economies. For example, many developing countries have, in the past,
experienced high rates of inflation or sharply devalued their currencies against
the U.S. dollar, thereby causing the value of investments in companies located
in those countries to decline. Transaction costs are often higher in developing
countries and there may be delays in settlement procedures.
21
31
Global Trends may participate in the initial public offering ("IPO")
market. Because of Global Trends' relatively small asset base, any investment it
may make in IPOs may significantly increase its total return. As Global Trends'
assets grow, the impact of IPO investments will decline, which may reduce Global
Trends' total return.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES OF CONSUMER PRODUCTS AND GLOBAL TRENDS
The investment objective of Global Trends is long-term growth of capital.
The investment objective of Consumer Products is long-term growth of capital.
The investment objective of Global Trends is fundamental, which means it can
only be changed with shareholder approval. The shareholders of Global Trends
have been asked to make the investment objective of the Fund non-fundamental.
See "Additional Information About Global Trends and Consumer Products."
INVESTMENT POLICIES OF GLOBAL TRENDS
Global Trends seeks to meet its investment objective by investing,
normally, at least 65% of its total assets in equity securities of issuers in
the following global industry sectors:
o consumer products and services,
o financial services,
o health care,
o infrastructure,
o natural resources, and
o telecommunications and technology
Global Trends considers a company to be in one of these industry sectors if
it (1) derives at least 50% of either its revenues or earnings from activities
related to that industry; or (2) devotes at least 50% of its assets to such
activities, based on the company's most recent fiscal year.
The fund may also invest up to 35% of its assets in equity securities of
issuers in other global industry sectors and in debt securities of U.S. and
foreign issuers. The fund normally invests in the securities of companies
located in at least three different countries, including the United States, and
may invest a significant portion of its assets in the securities of U.S.
issuers. However, the fund invests no more than 50% of its total assets in the
securities of issuers in any one country, other than the U.S. The fund may
invest substantially in securities denominated in one or more currencies.
22
32
The fund may invest in companies located in developing countries, i.e.,
those that are in the initial stages of their industrial cycle. The fund may
also invest up to 20% of its total assets in lower quality debt securities,
i.e., "junk bonds." Any percentage limitations are applied at the time of
purchase. During the fiscal year ended December 31, 2000, Global Trends'
portfolio turnover rate was 260%. That rate of portfolio turnover will result in
higher transaction costs for, and may result in additional taxes for
shareholders of, Global Trends.
Global Trends' portfolio managers invest fund assets by initially
determining the industry sectors that they believe provide the most advantageous
investment opportunities for meeting the fund's investment objective. If the
portfolio managers determine that certain sectors are facing slow or negative
growth, they will not invest fund assets in those sectors at that time. Global
Trends' portfolio managers then analyze specific companies within these sectors
for possible investment. In analyzing specific companies for possible
investment, the portfolio managers ordinarily look for several of the following
characteristics: above average per share earnings growth, high return on
invested capital, a healthy balance sheet, sound financial and accounting
policies and overall financial strength, strong competitive advantages,
effective research and product development and marketing, development of new
technologies, efficient service, pricing flexibility, strong management, and
general operating characteristics that will enable a company to compete
successfully in its respective markets. The portfolio managers consider whether
to sell a particular security when any of those factors materially changes.
INVESTMENT POLICIES OF CONSUMER PRODUCTS
Consumer Products seeks to meet its investment objective by investing all
of its investable assets in Consumer Products Portfolio, which in turn normally
invests at least 65% of its total assets in equity securities of domestic and
foreign consumer products and services companies. Consumer Products Portfolio
considers a "consumer product or services" company to be one that (1) derives at
least 50% of either its revenues or earnings from activities related to consumer
products or services; or (2) devotes at least 50% of its assets to such
activities, based on the company's most recent fiscal year. Such companies
include those that manufacture, market, retail, or distribute consumer products
(such as homes, automobiles, appliances, computers, household goods, food and
apparel) and goods and services related to entertainment, publishing, sports,
and media (such as television broadcasts, motion pictures, theme parks,
restaurants and lodging) or supply goods and services to such companies (such as
advertising, textiles and shipping companies).
Consumer Products Portfolio may invest up to 35% of its assets in debt
securities of domestic and foreign consumer products and services companies
and/or equity and debt securities of companies outside the consumer product or
services industries, which, in the opinion of the portfolio managers, stand to
benefit from development in such industries. Consumer Products Portfolio
normally invests in the securities of issuers located in at least three
countries, including the United States, and may invest a significant portion of
its assets in the securities of U.S. issuers. However, Consumer Products
Portfolio invests no more than 50% of its total assets in the securities of
issuers in any one country, other than the U.S. The portfolio may invest up to
20% of its total assets in lower-quality debt securities, i.e., "junk bonds."
23
33
During the fiscal year ended October 31, 2000, Consumer Products' portfolio
turnover rate was 259%. That rate of portfolio turnover will result in higher
transaction costs for, and may result in additional taxes for shareholders of,
Consumer Products.
Consumer Products Portfolio managers allocate Consumer Products Portfolio's
assets among securities of countries and in currency denominations that are
expected to provide the best opportunities for meeting the portfolio's
investment objective. In analyzing specific companies for possible investment,
the portfolio managers ordinarily look for several of the following
characteristics: above average per share earnings growth, high return on
invested capital, a health balance sheet, sound competitive advantages,
effective research and product development and market, development of new
technologies, efficient service, pricing flexibility, strong management, and
general operating characteristics that will enable the companies to compete
successfully in their respective markets. The portfolio manager considers
whether to sell a particular security when any of those factors materially
changes.
INVESTMENT RESTRICTIONS
Global Trends' investment restrictions prevent it from investing more than
25% of its total assets in the securities of issuers whose principal business
activities are in the same industry. Consumer Products is not subject to such a
limitation. Consumer Products is a feeder fund in a master/feeder arrangement.
Global Trends has a nonfundamental investment restriction that prohibits it from
investing in the securities of a single open-end, management investment company
with the same fundamental investment objectives, policies and limitations as
Global Trends. See "Additional Information About Global Trends and Consumer
Products."
PORTFOLIO MANAGEMENT
AIM Advisors uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of Global Trends' portfolio are
o Monika H. Degan, Senior Portfolio Manager, has been responsible for
Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1995,
o A. Dale Griffin, III, Senior Portfolio Manager, has been responsible
for Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1989,
o Benjamin A. Hock, Jr., Senior Portfolio Manager, has been responsible
for Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1999. From 1994 to 1999, he was, among
other offices, head of equity research at John Hancock Advisers, Inc.,
24
34
o Jason T. Holzer, Senior Portfolio Manager, has been responsible for
Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1996,
o Derek S. Izuel, Portfolio Manager, has been responsible for Global
Trends since 1999 and has been associated with AIM Advisors and/or its
affiliates since 1997. From 1995 to 1997 he was a full-time student,
o Clas G. Olsson, Senior Portfolio Manager, has been responsible for
Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1994,
o Jonathan C. Schoolar, Senior Portfolio Manager, has been responsible
for Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1986,
o Barrett K. Sides, Senior Portfolio Manager, has been responsible for
Global Trends since 2000 and has been associated with AIM Advisors
and/or its affiliates since 1990.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PERFORMANCE
A discussion of the performance of Global Trends for the fiscal year ended
December 31, 2000, is set forth in Appendix III to this Proxy
Statement/Prospectus.
FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Class A share and Class B share
of Global Trends during the fiscal years ended December 31, 2000, 1999 and 1998,
and for the period September 15, 1997 (date operations commenced) to December
31, 1997. Also shown are financial highlights for a Class C share of Global
Trends during the fiscal years ended December 31, 2000 and 1999, and for the
period January 2, 1998 (date operations commenced) to December 31, 1998. This
information has been audited by AST's independent accountants whose unqualified
report on the financial statements of Global Trends are included in its annual
report to shareholders for the fiscal year ended December 31, 2000. Global
Trends' annual report to shareholders dated December 31, 2000, is available
without charge upon request made to AST at the address or telephone number
appearing on the cover page of this Proxy Statement/Prospectus.
25
35
AIM GLOBAL TRENDS FUND CLASS A SHARES
Class A(a)
---------------------------------------------------------------------
September 15, 1997
(Date operations
Year Ended December 31, commenced) to
----------------------------------------------- December 31,
2000(b) 1999(b) 1998(b) 1997(b)
---------------------------------------------------------------------
Net asset value, beginning of period $ 15.78 $ 11.46 $ 10.63 $ 11.43
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.19) (0.06) (0.02) (0.01)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (1.11) 5.86 1.01 (0.31)
==========================================================================================================================
Total from investment operations (1.30) 5.80 0.99 (0.32)
==========================================================================================================================
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- (0.02) --
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.15) (1.48) (0.14) --
- --------------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.48)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (1.15) (1.48) (0.16) (0.48)
==========================================================================================================================
Net asset value, end of period $ 13.33 $ 15.78 $ 11.46 $ 10.63
==========================================================================================================================
Total return(c) (7.90)% 51.93% 9.37% (2.68)%
==========================================================================================================================
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 20,751 $ 20,595 $ 17,882 $ 15,145
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(d) 1.03% 0.50% 0.50%(e)
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.14%(d) 1.16% 0.50% 0.50%(e)
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (1.27)%(d) (0.50)% (0.21)% (0.35)%(e)
==========================================================================================================================
Portfolio turnover rate 260% 147% 28% 1%
==========================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) Ratios are based on average daily net assets of $21,286,571.
(e) Annualized.
26
36
AIM GLOBAL TRENDS FUND CLASS B SHARES
Class B(a)
--------------------------------------------------------------------
September 15, 1997
(Date operations
Year Ended December 31, commenced) to
----------------------------------------------- December 31,
2000(b) 1999(b) 1998(b) 1997(b)
--------------------------------------------------------------------
Net asset value, beginning of period $ 15.62 $ 11.41 $ 10.62 $ 11.43
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.26) (0.13) (0.07) (0.02)
- -------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.09) 5.82 1.00 (0.32)
=========================================================================================================================
Total from investment operations (1.35) 5.69 0.93 (0.34)
=========================================================================================================================
Less distributions:
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.15) (1.48) (0.14) --
- -------------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.47)
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (1.15) (1.48) (0.14) (0.47)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.12 $ 15.62 $ 11.41 $ 10.62
=========================================================================================================================
Total return(c) (8.30)% 51.18% 8.83% (2.83)%
=========================================================================================================================
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 22,279 $ 29,118 $ 25,555 $ 19,184
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(d) 1.53% 1.00% 1.00%(e)
- -------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.64%(d) 1.66% 1.00% 1.00%(e)
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets (1.77)%(d) (1.00)% (0.71)% (0.85)%(e)
=========================================================================================================================
Portfolio turnover rate 260% 147% 28% 1%
=========================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average daily net assets of $26,336,340.
(e) Annualized.
27
37
AIM GLOBAL TRENDS FUND CLASS C SHARES
Class C(a)
-------------------------------------------------
January 2, 1998
(Date sales
Year Ended December 31, commenced) to
---------------------------- December 31,
2000(b) 1999(b) 1998(b)
-------------------------------------------------
Net asset value, beginning of period $ 15.62 $ 11.40 $ 10.62
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.26) (0.13) (0.08)
- -----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.10) 5.83 1.00
=======================================================================================================================
Total from investment operations (1.36) 5.70 0.92
=======================================================================================================================
Less distributions from net realized gains (1.15) (1.48) (0.14)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.11 $ 15.62 $ 11.40
=======================================================================================================================
Total return(c) (8.37)% 51.33% 8.94%
=======================================================================================================================
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 1,789 $ 500 $ 249
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(d) 1.53% 1.00%(e)
- -----------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.64%(d) 1.66% 1.00%(e)
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (1.77)%(d) (1.00)% (0.71)%(e)
=======================================================================================================================
Portfolio turnover rate 260% 147% 28%
=======================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average daily net assets of $1,190,966.
(e) Annualized.
28
38
ADDITIONAL INFORMATION ABOUT THE AGREEMENT
TERMS OF THE REORGANIZATION
The terms and conditions under which the Reorganization may be consummated
are set forth in the Agreement. Significant provisions of the Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Agreement, a copy of which is attached as Appendix I to this
Proxy Statement/Prospectus.
THE REORGANIZATION
Consumer Products invests all of its investable assets in Consumer Products
Portfolio. If shareholders of Consumer Products approve the Agreement and other
closing conditions are met, Consumer Products will redeem its shares of Consumer
Products Portfolio and will receive all of the investment securities then held
by Consumer Products Portfolio. Global Trends will then acquire all of the
assets of Consumer Products in exchange for shares of Global Trends and the
assumption by Global Trends of the liabilities of Consumer Products.
Consummation of the Reorganization (the "Closing") is expected to occur on
September 10, 2001, at 8:00 a.m. Eastern Time (the "Effective Time") on the
basis of values calculated as of the close of regular trading on the NYSE on
September 7, 2001.
At the Effective Time, all of the assets of Consumer Products shall be
delivered to the Custodian for the account of Global Trends in exchange for the
assumption by Global Trends of all of the liabilities of any kind of Consumer
Products and delivery by AST directly to (i) Consumer Products Class A
shareholders of a number of Global Trends Class A shares and to (ii) Consumer
Products Class B shareholders of a number of Global Trends Class B shares and to
(iii) Consumer Products Class C shareholders of a number of Global Trends Class
C shares, having an aggregate net asset value equal to the net value of the
assets of Consumer Products transferred.
BOARD CONSIDERATIONS
The Board of Trustees of AIF has determined that the Reorganization of
Consumer Products is in the best interests of the shareholders of Consumer
Products and will not dilute the interests of Consumer Products shareholders.
The Board of Trustees recommends approval of the Agreement by the shareholders
of Consumer Products at the Special Meeting. A summary of the information that
was presented to, and considered by, the Board of Trustees in making its
determination is provided below.
At a meeting of the Board of Trustees held on May 11, 2001, AIM Advisors
proposed that the Board of Trustees consider the Reorganization of Consumer
Products into Global Trends. The Trustees received from AIM Advisors written
materials that contained information concerning Global Trends and Consumer
Products, including comparative total return and fee and expense information, a
comparison of the investment objectives of Global Trends and Consumer Products
and pro forma expense ratios of Global Trends. AIM Advisors also
29
39
provided the trustees with written materials concerning the structure of the
proposed Reorganization and the Federal tax consequences of the Reorganization.
The Board of Trustees considered the proposed Reorganization again at a meeting
held on June [11/12], 2001.
AIM Advisors proposed the Reorganization because the assets of Consumer
Products and Global Trends are decreasing and their holdings, investment
policies and performance are similar. As of March 31, 2000, Consumer Products
had net assets of approximately $220.4 million, and Global Trends had net assets
of approximately $53.0 million. As of March 31, 2001, Consumer Products had net
assets of approximately $157.2 million, and Global Trends had net assets of
approximately $35.7 million. AIM Advisors noted that the combined assets of the
two funds should provide a more stable base for management because daily
purchases and redemptions of shares should have a less significant impact on the
size of the combined funds.
In considering the Reorganization, the Board of Trustees noted that Global
Trends and Consumer Products have identical investment objectives. Both funds
seek to provide long-term growth of capital. Global Trends seeks to achieve its
objective by investing, normally, at least 65% of its assets in equity
securities of issuers in the following global industry sectors: consumer
products and services, financial services, healthcare, infrastructure, natural
resources, and telecommunications and technology. Consumer Products seeks to
achieve that objective by investing all of its investable assets in Consumer
Products Portfolio which, in turn, normally invests at least 65% of its total
assets in equity securities of domestic and foreign consumer products and
services companies. Consumer Products' prospectus definition of "consumer
products and services" is very broad, and up to 35% of its portfolio may be
invested in other types of securities. As of February 28, 2001, there was an
almost total overlap of portfolio holdings between the two funds. However, the
Board of Trustees noted that the assets of Consumer Products and Global Trends
are decreasing.
The Board of Trustees also considered the performance of Global Trends in
relation to the performance of Consumer Products. Consumer Products has a better
performance record than Global Trends since inception because Consumer Products
has been in operation longer than Global Trends and experienced significant
gains in its early years of operation. During the past three fiscal years,
Consumer Products has generally provided a higher average annual total return to
its Class A shareholders, before payment of sales charges, of -8.90% and 16.85%
for the one year period ended December 31, 2000 and three year period ended
December 31, 1997, respectively, as compared to -7.90% and 15.24% for Global
Trends for the same periods. As of March 2001, the Lipper Inc. rankings for
Global Trends and Consumer Products were as follows:
30
40
LIPPER RANK (Percentile)(1)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Global Trends(2) 50% 21% N/A N/A
Consumer Products(3) 50% 24% 15% N/A
________________________________________________________________________________
(1) Under the Lipper ranking system, the lower the percentile rank, the better
the performance.
(2) Lipper places Global Trends in the ____________ category.
(3) Lipper places Consumer Products in the ____________ category.
The Board considered the expenses incurred by the two funds. While the
total operating expenses of Global Trends under its contractual arrangements,
expressed as a percentage of average daily net assets, are slightly higher than
the total operating expenses of Consumer Products, the combined assets of the
two funds will create economies of scale which will lower Global Trends'
operating expense ratios. After the Reorganization, Global Trends' overall
expense ratios will be slightly higher than the historical expense ratios of
Consumer Products. However, the Board of Trustees noted that AIM Advisors
expects Consumer Products' expense ratio will increase regardless of whether the
Reorganization is approved. Moreover, AIM Advisors expects that the expense
ratios for Global Trends will decrease further as additional economies are
realized. AIM Advisors will contractually commit to waive fees and reimburse
expenses to the extent necessary to limit total operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to expense offset arrangements, if any) of Class A,
Class B and Class C shares to 2.00%, 2.50% and 2.50%, respectively, for a period
of one year from the date of consummation of the Reorganization.
The Board of Trustees noted that AIM Advisors may receive a benefit from
the Reorganization. AIM Advisors expects to realize some administrative benefit
from the combination of Global Trends and Consumer Products in the form of
economies of scale. AIM Advisors may also benefit if the combined assets of
Global Trends grow faster than Global Trends or Consumer Products would have
grown in the absence of the Reorganization.
In addition, the Board of Trustees noted that no initial sales or other
charges would be imposed on any of the shares of Global Trends issued to the
shareholders of Consumer Products in connection with the Reorganization.
Finally, the Board of Trustees reviewed the principal terms of the Agreement.
The Board of Trustees noted that Consumer Products would be provided with an
opinion of counsel that the Reorganization would be tax-free as to Consumer
Products and its shareholders.
Based on the foregoing, and the information presented to them, at its
meeting held on June [11/12], 2001, the Board of Trustees determined that the
Reorganization will not dilute the interests of the shareholders of Consumer
Products and is in the best interest of the Consumer Products Shareholders in
view of the better recent performance and the potential for lower
31
41
operating expenses of Global Trends. Therefore, the Board of Trustees
recommended the approval of the Reorganization by the shareholders of Consumer
Products.
OTHER TERMS
The Agreement may be amended without shareholder approval by mutual
agreement of AIF and AST. If any amendment is made to the Agreement which would
have a material adverse effect on shareholders, such change will be submitted to
the affected shareholders for their approval.
Each of AIF and AST has made representations and warranties in the
Agreement that are customary in matters such as the Reorganization. The
obligations of AIF and AST pursuant to the Agreement with respect to Consumer
Products or Global Trends are subject to various conditions, including the
following:
o the assets of Consumer Products to be acquired by Global Trends shall
constitute at least 90% of the fair market value of the net assets and
at least 70% of the fair market value of the gross assets held by
Consumer Products immediately prior to the Reorganization;
o AST's Registration Statement on Form N-14 under the Securities Act of
1933 (the "1933 Act") shall have been filed with the SEC and such
Registration Statement shall have become effective, and no stop-order
suspending the effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall have been
initiated or threatened by the SEC (and not withdrawn or terminated);
o the shareholders of Consumer Products shall have approved the
Agreement; and
o AST and AIF shall have received an opinion from Ballard Spahr Andrews
& Ingersoll, LLP, that the consummation of the transactions
contemplated by the Agreement will not result in the recognition of
gain or loss for Federal income tax purposes for Global Trends,
Consumer Products or their shareholders.
AIM Advisors has agreed to reimburse expenses and waive certain of its fees
so that the expense caps for Global Trends and Consumer Products will not be
exceeded. As a result, it is expected that AIM Advisors will effectively bear
all of the transaction expenses for Global Trends and Consumer Products will
bear all of its own transaction expenses.
The Board of Trustees of AIF may waive without shareholder approval any
default by AST or any failure by AST to satisfy any of the conditions to AIF's
obligations as long as such a waiver will not have a material adverse effect on
the benefits intended under the Agreement for the shareholders of Consumer
Products. The Agreement may be terminated and the Reorganization may be
abandoned by either AIF or AST at any time by mutual agreement of AIF and AST,
or by either party in the event that Consumer Products shareholders do not
approve the Agreement or if the Closing does not occur on or before December 1,
2001.
32
42
FEDERAL TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
consequences of the Reorganization and is based upon the current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the existing
Treasury regulations thereunder, current administrative rulings of the Internal
Revenue Service ("IRS") and judicial decisions, all of which are subject to
change. The principal Federal income tax consequences that are expected to
result from the Reorganization, under currently applicable law, are as follows:
o no gain or loss will be recognized by Consumer Products Portfolio or
Consumer Products upon the transfer of the assets of Consumer Products
Portfolio to Consumer Products in complete liquidation of Consumer
Products Portfolio;
o the tax basis of the assets received by Consumer Products in complete
liquidation of Consumer Products Portfolio will be equal to the tax
basis of Consumer Products for its shares of Consumer Products
Portfolio immediately prior to such liquidation, reduced by any cash
received by Consumer Products as part of the liquidating distribution;
o the holding period of the assets received by Consumer Products in
complete liquidation of Consumer Products Portfolio will include the
holding period for such assets in the hands of Consumer Products
Portfolio immediately prior to such liquidation;
o the transfer of all of the assets of Consumer Products to Global
Trends in exchange for shares of Global Trends that are distributed
directly to shareholders of Consumer Products will constitute a
"reorganization" within the meaning of Section 368(a) of the Code;
o no gain or loss will be recognized by Consumer Products upon the
transfer of its assets to Global Trends;
o no gain or loss will be recognized by any shareholder of Consumer
Products upon the exchange of shares of Consumer Products solely for
shares of Global Trends;
o the tax basis of the shares of Global Trends to be received by a
shareholder of Consumer Products will be the same as the tax basis of
the shares of Consumer Products surrendered in exchange therefor;
o the holding period of the shares of Global Trends to be received by a
shareholder of Consumer Products will include the holding period for
which such shareholder held the shares of Consumer Products exchanged
therefor, provided that such shares of Consumer Products are capital
assets in the hands of such shareholder as of the Closing;
o no gain or loss will be recognized by Global Trends on the receipt of
assets of Consumer Products in exchange for shares of Global Trends
and Global Trends' assumption of Consumer Products' liabilities;
o the tax basis of the assets of Consumer Products in the hands of
Global Trends will be the same as the tax basis of such assets in the
hands of Consumer Products immediately prior to the Reorganization;
and
33
43
o the holding period of the assets of Consumer Products to be received
by Global Trends will include the holding period of such assets in the
hands of Consumer Products immediately prior to the Reorganization.
As a condition to Closing, Ballard Spahr Andrews & Ingersoll, LLP will
render a favorable opinion to AIF and AST as to the foregoing Federal income tax
consequences of the Reorganization, which opinion will be conditioned upon the
accuracy, as of the date of Closing, of certain representations of AIF and AST
upon which Ballard Spahr Andrews & Ingersoll, LLP will rely in rendering its
opinion, which representations include, but are not limited to, the following
(taking into account for purposes thereof any events that are part of the plan
of reorganization):
o there is no plan or intention by the shareholders of Consumer Products
to redeem a number of shares of Global Trends received in the
Reorganization that would reduce Consumer Products shareholders'
ownership of Global Trends shares to a number of shares having a
value, as of the Closing Date, of less than 50% of the value of all of
the formerly outstanding shares of Consumer Products as of the Closing
Date;
o following the Reorganization, Global Trends will continue the historic
business of Consumer Products (for this purpose "historic business"
shall mean the business most recently conducted by Consumer Products
which was not entered into in connection with the Reorganization) or
use a significant portion of Consumer Products' historic business
assets in its business;
o at the direction of Consumer Products, Global Trends will issue
directly to each Consumer Products shareholder pro rata the shares of
Global Trends that Consumer Products constructively receives in the
Reorganization and Consumer Products will distribute its other
properties (if any) to its shareholders on, or as promptly as
practicable after, the Closing;
o Global Trends has no plan or intention to reacquire any of its shares
issued in the Reorganization, except to the extent that Global Trends
is required by the Investment Company Act of 1940 (the "1940 Act") to
redeem any of its shares presented for redemption;
o Global Trends does not plan or intend to sell or otherwise dispose of
any of the assets of Consumer Products acquired in the Reorganization,
except for dispositions made in the ordinary course of its business or
dispositions necessary to maintain its status as a "regulated
investment company" ("RIC") under the Code;
o Global Trends, Consumer Products and the shareholders of Consumer
Products will pay their respective expenses, if any, incurred in
connection with the Reorganization;
o Global Trends will acquire at least 90% of the fair market value of
the net assets, and at least 70% of the fair market value of the gross
assets, held by Consumer Products immediately before the
Reorganization, including for this purpose any amounts used by
Consumer Products to pay its reorganization expenses and all
34
44
redemptions and distributions made by Consumer Products immediately
before the Reorganization (other than redemptions pursuant to a demand
of a shareholder in the ordinary course of Consumer Products' business
as an open-end diversified management investment company under the
1940 Act and regular, normal dividends not in excess of the
requirements of Section 852 of the Code); and
o Global Trends and Consumer Products have each elected to be taxed as a
RIC under Section 851 of the Code and will each have qualified for the
special Federal tax treatment afforded RICs under the Code for all
taxable periods (including the last short taxable period of Consumer
Products ending on the Closing and the taxable year of Global Trends
that includes the Closing).
THE FOREGOING DESCRIPTION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATION IS MADE WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES
OF ANY SHAREHOLDER OF CONSUMER PRODUCTS. CONSUMER PRODUCTS SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM
OF THE REORGANIZATION, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
The Reorganization will be accounted for on a tax-free combined basis.
Accordingly, the book cost basis to Global Trends of the assets of Consumer
Products will be the same as the book cost basis of such assets to Consumer
Products.
ADDITIONAL INFORMATION ABOUT GLOBAL TRENDS
AND CONSUMER PRODUCTS
A meeting of the shareholders of Global Trends is scheduled to be held on
August 17, 2001. At that meeting, the Global Trends shareholders will consider
the following proposals.
o Election of Trustees. The shareholders of AST, including the
shareholders of Global Trends, will be asked to elect trustees as
described in Proposal 1 contained in this combined proxy statement and
prospectus.
o Approval of Advisory Agreement. Global Trends shareholders will be
asked to approve a new investment advisory agreement with AIM
Advisors. The terms of the proposed new investment advisory agreement
are not materially different than the current advisory agreement.
o Changes in Fundamental Investment Restrictions. Global Trends
shareholders will be asked to approve changes to Global Trends'
fundamental investment restrictions to conform such restrictions to a
set of uniform model restrictions under which most AIM Funds will
operate. The proposed fundamental restrictions will provide Global
Trends the ability to operate under new interpretations of the 1940
Act or pursuant to exemptive relief from the Securities and Exchange
Commission without receiving shareholder approval. A chart
35
45
describing Global Trends' investment restrictions, assuming the
proposed changes are approved, is attached as Appendix IV.
o Approve Making the Investment Objective Non-Fundamental. The
investment objective of Global Trends is a fundamental policy.
Therefore, any change to it requires shareholder approval. Making
Global Trends' investment objective non-fundamental gives the Board of
Trustees of AST the flexibility to make appropriate changes if
circumstances warrant without incurring the expense of seeking a
shareholder vote.
For more information with respect to AST and Global Trends concerning the
following topics, please refer to Global Trends Prospectus as indicated: (i) see
"Investment Objective and Strategies" and "Fund Management" for further
information regarding AST and Global Trends; (ii) see "Investment Objective and
Strategies," "Fund Management," and "Other Information" for further information
regarding management of AST and Global Trends; (iii) see "Fund Management" and
"Other Information" for further information regarding the shares of AST and
Global Trends; (iv) see "Fund Management," "Other Information," and "Shareholder
Information" for further information regarding the purchase, redemption and
repurchase of shares of AST and Global Trends.
For more information with respect to AIF and Consumer Products concerning
the following topics, please refer to Consumer Products Prospectus as indicated:
(i) see "Investment Objective and Strategies" and "Fund Management" for further
information regarding AIF and Consumer Products; (ii) see discussion in
"Investment Objective and Strategies," "Fund Management," and "Other
Information" for further information regarding the shares of AIF and Consumer
Products; (iii) see "Fund Management," "Other Information," and "Shareholder
Information" for further information regarding the purchase, redemption and
repurchase of AIF and Consumer Products.
RIGHTS OF SHAREHOLDERS
Global Trends is a separate series of shares of beneficial interest of AST,
a Delaware business trust. Consumer Products is a separate series of shares of
beneficial interest of AIF, which is also a Delaware business trust. There are
no material differences in rights of shareholders of Consumer Products and
Global Trends.
OWNERSHIP OF CONSUMER PRODUCTS AND GLOBAL TRENDS SHARES
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person who
as of May 30, 2001, to the knowledge of AST, owned 5% or more of any class of
the outstanding shares of Global Trends:
36
46
GLOBAL TRENDS
NAME AND NUMBER OF SHARES PERCENT OWNED
ADDRESS CLASS OF SHARES OWNED OF RECORD
------------- --------------- ---------------- -------------
* AST has no knowledge of whether all or any portion of the shares owned of
record are also owned beneficially.
37
47
Listed below is the name, address and percent ownership of each person who
as of May 30, 2001 to the knowledge of AIF, owned 5% or more of the outstanding
shares of Consumer Products:
CONSUMER PRODUCTS
NAME AND NUMBER OF SHARES PERCENT OWNED
ADDRESS CLASS OF SHARES OWNED OF RECORD
----------------- --------------- ---------------- -------------
* AST has no knowledge of whether all or any portion of the shares owned of
record are also owned beneficially.
OWNERSHIP OF OFFICERS AND DIRECTORS/TRUSTEES
To the best of the knowledge of AST, the ownership of shares of Global
Trends by officers and directors of AST as a group constituted less than 1% of
the outstanding shares of such fund as of May 30, 2001. To the best of the
knowledge of AIF, the ownership of shares of Consumer Products by officers or
trustees of AIF as a group constituted less than 1% of the outstanding shares of
such fund as of May 30, 2001.
CAPITALIZATION
The following table sets forth as of December 31, 2000 the capitalization
of Global Trends Class A, Class B and Class C shares, the capitalization of
Consumer Products Class A, Class B and Class C Shares, and the pro forma
capitalization of Global Trends Class A, Class B, and Class C shares as adjusted
to give effect to the transactions contemplated by the Agreement.
GLOBAL TRENDS AND CONSUMER PRODUCTS
CONSUMER PRO FORMA GLOBAL
PRODUCTS GLOBAL TRENDS TRENDS CLASS A
CLASS A SHARES CLASS A SHARES SHARES AS ADJUSTED
-------------- -------------- ------------------
Net Assets $85,735,142 $20,750,956 $106,486,098
Shares Outstanding 3,472,907 1,556,298 7,988,862
Net Asset Value Per Share $24.69 $13.33 $13.33
38
48
CONSUMER PRO FORMA GLOBAL
PRODUCTS GLOBAL TRENDS TRENDS CLASS B
CLASS B SHARES CLASS B SHARES SHARES AS ADJUSTED
-------------- -------------- ------------------
Net Assets $110,504,247 $22,278,511 $132,782,758
Shares Outstanding 4,671,992 1,698,209 10,119,902
Net Asset Value Per Share $23.65 $13.12 $13.12
CONSUMER PRO FORMA GLOBAL
PRODUCTS GLOBAL TRENDS TRENDS CLASS C
CLASS C SHARES CLASS C SHARES SHARES AS ADJUSTED
-------------- -------------- ------------------
Net Assets $3,963,815 $1,789,117 $5,752,932
Shares Outstanding 167,522 136,437 438,769
Net Asset Value Per Share $23.66 $13.11 $13.11
LEGAL MATTERS
Certain legal matters concerning AIF and its participation in the
Reorganization, the issuance of shares of Global Trends in connection with the
Reorganization and the tax consequences of the Reorganization will be passed
upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, 51st Floor,
Philadelphia, PA 19103-7599. Certain legal matters concerning AST and its
participation in the Reorganization will be passed upon by Kirkpatrick &
Lockhart, LLP 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036-1800.
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual reports which AST and
AIF have filed with the SEC pursuant to the requirements of the 1933 Act and the
1940 Act, to which reference is hereby made. The SEC file number for AST's
registration statement containing the Prospectus and Statement of Additional
Information relating to Global Trends is Registration No. 333-30551. Such
Prospectus and Statement of Additional Information are incorporated herein by
reference. The SEC file number for AIF's registration statement containing the
Prospectus and Statement of Additional Information relating to Consumer Products
is Registration No. 33-19338. Such Prospectus and Statement of Additional
Information are incorporated herein by reference.
AIF and AST are subject to the informational requirements of the 1940 Act
and in accordance therewith file reports and other information with the SEC.
Reports, proxy statements, registration statements and other information filed
by AST and AIF (including the Registration Statement of AST relating to Global
Trends on Form N-14 of which this Proxy Statement/Prospectus is a part and which
is hereby incorporated by reference) may be inspected without charge and copied
at the public reference facilities maintained by the SEC at Room
39
49
1014, Judiciary Plaza, 450 Fifth Street, NW, Washington, DC 20549, and at the
following regional offices of the SEC: 7 World Trade Center, New York, New York
10048; and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies
of such material may also be obtained from the Public Reference Section of the
SEC at 450 Fifth Street, NW, Washington, DC 20549, at the prescribed rates. The
SEC maintains a website at http://www.sec.gov that contains information
regarding AIF, AST and other registrants that file electronically with the SEC.
40
50
APPENDIX I
AGREEMENT
and
PLAN OF REORGANIZATION
for
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
a Portfolio of
AIM INVESTMENT FUNDS
June __, 2001
51
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS.............................................................................................2
Section 1.1. Definitions.................................................................................2
ARTICLE 2 TRANSFER OF ASSETS......................................................................................4
Section 2.1. Reorganization of Consumer Products Fund....................................................4
Section 2.2. Computation of Net Asset Value..............................................................5
Section 2.3. Valuation Date..............................................................................5
Section 2.4. Delivery....................................................................................5
Section 2.5. Termination of Series.......................................................................6
Section 2.6. Issuance of AST Shares......................................................................6
Section 2.7. Investment Securities.......................................................................7
Section 2.8. Liabilities and Expenses....................................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF AIF...................................................................7
Section 3.1. Organization; Authority.....................................................................7
Section 3.2. Registration and Regulation of AIF..........................................................7
Section 3.3. Financial Statements........................................................................8
Section 3.4. No Material Adverse Changes; Contingent Liabilities.........................................8
Section 3.5. Fund Shares; Liabilities; Business Operations...............................................8
Section 3.6. Accountants.................................................................................9
Section 3.7. Binding Obligation..........................................................................9
Section 3.8. No Breaches or Defaults.....................................................................9
Section 3.9. Authorizations or Consents.................................................................10
Section 3.10. Permits...................................................................................10
Section 3.11. No Actions, Suits or Proceedings..........................................................10
Section 3.12. Contracts.................................................................................10
Section 3.13. Properties and Assets.....................................................................11
Section 3.14. Taxes.....................................................................................11
Section 3.15. Benefit and Employment Obligations........................................................11
Section 3.16. Brokers...................................................................................12
Section 3.17. Voting Requirements.......................................................................12
Section 3.18. State Takeover Statutes...................................................................12
Section 3.19. Books and Records.........................................................................12
Section 3.20. Prospectus and Statement of Additional Information........................................12
Section 3.21. No Distribution...........................................................................12
Section 3.22. Liabilities of Consumer Products Fund.....................................................12
Section 3.23. Value of Shares...........................................................................13
Section 3.24. Shareholder Expenses......................................................................13
Section 3.25. Intercompany Indebtedness.................................................................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AST..................................................................13
Section 4.1. Organization; Authority....................................................................13
Section 4.2. Registration and Regulation of AST.........................................................13
Section 4.3. Financial Statements.......................................................................13
i
52
Section 4.4. No Material Adverse Changes; Contingent Liabilities........................................13
Section 4.5. Registration of Global Trends Shares.......................................................14
Section 4.6. Accountants................................................................................15
Section 4.7. Binding Obligation.........................................................................15
Section 4.8. No Breaches or Defaults....................................................................15
Section 4.9. Authorizations or Consents.................................................................15
Section 4.10. Permits...................................................................................15
Section 4.11. No Actions, Suits or Proceedings..........................................................16
Section 4.12. Taxes.....................................................................................16
Section 4.13. Brokers...................................................................................16
Section 4.14. Representations Concerning the Reorganization.............................................17
Section 4.15. Prospectus and Statement of Additional Information........................................17
Section 4.16. Value of Shares...........................................................................17
Section 4.17. Intercompany Indebtedness; Consideration..................................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF GIP..................................................................18
Section 5.1. Organization; Authority....................................................................18
Section 5.2. Financial Statements.......................................................................18
Section 5.3. No Material Adverse Changes; Contingent Liabilities........................................18
Section 5.4. Portfolio Shares; Business Operations......................................................18
Section 5.5. Binding Obligation.........................................................................19
Section 5.6. No Breaches or Defaults....................................................................19
Section 5.7. Authorizations or Consents.................................................................19
Section 5.8. No Actions, Suits or Proceedings...........................................................19
Section 5.9. Properties and Assets......................................................................20
Section 5.10. Taxes.....................................................................................20
ARTICLE 6 COVENANTS..............................................................................................20
Section 6.1. Conduct of Business........................................................................20
Section 6.2. Announcements..............................................................................21
Section 6.3. Portfolio Composition......................................................................21
Section 6.4. Expenses...................................................................................21
Section 6.5. Further Assurances.........................................................................21
Section 6.6. Notice of Events...........................................................................22
Section 6.7. Access to Information......................................................................22
Section 6.8. Consents, Approvals and Filings............................................................22
Section 6.9. Submission of Agreement to Shareholders....................................................22
ARTICLE 7 CONDITIONS PRECEDENT TO THE REORGANIZATION.............................................................23
Section 7.1. Conditions Precedent of AST................................................................23
Section 7.2. Mutual Conditions..........................................................................24
Section 7.3. Conditions Precedent of AIF................................................................25
ARTICLE 8 TERMINATION OF AGREEMENT...............................................................................25
Section 8.1. Termination................................................................................25
Section 8.2. Survival After Termination.................................................................26
ARTICLE 9 MISCELLANEOUS..........................................................................................26
Section 9.1. Survival of Representations and Warranties.................................................26
ii
53
Section 9.2. Law Governing..............................................................................26
Section 9.3. Binding Effect, Persons Benefiting, No Assignment..........................................26
Section 9.4. Obligations of the Parties.................................................................27
Section 9.5. Amendments.................................................................................27
Section 9.6. Enforcement................................................................................27
Section 9.7. Interpretation.............................................................................27
Section 9.8. Counterparts...............................................................................28
Section 9.9. Entire Agreement; Schedules................................................................28
Section 9.10. Notices...................................................................................28
Section 9.11. Representation by AIM Advisors............................................................29
iii
54
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, dated as of June
__, 2001 (the "Agreement"), by and among AIM Investment Funds, a Delaware
business trust ("AIF"), acting on behalf of AIM Global Consumer Products and
Services Fund ("Consumer Products Fund"), AIM Series Trust, a Delaware business
trust ("AST"), acting on behalf of AIM Global Trends Fund ("Global Trends"),
Global Investment Portfolios, a Delaware business trust ("GIP"), acting on
behalf of Global Consumer Products and Services Portfolio ("Consumer Products
Portfolio"), and A I M Advisors, Inc. ("AIM Advisors"), a Delaware corporation.
WITNESSETH
WHEREAS, AIF is an investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
(as defined below) that offers separate classes of its shares representing
interests in its investment portfolios, including Consumer Products Fund, for
sale to the public; and
WHEREAS, Consumer Products Fund invests all of its assets in
the shares of Consumer Products Portfolio, a series of the shares of GIP.
WHEREAS, AST is an investment company registered with the SEC
under the Investment Company Act that offers separate classes of its shares
representing interests in its investment portfolios, including Global Trends,
for sale to the public; and
WHEREAS, AIF desires to provide for the reorganization of
Consumer Products Fund through the transfer of substantially all of the assets
of Consumer Products Fund to Global Trends in exchange for the assumption by
Global Trends of all of the liabilities of Consumer Products Fund and the
issuance by AST of shares of Global Trends to the shareholders of Consumer
Products Fund in the manner set forth in this Agreement; and
WHEREAS, GIP desires to facilitate the reorganization of
Consumer Products Fund by transferring all of the assets and liabilities of
Consumer Products Portfolio to Consumer Products Fund, in exchange for all of
the issued and outstanding shares of Consumer Products Portfolio held by
Consumer Products Fund.
WHEREAS, this Agreement is intended to be and is adopted by
the parties hereto as a Plan of Reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and
the agreements and undertakings contained in this Agreement, the parties agree
as follows:
1
55
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For all purposes in this Agreement, the
following terms shall have the respective meanings set forth in this Section 1.1
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined):
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and all rules and regulations of the SEC adopted pursuant thereto.
"Affiliated Person" means an affiliated person as defined in
Section 2(a)(3) of the Investment Company Act.
"Agreement" means this Agreement and Plan of Reorganization,
together with all schedules and exhibits attached hereto and all amendments
hereto and thereof.
"AIM Advisors" means A I M Advisors, Inc., a Delaware
corporation.
"AIF" means AIM Investment Funds, a Delaware business trust.
"AIF Registration Statement" means the registration statement
on Form N-1A of AIF, as amended, Registration No. 33-19338.
"AST" means AIM Series Trust, a Delaware business trust.
"AST Registration Statement" means the registration statement
on Form N-1A of AST, as amended, Registration No. 333-30551, that is applicable
to the Global Trends.
"Benefit Plan" means any material "employee benefit plan" (as
defined in Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, retirement, profit sharing, welfare plans or other plan,
arrangement or understanding maintained or contributed to by AIF on behalf of
Consumer Products Fund, or otherwise providing benefits to any current or former
employee, officer or trustee of AIF.
"Consumer Products Fund" means AIM Global Consumer Products
and Services Fund, an investment portfolio of AIF.
"Consumer Products Fund Class A Shares" means Class A Shares
of beneficial interest of Consumer Products Fund issued by AIF.
"Consumer Products Fund Class B Shares" means Class B Shares
of beneficial interest of Consumer Products Fund issued by AIF.
"Consumer Products Fund Class C Shares" means Class C Shares
of beneficial interest of Consumer Products Fund issued by AIF.
"Consumer Products Fund Financial Statements" shall have the
meaning set forth in Section 3.3 of this Agreement.
"Consumer Products Fund Shareholders" means the holders of
record as of the close of regular trading on the NYSE on the Valuation Date of
the issued and outstanding shares of beneficial interest in Consumer Products
Fund.
"Consumer Products Fund Shareholders Meeting" means a meeting
of the shareholders of Consumer Products Fund convened in accordance with
applicable law and the
2
56
Agreement and Declaration of Trust of AIF to consider and vote upon the approval
of this Agreement and the transactions contemplated by this Agreement.
"Consumer Products Fund Shares" means the issued and
outstanding shares of beneficial interest in Consumer Products Fund.
"Consumer Products Portfolio" means Global Consumer Products
and Services Portfolio, an investment portfolio of GIP.
"Closing" means the consummation of the Reorganization.
"Closing Date" means September 10, 2001, or such other date as
the parties may mutually determine.
"Code" means the Internal Revenue Code of 1986, as amended,
and all rules and regulations adopted pursuant thereto.
"Custodian" means State Street Bank and Trust Company acting
in its capacity as custodian for the assets of the Global Trends and Consumer
Products Fund.
"Effective Time" shall mean 8:00 a.m. Central Time on the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all rules or regulations adopted pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all rules and regulations adopted by the SEC pursuant thereto.
"GIP" means Global Investment Portfolios, a Delaware business
trust.
"Global Trends" means AIM Global Trends Fund, an investment
portfolio of AST.
"Global Trends Class A Shares" means Class A Shares of
beneficial interest of Global Trends issued by AST.
"Global Trends Class B Shares" means Class B Shares of
beneficial interest of Global Trends issued by AST.
"Global Trends Class C Shares" means Class C Shares of
beneficial interest of Global Trends issued by AST.
"Global Trends Shares" means the shares of Global Trends
issued by AST, each representing an interest in Global Trends.
"Global Trends Financial Statements shall have the meaning set
forth in Section 4.3 of this Agreement.
"Governmental Authority" means any foreign, United States or
state government, government agency, department, board, commission (including
the SEC) or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including NASD Regulation, Inc., the
Commodity Futures Trading Commission, the National Futures Association, the
Investment Management Regulatory Organization Limited and the Office of Fair
Trading).
"Investment Company Act" means the Investment Company Act of
1940, as amended, and all rules and regulations adopted by the SEC pursuant
thereto.
3
57
"Lien" means any pledge, lien, security interest, charge,
claim or encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a
change in the condition (financial or otherwise), properties, assets or
prospects of an entity having an adverse monetary effect in an amount equal to
or greater than $50,000.
"Person" means an individual or a corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
"Reorganization" means the transfer of the assets and
liabilities of Consumer Products Portfolio to Consumer Products Fund, followed
immediately by the acquisition of the assets of Consumer Products Fund by Global
Trends in consideration of the assumption by Global Trends of all of the
liabilities of Consumer Products Fund and the issuance by AST of Global Trends
Shares directly to Consumer Products Fund Shareholders as described in this
Agreement.
"Required Shareholder Vote" shall have the meaning set forth
in Section 3.17 of this Agreement.
"Return" means any return, report or form or any attachment
thereto required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations adopted by the SEC pursuant thereto.
"Tax" means any tax or similar governmental charge, impost or
levy (including income taxes (including alternative minimum tax and estimated
tax), franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross
receipts taxes, value added taxes, employment taxes, excise taxes, ad valorem
taxes, property taxes, withholding taxes, payroll taxes, minimum taxes or
windfall profit taxes), together with any related penalties, fines, additions to
tax or interest, imposed by the United States or any state, county, local or
foreign government or subdivision or agency thereof.
"Valuation Date" shall have the meaning set forth in Section
2.3 of this Agreement.
ARTICLE 2
TRANSFER OF ASSETS
Section 2.1. Reorganization of Consumer Products Fund.
(a) Immediately prior to the Effective Time, all of the assets
of Consumer Products Portfolio will be transferred to the Custodian for the
account of Consumer Products
4
58
Fund, and the issued and outstanding shares of beneficial interest in
Consumer Products Portfolio will be redeemed and cancelled.
(b) At the Effective Time, all of the assets of Consumer
Products Fund shall be transferred, assigned and delivered to the Custodian for
the account of Global Trends in exchange for the assumption by Global Trends of
all of the liabilities of any kind of Consumer Products Fund and delivery by AST
directly to Consumer Products Fund Shareholders, in the manner described in
Section 2.6 below, of a number of Global Trends Shares (including, if
applicable, fractional shares rounded to the nearest thousandth) having an
aggregate net asset value equal to the net value of the assets of Consumer
Products Fund so transferred, assigned and delivered, all determined and
adjusted as provided in Section 2.2 below.
Section 2.2. Computation of Net Asset Value.
(a) The net asset value of Global Trends Shares shall be
determined on the Valuation Date in accordance with the policies and procedures
of Global Trends as described in the AST Registration Statement.
(b) The net value of the assets of Consumer Products Fund to
be transferred to Global Trends pursuant to this Agreement shall be determined
on the Valuation Date in accordance with the policies and procedures of Consumer
Products Fund as described in the AIF Registration Statement.
(c) All computations of value regarding the net assets of
Consumer Products Fund and the net asset value of Global Trends Shares to be
issued pursuant to this Agreement shall be made by agreement of AST and AIF. The
parties agree to use commercially reasonable efforts to resolve any material
pricing differences between the prices of portfolio securities determined in
accordance with their respective pricing policies and procedures.
Section 2.3. Valuation Date. The assets of Consumer Products Fund and
the net asset value per share of Global Trends Shares shall be valued as of the
close of regular trading on the NYSE on the business day next preceding the
Closing Date (the "Valuation Date").
Section 2.4. Delivery.
(a) GIP shall instruct the Custodian to transfer the assets of
Consumer Products Portfolio to Consumer Products Fund, and AIF shall instruct
the Custodian to transfer such assets to the account of Global Trends, at the
Effective Time. The assets so delivered shall be duly endorsed in proper form
for transfer in such condition as to constitute a good delivery thereof, in
accordance with the custom of brokers, and shall be accompanied by all necessary
state stock transfer stamps, if any, or a check for the appropriate purchase
price thereof.
(b) If, on the Closing Date, delivery of securities held by
Consumer Products Portfolio cannot be made in the manner contemplated by Section
2.4(a) for the reason that any of such securities purchased prior to the Closing
Date have not yet been delivered to Consumer Products Portfolio or its broker or
brokers, then, AST shall waive the delivery requirements of Section 2.4(a) with
respect to said undelivered securities if there is delivered to the Custodian by
or on the Closing Date and with respect to said undelivered securities, executed
copies of an
5
59
agreement of assignment and escrow agreement and due bills executed on behalf of
said broker or brokers, together with such other documents as may be required by
AST or the Custodian, including brokers' confirmation slips.
Section 2.5. Termination of Series.
(a) The share transfer books of Consumer Products Portfolio
will be permanently closed as of the close of business on the Valuation Date.
(b) The share transfer books of Consumer Products Fund will be
permanently closed as of the close of business on the Valuation Date and only
requests for the redemption of shares of Consumer Products Fund received in
proper form prior to the close of regular trading on the NYSE on the Valuation
Date shall be accepted by AIF. Redemption requests thereafter received by
Consumer Products Fund shall be deemed to be redemption requests for Global
Trends Shares, as applicable (assuming that the transactions contemplated by
this Agreement have been consummated), to be distributed to Consumer Products
Fund Shareholders under this Agreement.
(c) As soon as reasonably practicable after the Closing Date,
GIP shall terminate Consumer Products Portfolio as a series of its shares of
beneficial interest and AIF shall terminate Consumer Products Fund as a series
of its shares of beneficial interests.
Section 2.6. Issuance of Global Trends Shares.
(a) At the Effective Time, (i) each Consumer Products Fund
Shareholder of record as of the close of regular trading on the NYSE on the
Valuation Date holding Consumer Products Fund Class A shares shall be issued
that number of full and fractional shares of Global Trends Class A shares having
a net asset value equal to the net asset value of the Consumer Products Fund
Class A shares held by such Consumer Products Fund Shareholder on the Valuation
Date, (ii) each Consumer Products Fund Shareholder of record as of the Valuation
Date holding Consumer Products Fund Class B shares shall be issued that number
of full and fractional shares of Global Trends Class B shares having a net asset
value equal to the net asset value of the Consumer Products Fund Class B shares
held by such Consumer Products Fund Shareholders on the Valuation Date, and
(iii) each Consumer Products Fund Shareholder of record on the Valuation Date
holding Consumer Products Fund Class C shares shall be issued that number of
full and fractional shares of Global Trends Class C shares having a net asset
value equal to the net asset value of the Consumer Products Fund Class C shares
held by such Consumer Products Fund Shareholders on the Valuation Date. All
issued and outstanding shares of beneficial interest in Consumer Products Fund
shall thereupon be cancelled on the books of AIF.
(b) AIF shall provide instructions to the transfer agent of
AST with respect to Global Trends Class A shares, Global Trends Class B shares,
and Global Trends Class C shares to be issued to Consumer Products Fund
Shareholders. AST shall have no obligation to inquire as to the validity,
propriety or correctness of any such instruction, but shall, in each case,
assume that such instruction is valid, proper and correct. AST shall record on
its books the ownership of Global Trends Class A shares, Global Trends Class B
shares and Global Trends Class C shares
6
60
by Consumer Products Fund Shareholders and shall forward a confirmation of such
ownership to Consumer Products Fund Shareholders. No redemption or repurchase of
such shares credited to former Consumer Products Fund Shareholders in respect of
shares represented by unsurrendered shares certificates shall be permitted until
such certificates have been surrendered to AST for cancellation, or if such
certificates are lost or misplaced, until lost certificate affidavits have been
executed and delivered to AST.
Section 2.7. Investment Securities. On or prior to the Valuation Date,
GIP shall deliver a list setting forth the securities Consumer Products
Portfolio then owns together with the respective Federal income tax bases
thereof. GIP shall provide to AST on or before the Valuation Date, detailed tax
basis accounting records for each security to be transferred to it pursuant to
this Agreement. Such records shall be prepared in accordance with the
requirements for specific identification tax lot accounting and clearly reflect
the bases used for determination of gain and loss realized on the sale of any
security transferred to Global Trends hereunder. Such records shall be made
available by GIP prior to the Valuation Date for inspection by the Treasurer (or
his designee) or the auditors of AST upon reasonable request.
Section 2.8. Liabilities and Expenses. Consumer Products Portfolio and
Consumer Products Fund shall use their reasonable best efforts to discharge all
of their respective known liabilities, so far as may be possible, prior to the
Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AIF
AIF, on behalf of Consumer Products Fund, represents and
warrants to AST that:
Section 3.1. Organization; Authority. AIF is duly organized, validly
existing and in good standing under the Delaware Business Trust Act, with all
requisite trust power and authority to enter into this Agreement and perform its
obligations hereunder.
Section 3.2. Registration and Regulation of AIF. AIF is duly registered
with the SEC as an investment company under the Investment Company Act and all
Consumer Products Fund Shares which have been or are being offered for sale have
been duly registered under the Securities Act and have been duly registered,
qualified or are exempt from registration or qualification under the securities
laws of each state or other jurisdiction in which such shares have been or are
being offered for sale, and no action has been taken by AIF to revoke or rescind
any such registration or qualification. Consumer Products Fund is in compliance
in all material respects with all applicable laws, rules and regulations,
including, without limitation, the Investment Company Act, the Securities Act,
the Exchange Act and all applicable state securities laws. Consumer Products
Fund is in compliance in all material respects with the applicable investment
policies and restrictions set forth in the AIF Registration Statement currently
in effect. The value of the net assets of Consumer Products Fund is determined
using portfolio valuation methods that comply in all material respects with the
requirements of the Investment Company Act and the policies of Consumer Products
Fund and all purchases and redemptions of Consumer Products Fund Shares have
been effected at the net asset value per share calculated in such manner.
7
61
Section 3.3. Financial Statements. The books of account and related
records of Consumer Products Fund fairly reflect in reasonable detail its
assets, liabilities and transactions in accordance with generally accepted
accounting principles applied on a consistent basis. The audited financial
statements dated October 31, 2000, of Consumer Products Fund previously
delivered to AST (the "Consumer Products Fund Financial Statements"), present
fairly in all material respects the financial position of Consumer Products
Fund, as of the dates indicated and the results of operations and changes in net
assets for the periods then ended in accordance with generally accepted
accounting principles applied on a consistent basis for the periods then ended.
Section 3.4. No Material Adverse Changes; Contingent Liabilities. Since
October 31, 2000, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of Consumer
Products Fund or the status of Consumer Products Fund as a regulated investment
company under the Code, other than changes resulting from any change in general
conditions in the financial or securities markets or the performance of any
investments made by Consumer Products Fund or occurring in the ordinary course
of business of Consumer Products Fund or AIF. There are no contingent
liabilities of Consumer Products Fund not disclosed in the Consumer Products
Fund Financial Statements, which are required to be disclosed in accordance with
generally accepted accounting principles.
Section 3.5. Fund Shares; Liabilities; Business Operations.
(a) The Consumer Products Fund Shares have been duly
authorized and validly issued and are fully paid and non-assessable.
(b) During the five-year period ending on the Closing Date,
neither Consumer Products Fund nor any person related to Consumer Products Fund
(as defined in Section 1.368-1(e)(3) of the Treasury Regulations without regard
to Section 1.368-1(e)(3)(i)(A)) will have directly or through any transaction,
agreement, or arrangement with any other person, (i) acquired shares of Consumer
Products Fund, except for shares redeemed in the ordinary course of Consumer
Products Fund's business as an open-end investment company as required by the
1940 Act, or (ii) made distributions with respect to Consumer Products Fund
shares, except for (a) distributions necessary to satisfy the requirements of
Section 852 and 4982 of the Code for qualification as a regulated investment
company and avoidance of excise tax liability and (b) additional distributions,
to the extent such additional distributions do not exceed 50 percent of the
value (without giving effect to such distributions) of the proprietary interest
in Consumer Products Fund on the date of this Agreement.
(c) At the time of the Reorganization, Consumer Products Fund
shall not have outstanding any warrants, options, convertible securities or any
other type of right pursuant to which any Person could acquire Consumer Products
Fund Shares, except for the right of investors to acquire Consumer Products Fund
Shares at net asset value in the ordinary course of their business as an
open-end diversified management investment company operating under the
Investment Company Act.
(d) From the date it commenced operations, and ending on the
Closing Date, Consumer Products Fund will have conducted its historic business
within the meaning of Section 1.368-1(d) of the Income Tax Regulations under the
Code in a substantially unchanged manner
8
62
through investment of substantially all of its assets in shares of Consumer
Products Portfolio. From the date it commenced operations, and ending on the
Closing Date, Consumer Products Portfolio will have conducted its historical
business within the meaning of Section 1.368-1(d) of the Income Tax Regulations
under the Code in a substantially unchanged manner and at least 33-1/3 percent
of its shares will have been owned at all times by Consumer Products Fund. As
provided herein, Consumer Products Fund shall redeem in kind all of its shares
of Consumer Products Portfolio immediately prior to the Effective Time. In
anticipation of the Reorganization, Consumer Products Portfolio will not dispose
of assets that, in the aggregate, will result in less than fifty percent (50%)
of its historic business assets (within the meaning of Section 1.368-1(d) of
those regulations) being transferred to Global Trends.
(e) AIF does not have, and has not had during the six (6)
months prior to the date of this Agreement, any employees, and shall not hire
any employees from and after the date of this Agreement through the Closing
Date.
Section 3.6. Accountants. PricewaterhouseCoopers, LLP, which has
reported upon the Consumer Products Fund Financial Statements for the period
ended October 31, 2000, are independent public accountants as required by the
Securities Act and the Exchange Act.
Section 3.7. Binding Obligation. This Agreement has been duly
authorized, executed and delivered by AIF on behalf of Consumer Products Fund
and, assuming this Agreement has been duly executed and delivered by the other
parties hereto and approved by Consumer Products Fund Shareholders, constitutes
the legal, valid and binding obligation of AIF, enforceable against AIF in
accordance with its terms from and with respect to the revenues and assets of
Consumer Products Fund, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
creditors' rights generally, or by general equity principles (whether applied in
a court of law or a court of equity and including limitations on the
availability of specific performance or other equitable remedies).
Section 3.8. No Breaches or Defaults. The execution and delivery of
this Agreement by AIF on behalf of Consumer Products Fund and performance by AIF
of its obligations hereunder has been duly authorized by all necessary trust
action on the part of AIF, other than Consumer Products Fund Shareholder
approval, and (i) do not, and on the Closing Date will not, result in any
violation of the Agreement and Declaration of Trust or by-laws of AIF and (ii)
do not, and on the Closing Date will not, result in a breach of any of the terms
or provisions of, or constitute (with or without the giving of notice or the
lapse of time or both) a default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation or imposition of any Lien upon any
property or assets of Consumer Products Fund (except for such breaches or
defaults or Liens that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect) under (A) any indenture, mortgage
or loan agreement or any other material agreement or instrument to which AIF is
a party or by which it may be bound and which relates to the assets of Consumer
Products Fund or to which any of Consumer Products Fund's properties may be
subject; (B) any Permit (as defined below); or (C) any existing applicable law,
rule, regulation, judgment, order or decree of any Governmental Authority having
jurisdiction over AIF or any of Consumer Products Fund's properties. AIF is not
under the jurisdiction of a court in a Title 11 of the United States Code or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
9
63
Section 3.9. Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date and those that must
be made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by AIF in
connection with the due execution and delivery by AIF of this Agreement and the
consummation by AIF of the transactions contemplated hereby.
Section 3.10. Permits. AIF has in full force and effect all Federal,
state, local and foreign governmental approvals, consents, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
(collectively, "Permits") necessary for it to conduct its business as presently
conducted as it relates to Consumer Products Fund, and there has occurred no
default under any Permit, except for the absence of Permits and for defaults
under Permits the absence or default of which would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. To the
knowledge of AIF there are no proceedings relating to the suspension, revocation
or modification of any Permit, except for such that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 3.11. No Actions, Suits or Proceedings.
(a) There is no pending action, litigation or proceeding, nor,
to the knowledge of AIF, has any litigation been overtly threatened in writing
or, if probable of assertion, orally, against AIF before any Governmental
Authority which questions the validity or legality of this Agreement or of the
actions contemplated hereby or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration
actions, suits, or proceedings instituted or pending or, to the knowledge of
AIF, threatened in writing or, if probable of assertion, orally against AIF
affecting any property, asset, interest, or right of Consumer Products Fund,
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to Consumer Products Fund. There are not in
existence on the date hereof any plea agreements, judgments, injunctions,
consents, decrees, exceptions or orders that were entered by, filed with or
issued by Governmental Authority relating to AIF's conduct of the business of
Consumer Products Fund affecting in any significant respect the conduct of such
business. AIF is not, and has not been, to the knowledge of AIF, the target of
any investigation by the SEC or any state securities administrator with respect
to its conduct of the business of Consumer Products Fund.
Section 3.12. Contracts. AIF is not in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party and which involves or affects the assets of Consumer
Products Fund, by which the assets, business, or operations of Consumer Products
Fund may be bound or affected, or under which it or the assets, business or
operations of Consumer Products Fund receives benefits, and which default could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, and, to the knowledge of AIF, there has not occurred any event
that, with the lapse of time or the giving of notice or both, would constitute
such a default.
10
64
Section 3.13. Properties and Assets. Consumer Products Fund has good
and marketable title to all properties and assets reflected in the Resource Fund
Financial Statements, as owned by it, free and clear of all Liens, except as
described in the Consumer Products Fund Financial Statements.
Section 3.14. Taxes.
(a) Consumer Products Fund has elected to be treated as a
regulated investment company under Subchapter M of the Code and is a separate
corporation within the meaning of Section 851(g)(1) of the Code. Consumer
Products Fund has qualified as such for each taxable year since inception and
that has ended prior to the Closing Date and will have satisfied the
requirements of Part I of Subchapter M of the Code to maintain such
qualification for the period beginning on the first day of its current taxable
year and ending on the Closing Date. Consumer Products Fund has no earnings and
profits accumulated in any taxable year in which the provisions of Subchapter M
of the Code did not apply to it. In order to (i) insure continued qualification
of each Consumer Products Fund as a "regulated investment company" for tax
purposes and (ii) eliminate any tax liability of Consumer Products Fund arising
by reason of undistributed investment company taxable income or net capital
gain, AIF will declare to Consumer Products Fund Shareholders of record on or
prior to the Valuation Date, a dividend or dividends that, together with all
previous such dividends shall have the effect of distributing (A) all of
Consumer Products Fund's investment company taxable income (determined without
regard to any deductions for dividends paid) for the taxable year ended October
31, 2000 and for the short taxable year beginning on November 1, 2000 and ending
on the Closing Date and (B) all of Consumer Products Fund's net capital gains
realized in its taxable year ended October 31, 2000 and in such short taxable
year (after reduction for any capital loss carryover).
(b) Consumer Products Fund has timely filed all Returns
required to be filed by it and all Taxes with respect thereto have been paid,
except where the failure so to file or so to pay, would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Adequate provision has been made in the financial statements of Consumer
Products Fund for all Taxes in respect of all periods ending on or before the
date of such financial statements, except where the failure to make such
provisions would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect. No deficiencies for any Taxes have been
proposed, assessed or asserted in writing by any taxing authority against
Consumer Products Fund, and no deficiency has been proposed, assessed or
asserted, in writing, where such deficiency would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No waivers
of the time to assess any such Taxes are outstanding nor are any written
requests for such waivers pending and no Return of Consumer Products Fund is
currently being or has been audited with respect to income taxes or other Taxes
by any Federal, state, local, or foreign Tax authority.
(c) To the best of our knowledge, Consumer Products Fund's
fiscal year has not been changed for tax purposes since the date on which it
commenced operations.
Section 3.15. Benefit and Employment Obligations. On or prior to the
Closing Date, Consumer Products Fund shall not have any obligation to provide
any post-retirement or post-employment benefit to any Person, including but not
limited to under any Benefit Plan, and shall
11
65
have no obligation to provide unfunded deferred compensation or other unfunded
or self-funded benefits to any Person.
Section 3.16. Brokers. No broker, finder or similar intermediary has
acted for or on behalf of AIF, Consumer Products Fund in connection with this
Agreement or the transactions contemplated hereby, and no broker, finder, agent
or similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any agreement, arrangement or
understanding with AIF or any action taken by it.
Section 3.17. Voting Requirements. The vote of a majority of the
holders of Consumer Products Fund Shares cast at a meeting at which a quorum is
present (the "Required Shareholder Vote"), are the only votes of the holders of
any class or series of shares of beneficial interest of Consumer Products Fund
necessary to approve this Agreement and the transactions contemplated by this
Agreement.
Section 3.18. State Takeover Statutes. No state takeover statute or
similar statute or regulation applies or purports to apply to the
Reorganization, this Agreement or any of the transactions contemplated by this
Agreement.
Section 3.19. Books and Records. The books and records of AIF relating
to Consumer Products Fund, reflecting, among other things, the purchase and sale
of Consumer Products Fund Shares by Consumer Products Fund Shareholders, the
number of issued and outstanding shares owned by Consumer Products Fund
Shareholder and the state or other jurisdiction in which such shares were
offered and sold, are complete and accurate in all material respects.
Section 3.20. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Consumer Products
Fund as of the date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or on the Closing Date, do
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
Section 3.21. No Distribution. Global Trends Shares are not being
acquired for the purpose of any distribution thereof, other than in accordance
with the terms of this Agreement.
Section 3.22. Liabilities of Consumer Products Fund. The liabilities of
Consumer Products Fund that are to be assumed by Global Trends in connection
with the Reorganization, or which the assets of Consumer Products Fund to be
transferred in the Reorganization are subject, were incurred by Consumer
Products Fund in the ordinary course of its business. The fair market value of
the assets of Consumer Products Fund to be transferred to Global Trends in the
Reorganization will equal or exceed the sum of the liabilities to be assumed by
Global Trends plus the amount of liabilities, if any, to which such transferred
assets will be subject. The total adjusted basis of the assets transferred to
Global Trends will equal or exceed the sum of the liabilities to be assumed by
Global Trends plus the amount of liabilities to which the transferred assets are
subject.
12
66
Section 3.23. Value of Shares. The fair market value of Global Trends
Class A shares received by Resource Fund Shareholders will be approximately
equal to the fair market value of the Consumer Products Fund Class A shares
constructively surrendered in exchange therefor, and the fair market value of
Global Trends Class B shares and Global Trends Class C shares received by
Consumer Products Fund Shareholders will be approximately equal to the fair
market value of the Consumer Products Fund Class B shares and the Consumer
Products Fund Class C shares constructively surrendered therefor.
Section 3.24. Shareholder Expenses. Consumer Products Fund Shareholders
will pay their own expenses, if any, incurred in connection with the
Reorganization.
Section 3.25. Intercompany Indebtedness. There is no intercompany
indebtedness between AIF and AST that was issued, acquired, or will be settled,
at a discount.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AST
AST, on behalf of Global Trends, represents and warrants to
AIF as follows:
Section 4.1. Organization; Authority. AST is duly organized, validly
existing and in good standing under the Delaware Business Trust Act, with all
requisite trust power and authority to enter into this Agreement and perform its
obligations hereunder.
Section 4.2. Registration and Regulation of AST. AST is registered with
the SEC under the Investment Company Act as an open-end, management, series,
investment company. Global Trends is in compliance in all material respects with
all applicable laws, rules and regulations, including without limitation the
Investment Company Act, the Securities Act, the Exchange Act and all applicable
state securities laws. Global Trends is in compliance in all material respects
with the applicable investment policies and restrictions set forth in the AST
Registration Statement currently in effect. The value of the net assets of the
Global Trends is determined using portfolio valuation methods that comply in all
material respects with the requirements of the Investment Company Act.
Section 4.3. Financial Statements. The books of account and related
records of Global Trends fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited financial statements dated
December 31, 2000, of Global Trends previously delivered to AIF (the "Global
Trends Financial Statements") present fairly in all material respects the
financial position of Global Trends as of the dates indicated and the results of
operations and changes in net assets for the periods then ended in accordance
with generally accepted accounting principles applied on a consistent basis for
the periods then ended.
Section 4.4. No Material Adverse Changes; Contingent Liabilities. Since
December 31, 2000, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of Global
Trends or the status of Global Trends as a regulated investment company under
the Code, other than changes resulting from any change in general conditions in
the financial or securities markets or the performance of any investments
13
67
made by Global Trends or occurring in the ordinary course of business of Global
Trends or AST. There are no contingent liabilities of Global Trends not
disclosed in Global Trends Financial Statements which are required to be
disclosed in accordance with generally accepted accounting principles.
Section 4.5. Registration of Global Trends Shares.
(a) The shares of beneficial interest of AST are divided into
portfolios, including Global Trends. Global Trends currently has 3 classes of
shares, Class A shares, Class B shares, and Class C shares. Under the Delaware
Business Trust Act and its Agreement and Declaration of Trust, as amended, AST
is authorized to issue an unlimited number of shares of any class representing
an investment in each of its portfolios, including Global Trends.
(b) Global Trends Shares of AST to be issued pursuant to
Section 2.6 shall on the Closing Date be duly registered under the Securities
Act by a Registration Statement on Form N-14 of AST then in effect.
(c) Global Trends Shares to be issued pursuant to Section 2.6
are duly authorized and on the Closing Date will be validly issued and fully
paid and non-assessable and will conform to the description thereof contained in
the Registration Statement on Form N-14 then in effect. At the time of the
Reorganization, Global Trends shall not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any Person
could acquire Global Trends Shares except for the right of investors to acquire
Global Trends Shares at net asset value in the normal course of its business as
an open-ended diversified management investment company operating under the
Investment Company Act.
(d) The combined proxy statement/prospectus (the "Combined
Proxy Statement/Prospectus") which forms a part of AST's Registration Statement
on Form N-14 shall be furnished to AIF and Consumer Products Fund Shareholders
entitled to vote at the Consumer Products Fund Shareholders Meeting. The
Combined Proxy Statement/Prospectus and related Statement of Additional
Information of Global Trends, when they become effective, shall conform to the
applicable requirements of the Securities Act and the Investment Company Act and
shall not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading, provided, however, that no representation or warranty is
made with respect to written information provided by AIF for inclusion in the
Combined Proxy Statement Prospectus.
(e) The shares of Global Trends which have been or are being
offered for sale (other than Global Trends Shares to be issued in connection
with the Reorganization) have been duly registered under the Securities Act by
the AST Registration Statement then in effect and have been duly registered,
qualified or are exempt from registration or qualification under the securities
laws of each state or other jurisdiction in which such shares have been or are
being offered for sale, and no action has been taken by AST to revoke or rescind
any such registration or qualification.
14
68
Section 4.6. Accountants. PricewaterhouseCoopers LLP, which has
reported upon Global Trends Financial Statements for the period ended December
31, 2000, are independent public accountants as required by the Securities Act
and the Exchange Act.
Section 4.7. Binding Obligation. This Agreement has been duly
authorized, executed and delivered by AST on behalf of Global Trends and,
assuming this Agreement has been duly executed and delivered by the other
parties hereto, constitutes the legal, valid and binding obligation of AST,
enforceable against AST in accordance with its terms from and with respect to
the revenues and assets of Global Trends, except as the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors' rights generally, or by general equity
principles (whether applied in a court or law or a court of equity and including
limitations on the availability of specific performance or other equitable
remedies).
Section 4.8. No Breaches or Defaults. The execution and delivery of
this Agreement by AST on behalf of Global Trends and performance by AST of its
obligations hereunder have been duly authorized by all necessary trust action on
the part of AST and (i) do not, and on the Closing Date will not, result in any
violation of the Agreement and Declaration of Trust, as amended, or by-laws, as
amended, of AST and (ii) do not, and on the Closing Date will not, result in a
breach of any of the terms or provisions of, or constitute (with or without the
giving of notice or the lapse of time or both) a default under, or give rise to
a right of termination, cancellation or acceleration of any obligation or to the
loss of a material benefit under, or result in the creation or imposition of any
Lien upon any property or assets of the assets of Global Trends (except for such
breaches or defaults or Liens that would not reasonably be expected,
individually or in the aggregate, to adversely affect the consummation of the
Reorganization) under (A) any indenture, mortgage or loan or any other material
agreement or instrument to which AST is a party or by which it may be bound
which relates to the assets of Global Trends or to which any properties of
Global Trends may be subject; (B) any Permit; or (C) any existing applicable
law, rule, regulation, judgment, order or decree of any Governmental Authority
having jurisdiction over AST or any of Global Trends' properties.
Section 4.9. Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by AST in connection with the
due execution and delivery by AST of this Agreement and the consummation by AST
of the transactions contemplated hereby.
Section 4.10. Permits. AST has in full force and effect all Permits
necessary for it to conduct its business as presently conducted as it relates to
Global Trends, and there has occurred no default under any Permit, except for
the absence of Permits and for defaults under Permits the absence or default of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the knowledge of AST there are no
proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
15
69
Section 4.11. No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to
the knowledge of AST, has any litigation been overtly threatened in writing or,
if probable of assertion, orally, against AST before any Governmental Authority
which questions the validity or legality of this Agreement or of the
transactions contemplated hereby, or which seeks to prevent the consummation of
the transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration
actions, suits, or proceedings instituted or pending or, to the knowledge of
AST, threatened in writing or, if probable of assertion, orally against AST
affecting any property, asset, interest, or right of Global Trends, that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect with respect to Global Trends. There are not in existence on the
date hereof any plea agreements, judgments, injunctions, consents, decrees,
exceptions or orders that were entered by, filed with or issued by Governmental
Authority relating to AST's conduct of the business of Global Trends affecting
in any significant respect the conduct of such business. AST is not, and has not
been, to the knowledge of AST, the target of any investigation by the SEC or any
state securities administrator with respect to its conduct of the business of
Global Trends.
Section 4.12. Taxes.
(a) Global Trends has elected to be treated as a regulated
investment company under Subchapter M of the Code and is a separate corporation
within the meaning of Section 851(g)(1) of the Code. Global Trends has qualified
as such for each taxable year since inception that has ended prior to the
Closing Date and will satisfy the requirements of Part I of Subchapter M of the
Code to maintain such qualification for its current taxable year.
(b) Global Trends has timely filed all Returns required to be
filed by it and all Taxes with respect thereto have been paid, except where the
failure so to file or so to pay, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Adequate provision has
been made in the financial statements of Global Trends for all Taxes in respect
of all periods ending on or before the date of such financial statements, except
where the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against Global Trends, and no deficiency has been
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of Global
Trends is currently being or has been audited with respect to income taxes or
other Taxes by any Federal, state, local, or foreign Tax authority.
(c) Global Trends' fiscal year has not been changed for tax
purposes since the date on which it commenced operations.
Section 4.13. Brokers. No broker, finder or similar intermediary has
acted for or on behalf of AST or Global Trends in connection with this Agreement
or the transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any
16
70
broker's, finder's or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with AST or any action
taken by it.
Section 4.14. Representations Concerning the Reorganization.
(a) Prior to or in the Reorganization, neither Global Trends
or any person related to Global Trends (for purposes of this paragraph as
defined in Section 1.368-1(e)(3) of the Treasury Regulations) will have acquired
directly or through any transaction, agreement or arrangement with any other
person, shares of Consumer Products Fund with consideration other than shares of
Global Trends. There is no plan or intention by Global Trends or any person
related to Global Trends to redeem or acquire any of the Global Trends shares
issued in the Reorganization either directly or through any transaction,
agreement, or arrangement with any other person, other than redemptions in the
ordinary course of Global Trends' business as an open-end investment company as
required by the 1940 Act.
(b) Global Trends has no plan or intention to sell or
otherwise dispose of any of the assets of Consumer Products Fund acquired in the
Reorganization, other than in the ordinary course of its business and to the
extent necessary to maintain its status as a "regulated investment company"
under the Code.
(c) Following the Reorganization Global Trends will continue
the "historic business" of Consumer Products Fund (within the meaning of Section
1.368-1(d) of the Income Tax Regulations under the Code) or use a significant
portion of Consumer Products Fund's historic business assets in a business.
Section 4.15. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Global Trends as
of the date on which they were issued did not contain, and as supplemented by
any supplement thereto dated prior to or on the Closing Date do not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
Section 4.16. Value of Shares. The fair market value of Global Trends
Class A shares received by Consumer Products Fund Shareholders will be
approximately equal to the fair market value of Consumer Products Fund Class A
shares constructively surrendered in exchange therefor, and the fair market
value of the Global Trends Class B shares and Global Trends Class C shares
received by Consumer Products Fund Shareholders will be approximately equal to
the fair market value of the Consumer Products Fund Class B shares and Consumer
Products Fund Class C shares constructively surrendered therefor.
Section 4.17. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between AIF and AST that was issued or acquired, or
will be settled, at a discount. No consideration other than Global Trends Shares
(and Global Trends' assumption of Consumer Products Fund's liabilities,
including for this purpose all liabilities to which the assets of
17
71
Consumer Products Fund are subject) will be issued in exchange for the assets of
Consumer Products Fund acquired by Global Trends in connection with the
Reorganization. The fair market value of the assets of Consumer Products Fund
transferred to Global Trends in the Reorganization will equal or exceed the sum
of the liabilities assumed by Global Trends, plus the amount of liabilities, if
any, to which such transferred assets are subject.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF GIP
GIP, on behalf of Consumer Products Portfolio, represents and
warrants to AST that:
Section 5.1. Organization; Authority. GIP is duly organized, validly
existing and in good standing under the Delaware Business Trust Act, with all
requisite trust power and authority to enter into this Agreement and perform its
obligations hereunder.
Section 5.2. Financial Statements. The books of account and related
records of Consumer Products Portfolio fairly reflect in reasonable detail its
assets, liabilities and transactions in accordance with generally accepted
accounting principles applied on a consistent basis. The audited financial
statements dated October 31, 2000, of Consumer Products Portfolio (the "Consumer
Products Portfolio Financial Statements") present fairly in all material
respects the financial position of Consumer Products Portfolio, as of the dates
indicated and the results of operations and changes in net assets for the
periods then ended in accordance with generally accepted accounting principles
applied on a consistent basis for the periods then ended.
Section 5.3. No Material Adverse Changes; Contingent Liabilities. Since
October 31, 2000, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of Consumer
Products Portfolio or the status of Consumer Products Portfolio as a regulated
investment company under the Code, other than changes resulting from any change
in general conditions in the financial or securities markets or the performance
of any investments made by Consumer Products Portfolio or occurring in the
ordinary course of business of Consumer Products Portfolio or GIP. There are no
contingent liabilities of Consumer Products Portfolio not disclosed in the
Consumer Products Portfolio Financial Statements which are required to be
disclosed in accordance with generally accepted accounting principles.
Section 5.4. Portfolio Shares; Business Operations.
(a) At the time of the Reorganization, Consumer Products
Portfolio shall not have outstanding any warrants, options, convertible
securities or any other type of right pursuant to which any Person could acquire
Consumer Products Portfolio shares, except for the right of investors to acquire
Consumer Products Portfolio shares at net asset value in the ordinary course of
its business.
(b) Consumer Products Portfolio is in compliance in all
material respects with the investment policies and restrictions applicable to
it.
18
72
Section 5.5. Binding Obligation. This Agreement has been duly
authorized, executed and delivered by GIP on behalf of Consumer Products
Portfolio and, assuming this Agreement has been duly executed and delivered by
the other parties hereto, constitutes the legal, valid and binding obligation of
GIP, enforceable against GIP in accordance with its terms from and with respect
to the revenues and assets of Consumer Products Portfolio, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors' rights generally, or by
general equity principles (whether applied in a court of law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
Section 5.6. No Breaches or Defaults. The execution and delivery of
this Agreement by GIP on behalf of Consumer Products Portfolio and performance
by GIP of its obligations hereunder has been duly authorized by all necessary
trust action on the part of GIP, and (i) do not, and on the Closing Date will
not, result in any violation of the Agreement and Declaration of Trust or
by-laws of GIP and (ii) do not, and on the Closing Date will not, result in a
breach of any of the terms or provisions of, or constitute (with or without the
giving of notice or the lapse of time or both) a default under, or give rise to
a right of termination, cancellation or acceleration of any obligation or to the
loss of a material benefit under, or result in the creation or imposition of any
Lien upon any property or assets of Consumer Products Portfolio (except for such
breaches or defaults or Liens that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect) under (A)
any indenture, mortgage or loan agreement or any other material agreement or
instrument to which GIP is a party or by which it may be bound and which relates
to the assets of Consumer Products Portfolio or to which any of Consumer
Products Portfolio's properties may be subject; (B) any Permit; or (C) any
existing applicable law, rule, regulation, judgment, order or decree of any
Governmental Authority having jurisdiction over GIP or any of Consumer Products
Portfolio's properties.
Section 5.7. Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date and those that must
be made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by GIP in
connection with the due execution and delivery by GIP of this Agreement and the
consummation by GIP of the transactions contemplated hereby.
Section 5.8. No Actions, Suits or Proceedings.
(a) There is no pending action, litigation or proceeding, nor,
to the knowledge of GIP, has any litigation been overtly threatened in writing
or, if probable of assertion, orally, against GIP before any Governmental
Authority which questions the validity or legality of this Agreement or of the
actions contemplated hereby or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration
actions, suits, or proceedings instituted or pending or, to the knowledge of
GIP, threatened in writing or, if probable of assertion, orally against GIP
affecting any property, asset, interest, or right of Consumer Products
Portfolio, that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to Consumer Products
Portfolio. There are not
19
73
in existence on the date hereof any plea agreements, judgments, injunctions,
consents, decrees, exceptions or orders that were entered by, filed with or
issued by Governmental Authority relating to GIP's conduct of the business of
Consumer Products Portfolio affecting in any significant respect the conduct of
such business. GIP is not, and has not been, to the knowledge of GIP, the target
of any investigation by the SEC or any state securities administrator with
respect to its conduct of the business of Consumer Products Portfolio.
Section 5.9. Properties and Assets. Consumer Products Portfolio has
good and marketable title to all properties and assets reflected in the Consumer
Products Portfolio Financial Statements, as owned by it, free and clear of all
Liens, except as described in the Consumer Products Portfolio Financial
Statements.
Section 5.10. Taxes.
(a) Consumer Products Portfolio is treated as a separate
entity for federal income tax purposes, is classified as a partnership under
Section 7701 of the Code and is not a publicly-traded partnership under
Section 7704 of the Code.
(b) Since Consumer Products Portfolio's inception, Consumer
Products Portfolio's assets have consisted solely of cash; corporate stock and
equity securities; notes, bonds, debentures, and other evidences of
indebtedness; interest rate, currency, or equity notional principal contracts;
foreign currencies; and interests in or derivative financial instruments
(including options, forward or futures contracts, short positions and similar
financial instruments) in the assets listed above.
(c) Consumer Products Portfolio has engaged only in investment
activities for its own account.
(d) Each shareholder of Consumer Products Portfolio has
contributed only cash to Consumer Products Portfolio.
(e) To the best of our knowledge, Consumer Products Portfolio
has never held interests in other entities that are classified as partnerships
under Section 7701 of the Code and has never made an election to adjust the
basis of its assets under Section 754 of the Code.
ARTICLE 6
COVENANTS
Section 6.1. Conduct of Business.
(a) From the date of this Agreement up to and including the
Closing Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 8), AIF shall conduct the business of Consumer Products Fund
only in the ordinary course and substantially in accordance with past practices,
and shall use its reasonable best efforts to preserve intact its business
organization and material assets and maintain the rights, franchises and
business and customer relations necessary to conduct the business of Consumer
Products Fund in the ordinary course in all material respects.
20
74
(b) From the date of this Agreement up to and including the
Closing Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 8), AST shall conduct the business of Global Trends only in
the ordinary course and substantially in accordance with past practices, and
shall use its reasonable best efforts to preserve intact its business
organization and material assets and maintain the rights, franchises and
business relations necessary to conduct the business operations of Global Trends
in the ordinary course in all material respects.
(c) From the date of this Agreement up to and including the
Closing Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 8), GIP shall conduct the business of Consumer Products
Portfolio only in the ordinary course and substantially in accordance with past
practices, and shall use its reasonable best efforts to preserve intact its
business organization and material assets and maintain the rights, franchises
and business and customer relations necessary to conduct the business of
Consumer Products Portfolio in the ordinary course in all material respects.
Section 6.2. Announcements. The parties shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement and the transactions contemplated by this Agreement,
and no party shall issue any such press release or make any public statement
without the prior written approval of the other parties to this Agreement, such
approval not to be unreasonably withheld, except as may be required by law.
Section 6.3. Portfolio Composition. The parties agree that in the event
that AST determines in its sole discretion that any securities owned by Consumer
Products Portfolio are securities that are inconsistent with the investment
objectives and investment strategies of Global Trends, AST will instruct GIP, at
least 30 days prior to the Closing Date, to dispose of such securities and GIP
will comply with such instruction or advise AST that it elects not to dispose of
such securities and will transfer such securities to AST at the Effective Time
pursuant to Section 2.1(b) hereof; provided, however, that GIP will not be
required to dispose of Consumer Products Portfolio assets to the extent that
such dispositions would, in the aggregate, cause 50% or more at the net asset
value of Consumer Products Portfolio on the Closing Date to consist of assets
(including cash) acquired at the request of AST or of assets other than its
historic business assets.
Section 6.4. Expenses. Consumer Products Portfolio, Consumer Products
Fund and Global Trends shall each bear the expenses it incurs in connection with
this Agreement and the Reorganization and other transactions contemplated
hereby.
Section 6.5. Further Assurances. Each of the parties hereto shall
execute such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganization, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganization.
21
75
Section 6.6. Notice of Events. AST shall give prompt notice to AIF, and
AIF shall give prompt notice to AST, of (a) the occurrence or nonoccurrence of
any event which to the knowledge of AST or to the knowledge of AIF, the
occurrence or non-occurrence of which would be likely to result in any of the
conditions specified in (i) in the case of AST, Sections 7.1 and 7.2 or (ii) in
the case of AIF, Sections 7.2 and 7.3, not being satisfied so as to permit the
consummation of the Reorganization and (b) any material failure on its part, or
on the part of the other party hereto of which it has knowledge, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.5 shall not limit or otherwise affect the remedies available
hereunder to any party.
Section 6.7. Access to Information.
(a) AIF will, during regular business hours and on reasonable
prior notice, allow AST and its authorized representatives reasonable access to
the books and records of AIF pertaining to the assets of Consumer Products Fund
and to officers of AIF knowledgeable thereof; provided, however, that any such
access shall not significantly interfere with the business or operations of AIF.
(b) AST will, during regular business hours and on reasonable
prior notice, allow AIF and its authorized representatives reasonable access to
the books and records of AST pertaining to the assets of Global Trends and to
officers of AST knowledgeable thereof; provided, however, that any such access
shall not significantly interfere with the business or operations of AST.
(c) GIP will, during regular business hours and on reasonable
prior notice, allow AST and AIF and their authorized representatives reasonable
access to the books and records of GIP pertaining to the assets of Consumer
Products Portfolio and to officers of GIP knowledgeable thereof; provided,
however, that any such access shall not significantly interfere with the
business or operations of GIP.
Section 6.8. Consents, Approvals and Filings. Each of GIP, AIF and AST
shall make all necessary filings, as soon as reasonably practicable, including,
without limitation, those required under the Securities Act, the Exchange Act,
the Investment Company Act and the Advisers Act, in order to facilitate prompt
consummation of the Reorganization and the other transactions contemplated by
this Agreement. In addition, each of GIP, AIF and AST shall use its reasonable
best efforts, and shall cooperate fully with each other (i) to comply as
promptly as reasonably practicable with all requirements of Governmental
Authorities applicable to the Reorganization and the other transactions
contemplated herein and (ii) to obtain as promptly as reasonably practicable all
necessary permits, orders or other consents of Governmental Authorities and
consents of all third parties necessary for the consummation of the
Reorganization and the other transactions contemplated herein. Each of GIP, AIF
and AST shall use reasonable efforts to provide such information and
communications to Governmental Authorities as such Governmental Authorities may
request.
Section 6.9. Submission of Agreement to Shareholders. AIF shall take
all action necessary in accordance with applicable law and its Agreement and
Declaration of Trust and by-
22
76
laws to convene the Consumer Products Fund Shareholders Meeting. AIF shall,
through its Board of Trustees, recommend to Consumer Products Fund Shareholders
approval of this Agreement and the transactions contemplated by this Agreement.
AIF shall use its reasonable best efforts to hold the Consumer Products Fund
Shareholders Meeting as soon as practicable after the date hereof.
ARTICLE 7
CONDITIONS PRECEDENT TO THE REORGANIZATION
Section 7.1. Conditions Precedent of AST. The obligation of AST to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by AST.
(a) The representations and warranties of AIF on behalf of
Consumer Products Fund set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date with the same effect as though all such representations and warranties had
been made as of the Closing Date.
(b) AIF shall have complied with and satisfied in all material
respects all agreements and conditions set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(c) The representations and warranties of GIP on behalf of
Consumer Products Portfolio set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date with the same effect as though all such representations and
warranties had been made as of the Closing Date.
(d) GIP shall have complied with and satisfied in all material
respects all agreements and conditions set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(e) AST shall have received at the Closing Date (i) a
certificate, dated as of the Closing Date, from an officer of AIF on behalf of
AIF, in such individual's capacity as an officer of AIF and not as an
individual, to the effect that the conditions specified in Section 7.1(a) and
(b) have been satisfied, (ii) a certificate, dated as of the Closing Date, from
an officer of GIP on behalf of GIP in such individual's capacity as an officer
of GIP and not as in individual, to the effect that the conditions specified in
Section 7.1(c) and (d) have been satisfied, and (iii) a certificate, dated as of
the Closing Date, from the Secretary or Assistant Secretary of AIF certifying as
to the accuracy and completeness of the attached Agreement and Declaration of
Trust and by-laws of AIF, and resolutions, consents and authorizations of or
regarding AIF with respect to the execution and delivery of this Agreement and
the transactions contemplated hereby.
(f) AST shall have received the signed opinion of Kirkpatrick
& Lockhart LLP, counsel to AIF, or other counsel reasonably acceptable to AST,
in form and substance reasonably acceptable to counsel for AST, as to the
matters set forth in Schedule 7.1(d).
23
77
Section 7.2. Mutual Conditions. The obligations of AIF and AST to
consummate the Reorganization are subject to the satisfaction, at or prior to
the Closing Date, of all of the following further conditions, any one or more
may be waived in writing by AIF and AST, but only if and to the extent that such
waiver is mutual.
(a) All of the issued and outstanding shares of Consumer
Products Portfolio shall have been redeemed by the transfer of all of the assets
of Consumer Products Portfolio to Consumer Products Fund and the cancellation of
all of the issued and outstanding shares of the Consumer Products Portfolio.
(b) All filings required to be made prior to the Closing Date
with, and all consents, approvals, permits and authorizations required to be
obtained on or prior to the Closing Date from, Governmental Authorities in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein by AIF, GIP and AST shall
have been made or obtained, as the case may be; provided, however, that such
consents, approvals, permits and authorizations may be subject to conditions
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(c) This Agreement, the Reorganization of Consumer Products
Fund and related corporate matters shall have been approved and adopted at the
Consumer Products Fund Shareholders Meeting by the shareholders of Consumer
Products Fund on the record date by the Required Shareholders Vote.
(d) The assets of Consumer Products Fund to be acquired by
Global Trends shall constitute at least 90% of the fair market value of the net
assets and at least 70% of the fair market value of the gross assets held by
Consumer Products Fund, immediately prior to the Reorganization. For purposes of
this Section 7.2(d), assets used by Consumer Products Fund to pay the expenses
it incurs in connection with this Agreement and the Reorganization and to effect
all shareholder redemptions and distributions (other than regular, normal
dividends and regular, normal redemptions pursuant to the Investment Company
Act, and not in excess of the requirements of Section 852 of the Code, occurring
in the ordinary course of Consumer Products Fund's business as an open-end
diversified management investment company) after the date of this Agreement
shall be included as assets of Consumer Products Fund held immediately prior to
the Reorganization.
(e) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Authority preventing the
consummation of the Reorganization on the Closing Date shall be in effect;
provided, however, that the party or parties invoking this condition shall use
reasonable efforts to have any such order or injunction vacated.
(f) The Registration Statement on Form N-14 filed by AST with
respect to Global Trends Shares to be issued to Consumer Products Fund
Shareholders in connection with the Reorganization shall have become effective
under the Securities Act and no stop order suspending the effectiveness thereof
shall have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the Securities Act.
24
78
(g) AIF and AST shall have received on or before the Closing
Date an opinion of Ballard Spahr Andrews & Ingersoll, LLP ("BSA&I") in form,
scope and substance satisfactory to AIF and AST, set forth on Schedule 7.2(g).
In rendering such opinion, BSA&I may request and rely upon representations
contained in certificates of officers of AIF, AST and others, and the officers
of AIF and AST shall use their best efforts to make available such truthful
certificate.
(h) The dividend or dividends described in the last sentence
of Section 3.14(a) shall have been declared.
Section 7.3. Conditions Precedent of AIF. The obligation of AIF to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by AIF.
(a) The representations and warranties of AST on behalf of
Global Trends set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
with the same effect as though all such representations and warranties had been
made as of the Closing Date.
(b) AST shall have complied with and satisfied in all material
respects all agreements and conditions set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(c) AIF shall have received on the Closing Date (i) a
certificate, dated as of the Closing Date, from an officer of AST on behalf of
AST, in such individual's capacity as an officer of AST and not as an
individual, to the effect that the conditions specified in Section 7.3(a) and
(b) have been satisfied and (ii) a certificate, dated as of the Closing Date,
from the Secretary or Assistant Secretary of AST certifying as to the accuracy
and completeness of the attached Agreement and Declaration of Trust, as amended,
and by-laws, as amended, of AST and resolutions, consents and authorizations of
or regarding AST with respect to the execution and delivery of this Agreement
and the transactions contemplated hereby.
(d) AIF shall have received the signed opinion of Ballard
Spahr Andrews & Ingersoll, LLP, counsel to AST, or other counsel reasonably
acceptable to AIF, in form and substance reasonably acceptable to counsel for
AIF, as to the matters set forth on Schedule 7.3(d).
ARTICLE 8
TERMINATION OF AGREEMENT
Section 8.1. Termination.
(a) This Agreement may be terminated on or prior to the
Closing Date as follows:
(i) by mutual written consent of AIF and AST; or
25
79
(ii) at the election of AIF or AST:
(A) if the Closing Date shall not be on or
before December 31, 2000, or such later date as the
parties hereto may agree upon, unless the failure to
consummate the Reorganization is the result of a
willful and material breach of this Agreement by the
party seeking to terminate this Agreement;
(B) if upon a vote at the Consumer Products
Fund Shareholders Meeting or any adjournment thereof,
the Required Shareholder vote shall not have been
obtained as contemplated by Section 6.8; or
(C) if any Governmental Authority shall have
issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or
otherwise prohibiting the Reorganization and such
order, decree, ruling or other action shall have
become final and nonappealable.
(b) The termination of this Agreement shall be effectuated by
the delivery by the terminating party to the other party of a written notice of
such termination.
Section 8.2. Survival After Termination. If this Agreement is
terminated in accordance with Section 8.1 hereof and the transactions
contemplated hereby are not consummated, this Agreement shall become void and of
no further force and effect, except for the provisions of Section 6.4.
ARTICLE 9
MISCELLANEOUS
Section 9.1. Survival of Representations and Warranties. The
representations, warranties and covenants in this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereunder for a period of one (1)
year following the Closing Date.
Section 9.2. Law Governing. This Agreement shall be construed and
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
Section 9.3. Binding Effect, Persons Benefiting, No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such Persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Without the prior written consent of the parties
hereto, this Agreement may not be assigned by any of the parties hereto.
26
80
Section 9.4. Obligations of the Parties.
(a) The parties hereby acknowledge and agree that Global
Trends is a separate investment portfolio of AST, that AST is executing this
Agreement on behalf of Global Trends, and that any amounts payable by AST under
or in connection with this Agreement shall be payable solely from the revenues
and assets of Global Trends. The parties further acknowledge and agree that this
Agreement has been executed by a duly authorized officer of AST in his or her
capacity as an officer of AST intending to bind AST as provided herein, and that
no officer, trustee or shareholder of AST shall be personally liable for the
liabilities or obligations of AST incurred hereunder.
(b) The parties hereby acknowledge and agree that Consumer
Products Fund is a separate investment portfolio of AIF, that AIF is executing
this Agreement on behalf of Consumer Products Fund and that any amounts payable
by AIF under or in connection with this Agreement in respect of Consumer
Products Fund shall be payable solely from the revenues and assets of Consumer
Products Fund. The parties further acknowledge and agree that this Agreement has
been executed by a duly authorized officer of AIF in his or her capacity as an
officer of AIF intending to bind AIF as provided herein, and that no officer,
trustee or shareholder of AIF shall be personally liable for the liabilities of
AIF incurred hereunder.
(c) The parties hereby acknowledge and agree that Consumer
Products Portfolio is a separate investment portfolios of GIP, that GIP is
executing this Agreement on behalf of Consumer Products Portfolio and that any
amounts payable by GIP under or in connection with this Agreement in respect of
Consumer Products Portfolio shall be payable solely from the revenues and assets
of Consumer Products Portfolio. The parties further acknowledge and agree that
this Agreement has been executed by a duly authorized officer of GIP in his or
her capacity as an officer of GIP intending to bind GIP as provided herein, and
that no officer, trustee or shareholder of GIP shall be personally liable for
the liabilities of GIP incurred hereunder.
Section 9.5. Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by each party to this
Agreement.
Section 9.6. Enforcement. The parties agree irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
Section 9.7. Interpretation. When a reference is made in this Agreement
to a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". Each
27
81
representation and warranty contained in Article 3, 4 or 5 that relates to a
general category of a subject matter shall be deemed superseded by a specific
representation and warranty relating to a subcategory thereof to the extent of
such specific representation or warranty.
Section 9.8. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
Section 9.9. Entire Agreement; Schedules. This Agreement, including the
Schedules, certificates and lists referred to herein, and any documents executed
by the parties simultaneously herewith or pursuant thereto, constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, written or oral, between the parties with respect to such
subject matter.
Section 9.10. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to AST:
AIM Series Trust
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attn: William H. Rheiner, Esq.
Fax: (215) 864-8999
(b) If to AIF or GIP:
AIM Investment Portfolios
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
28
82
with a copy to:
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
Washington, DC 20036-1800
Attn: Arthur J. Brown, Esq.
Fax: (202) 778-9100
Section 9.11. Representation by AIM Advisors. In its capacity as
investment adviser to AST, AIM Advisors represents to AIF that to the best of
its knowledge the representations and warranties of AST and Global Trends
contained in this Agreement are true and correct as of the date of this
Agreement. In its capacity as investment adviser to AIF, AIM Advisors represents
to AST that to the best of its knowledge the representations and warranties of
AIF and Consumer Products Fund are true and correct as of the date of this
Agreement. For purposes of this Section 9.11, the best knowledge standard shall
be deemed to mean that the officers of AIM Advisors who have substantive
responsibility for the provision of investment advisory services to AST and
Global Trends and to AIF and Consumer Products Fund do not have actual knowledge
to the contrary.
29
83
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
AIM INVESTMENT FUNDS, acting
on behalf of AIM Global Consumer Products Fund
By:
-------------------------------------------
AIM SERIES TRUST, acting
on behalf of AIM Global Trends
By:
-------------------------------------------
GLOBAL INVESTMENT PORTFOLIO, acting on
behalf of Global Consumer Products Portfolio
By:
-------------------------------------------
A I M ADVISORS, INC.
By:
-------------------------------------------
30
84
Schedule 7.1(d)
Opinion of Counsel to AIF
1. AIF is validly existing as a business trust under the Delaware Business
Trust Act.
2. AIF is an open-end, management investment company registered under the
Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AIF have
been duly authorized and approved by all requisite trust action on the
part of AIF. The Agreement has been duly executed and delivered by AIF
and constitutes the valid and binding obligation of Consumer Products
Fund.
4. The Consumer Products Fund Shares outstanding on the date hereof have
been duly authorized and validly issued, are fully paid and are
non-assessable.
5. AIF is not required to submit any notice, report or other filing with
or obtain any authorization, consent or approval from any governmental
authority or self regulatory organization prior to the consummation of
the transactions contemplated by the Agreement.
We confirm to you that to our knowledge, no litigation or governmental
proceeding is pending or threatened in writing against Consumer Products Fund
(i) with respect to the Agreement or (ii) which involves in excess of $500,000
in damages.
31
85
Schedule 7.2(g)
Tax Opinions
(i) In accordance with Section 731 of the Code, no gain or
loss will be recognized by Consumer Products Portfolio or Consumer Products Fund
upon the transfer of the assets of Consumer Products Portfolio to Consumer
Products Fund in complete liquidation of Consumer Products Portfolio.
(ii) The basis of the assets received by Consumer Products
Fund in complete liquidation of Consumer Products Portfolio will be determined
in accordance with Section 732(b) of the Code.
(iii) In accordance with Section 735(b) of the Code, the
holding period of the assets received by Consumer Products Fund in complete
liquidation of Consumer Products Portfolio will include the holding period for
such assets in the hands of Consumer Products Portfolio.
(iv) The transfer of the assets of Consumer Products Fund to
Global Trends in exchange for the Global Trends Shares distributed directly to
Consumer Products Fund Shareholders, as provided in the Agreement, will
constitute a "reorganization" within the meaning of Section 368(a) of the Code
and that Consumer Products Fund and AST will each be a "party to a
reorganization" within the meaning of 368(b) of the Code.
(v) In accordance with Section 361(a) and Section 361(c)(1) of
the Code, no gain or loss will be recognized by Consumer Products Fund on the
transfer of its assets to Global Trends solely in exchange for Global Trends
Class A shares, Global Trends Class B shares and Global Trends Class C shares or
on the distribution of such Global Trends Class A shares, Global Trends Class B
shares and Global Trends Class C shares to Consumer Products Fund Shareholders.
(vi) In accordance with Section 1032 of the Code, no gain or
loss will be recognized by Global Trends upon the receipt of assets of Consumer
Products Fund in exchange for Global Trends Class A shares, Global Trends Class
B shares and Global Trends Class C shares issued directly to Consumer Products
Fund Shareholders.
(vii) In accordance with Section 354(a)(1) of the Code, no
gain or loss will be recognized by Consumer Products Fund Shareholders on the
receipt of Global Trends Class A shares, Global Trends Class B shares and Global
Trends Class C shares in exchange for their Consumer Products Fund Shares.
(viii) In accordance with Section 362(b) of the Code, the
basis to Global Trends of the assets of Consumer Products Fund transferred to it
will be the same as the basis of such assets in the hands of Consumer Products
Fund immediately prior to the Reorganization.
(ix) In accordance with Section 358(a) of the Code, the basis
of a Consumer Products Fund Shareholder for Global Trends Class A shares Global
Trends Class B shares and
32
86
Global Trends Class C shares received by such Consumer Products Fund Shareholder
will be the same as his basis for Consumer Products Fund Shares exchanged
therefor.
(x) In accordance with Section 1223(1) of the Code, the
holding period of a Consumer Products Fund Shareholder for Global Trends Class A
shares, Global Trends Class B shares and Global Trends Class C shares will be
determined by including said Consumer Products Fund Shareholder's holding period
for Consumer Products Fund Shares exchanged therefor, provided that the
shareholder held such Consumer Products Fund shares as a capital asset.
(xi) In accordance with Section 1223(2) of the Code, the
holding period with respect to the assets of Consumer Products Fund transferred
to Global Trends in the Reorganization will include the holding period for such
assets in the hands of Consumer Products Fund.
33
87
Schedule 7.3(d)
Opinion of Counsel to AST
1. AST is validly existing as a business trust under the Delaware Business
Trust Act.
2. AST is an open-end, management investment company registered under the
Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AST have
been duly authorized and approved by all requisite trust action on the
part of AST. The Agreement has been duly executed and delivered by AST
and constitutes the valid and binding obligation of Global Trends.
4. Global Trends Class A Shares, Global Trends Class B Shares and Global
Utilities Fund Class C Shares outstanding on the date hereof have been
duly authorized and validly issued, are fully paid and are
non-assessable.
5. AST is not required to submit any notice, report or other filing with
or obtain any authorization, consent or approval from any governmental
authority or self regulatory organization prior to the consummation of
the transactions contemplated by the Agreement.
We confirm to you that to our knowledge, no litigation or governmental
proceeding is pending or threatened in writing against Global Trends (i) with
respect to the Agreement or (ii) which involves in excess of $500,000 in
damages.
34
88
APPENDIX II
AIM GLOBAL TRENDS FUND
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
AIM Global Trends Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2001
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
89
----------------------
AIM GLOBAL TRENDS FUND
----------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 3
Performance Table 3
FEE TABLE AND EXPENSE EXAMPLE 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 4
Expense Example 4
FUND MANAGEMENT 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 5
Advisor Compensation 5
Portfolio Managers 5
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect are servicemarks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
90
----------------------
AIM GLOBAL TRENDS FUND
----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in equity securities of issuers in the following global
industry sectors:
- consumer products and services
- financial services
- health care
- infrastructure
- natural resources and
- telecommunications and technology.
The fund considers a company to be in one of these industry sectors if it (1)
derives at least 50% of either its revenues or earnings from activities related
to that industry; or (2) devotes at least 50% of its assets to such activities,
based on the company's most recent fiscal year.
The fund may also invest up to 35% of its assets in equity securities of
issuers in other global industry sectors and in debt securities of U.S. and
foreign issuers. The fund will normally invest in the securities of companies
located in at least three different countries, including the United States, and
may invest a significant portion of its assets in the securities of U.S.
issuers. However, the fund will invest no more than 50% of its total assets in
the securities of issuers in any one country, other than the U.S. The fund may
invest substantially in securities denominated in one or more currencies.
The fund may invest in companies located in developing countries, i.e., those
that are in the initial stages of their industrial cycle. The fund may also
invest up to 20% of its total assets in lower-quality debt securities, i.e.,
"junk bonds."
Any percentage limitations with respect to assets of the fund are applied at
the time of purchase.
The portfolio managers invest fund assets by initially determining the
industry sectors that they believe provide the most advantageous investment
opportunities for meeting the fund's investment objective. If the portfolio
managers determine that certain sectors are facing slow or negative growth, they
will not invest fund assets in those sectors at that time. The portfolio
managers then analyze specific companies within these sectors for possible
investment. In analyzing specific companies for possible investment, the
portfolio managers ordinarily look for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; development of new technologies; efficient
service; pricing flexibility; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets. The portfolio managers consider whether to sell a particular
security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash (U.S. dollars, foreign currency, or
multinational currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. As a result, the fund may
not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objective. If the fund does trade in this way, it may
incur increased transaction costs, which can lower the actual return on your
investment. Active trading may also increase short-term gains and losses, which
may affect the taxes you have to pay.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
Because the fund focuses its investments in particular industries, an
investment in the fund may be more volatile than that of other investment
companies that do not concentrate their investments in such a manner. The value
of the shares of the fund will be especially susceptible to factors affecting
the industries in which it focuses. In particular, each of the industries is
subject to governmental regulation that may have a material effect on the
products and services offered by companies in that industry.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
1
91
----------------------
AIM GLOBAL TRENDS FUND
----------------------
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The fund may participate in the initial public offering (IPO) market. Because
of the fund's small asset base, any investment the fund may make in IPOs may
significantly increase the fund's total returns. As the fund's assets grow, the
impact of IPO investments will decline, which may reduce the fund's total
returns.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
92
----------------------
AIM GLOBAL TRENDS FUND
----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. Total return information in the bar chart
and table below may be affected by special market factors, including the fund's
investments in initial public offerings (IPOs), which had a magnified impact on
the fund due to its small asset base. There is no guarantee that, as the fund's
assets grow, it will continue to experience substantially similar performance.
Prior to August 27, 1999, the fund was not actively managed and invested its
assets in other AIM funds (that were actively managed) based on the industry
weighting of the companies comprising the Morgan Stanley Capital International
("MSCI") All Country World Index. Those AIM funds invested in the same global
industry sectors the fund does: consumer products and services, financial
services, health care, infrastructure, natural resources, and telecommunications
and technology. Prior to that date, the fund, as a shareholder in other AIM
funds, was indirectly bearing its pro rata share of the fees and expenses
incurred by those funds.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
1998 ....................................... 9.37%
1999 ....................................... 51.93%
2000 ....................................... -7.90%
During the period shown in the bar chart, the highest quarterly return was
34.24% (quarter ended December 31, 1999) and the lowest quarterly return was
- -17.89% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 2000) 1 YEAR INCEPTION DATE
- -------------------------------------------------------------------------------------------
Class A (12.29)% 11.20% 09/15/97
Class B (12.50) 11.61 09/15/97
Class C (9.21) 14.77 01/02/98
MSCI All Country World Index(1) (13.92) 9.49(2) 08/31/97(2)
MSCI World Index(3) (13.18) 10.31(2) 08/31/97(2)
- -------------------------------------------------------------------------------------------
(1) The MSCI All Country World Index measures the performance of securities
listed on the major world stock exchanges of 47 markets, including both
developed and emerging markets.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
(3)The MSCI World Index measures the performance of 1,578 securities listed on
major world stock exchanges. The fund has elected to use the MSCI World Index
because it more closely resembles the securities in which the fund invests.
3
93
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund. There is no guarantee that actual expenses will be the same
as those shown below.
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
Maximum Sales Charge
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
Management Fees 0.98% 0.98% 0.98%
Distribution and/or
Service (12b-1) Fees 0.50 1.00 1.00
Other Expenses 0.66 0.66 0.66
Total Annual Fund
Operating Expenses 2.14 2.64 2.64
Fee Waiver(2) 0.14 0.14 0.14
Net Expenses 2.00 2.50 2.50
- -------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to limit the fund's total
operating expenses (excluding interest, taxes, dividend expense on short
sales, extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to 2.00%,
2.50% and 2.50%, respectively.
You may also be charged a transaction or other fee by the financial institution
managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more
than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
Class A $682 $1,113 $1,570 $2,830
Class B 767 1,120 1,600 2,853
Class C 367 820 1,400 2,973
- ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
Class A $682 $1,113 $1,570 $2,830
Class B 267 820 1,400 2,853
Class C 267 820 1,400 2,973
- ----------------------------------------------
4
94
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 135
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2000, the advisor received
compensation of 0.98% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Monika H. Degan, Senior Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1995.
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since 2000 and has been associated with the advisor and/or its
affiliates since 1989.
- - Benjamin A. Hock, Jr., Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1999. From 1994 to 1999, he was, among other offices, head of equity
research at John Hancock Advisers, Inc.
- - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund
since 2000 and has been associated with the advisor and/or its affiliates
since 1996. From 1994 to 1996, he was an associate with JMB Realty.
- - Derek S. Izuel, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1997. From 1995 to 1997 he was a full time student.
- - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1994.
- - Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for
the fund since 2000 and has been associated with the advisor and/or its
affiliates since 1986.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since 2000 and has been associated with the advisor and/or its affiliates
since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Trends Fund are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
5
95
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the fund's financial
statements, is included in the fund's annual report, which is available upon
request.
Total return information in this table has been affected by special market
factors, including the fund's investments in initial public offerings (IPOs),
which may have a magnified impact on the fund due to its small asset base. There
is no guarantee that, as the fund's assets grow, it will continue to experience
substantially similar performance.
Prior to August 27, 1999, the fund was not actively managed and invested in
other AIM funds.
CLASS A(a)
---------------------------------------------------
SEPTEMBER 15,
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) THROUGH
----------------------------- DECEMBER 31,
2000(b) 1999(b) 1998(b) 1997(b)
------- ------- ------- ------------------
Net asset value, beginning of period $ 15.78 $11.46 $10.63 $ 11.43
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.06) (0.02) (0.01)
- -----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.11) 5.86 1.01 (0.31)
=================================================================================================================
Total from investment operations (1.30) 5.80 0.99 (0.32)
=================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.02) --
- -----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.15) (1.48) (0.14) --
- -----------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.48)
=================================================================================================================
Total distributions (1.15) (1.48) (0.16) (0.48)
=================================================================================================================
Net asset value, end of period $ 13.33 $15.78 $11.46 $ 10.63
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(c) (7.90)% 51.93% 9.37% (2.68)%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,751 $20,595 $17,822 $15,145
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(d) 1.03% 0.50% 0.50%(e)
- -----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.14%(d) 1.16% 0.50% 0.50%(e)
=================================================================================================================
Ratio of net investment income (loss) to average net assets (1.27)%(d) (0.50)% (0.21)% (0.35)%(e)
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 260% 147% 28% 1%
_________________________________________________________________________________________________________________
=================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) Ratios are based on average daily net assets of $21,286,571.
(e) Annualized.
6
96
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
CLASS B(a)
---------------------------------------------------
SEPTEMBER 15,
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) THROUGH
----------------------------- DECEMBER 31,
2000(b) 1999(b) 1998(b) 1997(b)
------- ------- ------- ------------------
Net asset value, beginning of period $ 15.62 $11.41 $10.62 $ 11.43
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.26) (0.13) (0.07) (0.02)
- -----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.09) 5.82 1.00 (0.32)
=================================================================================================================
Total from investment operations (1.35) 5.69 0.93 (0.34)
=================================================================================================================
Less distributions:
Distributions from net realized gains (1.15) (1.48) (0.14) --
- -----------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.47)
=================================================================================================================
Total distributions (1.15) (1.48) (0.14) (0.47)
=================================================================================================================
Net asset value, end of period $ 13.12 $15.62 $11.41 $ 10.62
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(c) (8.30)% 51.18% 8.83% (2.83)%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $22,279 $29,118 $25,555 $19,184
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(d) 1.53% 1.00% 1.00%(e)
- -----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.64%(d) 1.66% 1.00% 1.00%(e)
=================================================================================================================
Ratio of net investment income (loss) to average net assets (1.77)%(d) (1.00)% (0.71)% (0.85)%(e)
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 260% 147% 28% 1%
_________________________________________________________________________________________________________________
=================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average daily net assets of $26,336,340.
(e) Annualized.
CLASS C(a)
----------------------------------------
JANUARY 2,
YEAR ENDED (DATE SALES
DECEMBER 31, COMMENCED) THROUGH
------------------ DECEMBER 31,
2000(b) 1999(b) 1998(b)
------- ------- ------------------
Net asset value, beginning of period $15.62 $11.40 $10.62
- ------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.26) (0.13) (0.08)
- ------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.10) 5.83 1.00
======================================================================================================
Total from investment operations (1.36) 5.70 0.92
======================================================================================================
Less distributions from net realized gains (1.15) (1.48) (0.14)
======================================================================================================
Net asset value, end of period $13.11 $15.62 $11.40
______________________________________________________________________________________________________
======================================================================================================
Total return(c) (8.37)% 51.33% 8.94%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,789 $ 500 $ 249
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(d) 1.53% 1.00%(e)
- ------------------------------------------------------------------------------------------------------
Without fee waivers 2.64%(d) 1.66% 1.00%(e)
======================================================================================================
Ratio of net investment income (loss) to average net assets (1.77)%(d) (1.00)% (0.71)%(e)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 260% 147% 28%
______________________________________________________________________________________________________
======================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average daily net assets of $1,190,966.
(e) Annualized.
7
97
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund at the end of the month which is seven years after the date
on which shares were purchased. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until the end of the month which is
eight years after the date on which you purchased your original
shares.
----------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
A-1 MCF--04/01
98
-------------
THE AIM FUNDS
-------------
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned
(Class A, B or C) for the purpose of qualifying for the lower initial sales
charge rates that apply to larger purchases. The applicable initial sales charge
for the new purchase is based on the total of your current purchase and the
current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--04/01 A-2
99
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap
Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 25 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
A-3 MCF--04/01
100
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $25. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker
or financial consultant may charge service fees for handling redemption
transactions. Your shares also may be subject to a contingent deferred sales
charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--04/01 A-4
101
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--04/01
102
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE
You may, within 120 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
shares of any AIM Fund at net asset value in an identically registered account.
If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free
Intermediate Fund, you will incur an initial sales charge reflecting the
difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--04/01 A-6
103
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--04/01
104
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not
be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
generally taxable to you at different rates depending on the length of time
the fund holds its assets. Different tax rates may apply to ordinary income
and long-term capital gain distributions, regardless of how long you have held
your shares. Every year, you will be sent information showing the amount of
dividends and distributions you received from each AIM Fund during the prior
year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--04/01 A-8
105
----------------------
AIM GLOBAL TRENDS FUND
----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a
request by e-mail or
download prospectuses,
annual or semiannual
reports via our website:
http://www.aimfunds.com
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ----------------------------------
AIM Global Trends Fund
SEC 1940 Act file number: 811-7787
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GTR-PRO-1 INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
106
GLOBAL TRENDS DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of Global Trends for the
year-ended December 31, 2000, that was prepared by its officers and AIM Advisors
and included in its Annual Report dated December 31, 2000.
APPENDIX III
ANNUAL REPORT / MANAGERS' OVERVIEW
WORLD MARKETS STRUGGLE THROUGH VOLATILE 2000
HOW DID AIM GLOBAL TRENDS FUND PERFORM DURING THE FISCAL YEAR?
Markets around the world endured a difficult year in 2000, as did those in the
United States, and the fund felt the effects of this struggle. For the 12 months
ended December 31, 2000, the fund posted total returns of -7.90% for Class A
shares, -8.30% for Class B shares and -8.37% for Class C shares. (These returns
are at net asset value, which does not include sales charges.) Even so, the fund
outperformed its benchmark, the MSCI World Index, which had a return of -13.18%
for the same period.
WHAT WERE SOME KEY TRENDS IN THE U.S. STOCK MARKET?
A strong U.S. market rally during the initial months of 2000 gave way to a
volatile, downward-trending market for the rest of the year. The market's upward
climb was regularly halted and sent backwards as concerns about tech-stock
valuations, rising interest rates and corporate earnings took hold. In late
summer and early fall, rising oil prices, unrest in the Middle East and
corporate earnings concerns combined to produce another steep market decline. A
number of major corporations reported earnings disappointments in the fall, as
rising oil prices and a weak euro cut into profit margins.
Uncertainty about the outcome of the U.S. presidential election also roiled
markets, and the December resolution of the election controversy failed to
produce a sustained stock-market rally. By then, the U.S. Federal Reserve Board
(the Fed) indicated that it might consider cutting interest rates in the wake of
slower growth (gross domestic product growth declined from an annual rate of
5.6% in the second quarter of 2000 to 2.2% in the third).
However, the Fed's bias shift was insufficient to counteract investors'
concerns, and most key market indexes recorded losses for the year. As in many
international markets, in the United States value stocks outperformed growth
stocks and smaller companies outperformed large companies for the year.
HOW DID WORLD MARKETS FARE DURING THE FISCAL YEAR?
Europe entered 2000 filled with TMT (technology, media and telecommunications)
euphoria. Like many of their world brethren, European equity markets were
enjoying the rapid appreciation of Internet and wireless stocks. The party ended
abruptly in March, however, as inflation fears, rising interest rates and
incredibly high stock valuations sparked a worldwide tech sell-off.
European markets were not immune to the volatility sparked by the Nasdaq's
spring plunge. The global meltdown of TMT stocks caused most world markets to
give back all their high-tech gains. By year-end, few European indexes were in
the black.
A series of inflationary concerns also contributed to European stock-market
volatility. The euro fell to a record low in October and put upward pressure on
inflation by increasing the price of imported goods and commodities, such as
oil. Any European company that has to pay for dollar-denominated materials such
as oil, minerals and metals is negatively affected by a lower euro.
The Japanese stock market mirrored its U.S. counterpart in terms of
volatility following the spring technology sell-off. The world's second-largest
economy, Japan slipped back into recession in early 2000. However, there are
signs that corporate Japan is beginning to take a more aggressive stance toward
cost-cutting to bolster profits. Outside Japan, investment in Asia has weakened
because of political turmoil in many countries and interest-rate concerns.
WHAT SECTORS/COUNTRIES CONTRIBUTED TO THE FUND'S PERFORMANCE?
Over the fiscal year, the fund's performance was largely driven by health care,
energy, financials and technology. During the year we built significant
weightings in health care and financials as these sectors' fundamentals and
earnings improved, as well as adding to consumer-related products and services
that people need regardless of market conditions. We greatly decreased our tech
weighting as we strove to find solid growth prospects in that sector.
The fund's shifts in regional or country allocation have been more a
function of
-------------------------------------
EUROPEAN MARKETS WERE NOT IMMUNE
TO THE VOLATILITY SPARKED BY THE
NASDAQ'S SPRING PLUNGE.
-------------------------------------
-------------------------------------
READ THIS REPORT ONLINE!
A NEW SERVICE--ELECTRONIC DELIVERY
OF FUND REPORTS AND PROSPECTUSES--
IS AVAILABLE. YOU CAN READ THE SAME
AIM REPORT YOU ARE READING NOW-
ONLINE. ONCE YOU SIGN UP FOR THE
SERVICE, WE WILL SEND YOU A LINK TO
THE REPORT VIA E-MAIL. IF YOU CHOOSE
TO RECEIVE YOUR REPORTS ONLINE,
YOU WILL NOT RECEIVE A PAPER COPY BY
MAIL. YOU MAY CANCEL THE SERVICE AT
ANY TIME BY VISITING OUR WEB SITE.
PLEASE VISIT OUR WEB SITE AT
www.aimfunds.com AND GO TO "YOUR
AIM ACCOUNT." LOG INTO YOUR
ACCOUNT AND THEN CLICK ON THE "VIEW
OTHER ACCOUNT OPTIONS" DROPDOWN
MENU AND SELECT "eDELIVERY."
-------------------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL TRENDS FUND
2
107
ANNUAL REPORT / MANAGERS' OVERVIEW
stock selection than regional strategy. We did increase our weighting in Europe,
however, to take advantage of a soft market and better valuations there,
especially in financial and energy positions. Our weighting in Japan has
decreased significantly since a year ago as the country continues to struggle to
bring itself out of recession and solid investment opportunities remain scarce.
WHAT WERE SOME OF THE FUND'S TOP HOLDINGS?
o DYNEGY: This company markets and trades electricity, natural gas, coal and
other energy products in the United States, the United Kingdom and
throughout continental Europe. Dynegy invests in power projects and has
formed alliances with utility companies to sell energy in deregulated
markets.
o NOVARTIS: The Swiss company's health-care operations account for 55% of its
sales and include prescription drugs, contact lenses and ophthalmic
medications. Novartis is one of the world's top five pharmaceutical firms.
o SANOFI-SYNTHELABO: Created by the merger of two French companies,
Sanofi-Synthelabo specializes in cardiovascular, central nervous system,
oncology and internal medicine formulations. The drug maker has a bevy of
new drugs in its pipeline and its sights set on the United States' drug
market.
WHAT WERE MARKETS LIKE AS THE FISCAL YEAR CLOSED?
Both domestically and overseas, the situation was mixed. There was widespread
concern about a slowing U.S. economy and corporate earnings. Many believe
that disappointing earnings may continue for the next six to eight months, as
capital expenditures and consumer spending may decline. A lagging U.S.
economy could spell potential trouble for many overseas markets.
Even in this uncertain environment, there are reasons for optimism.
Inflation remains low, and many analysts believe that the Fed could cut rates
over the next several months. Historically, declining interest rates bode well
for stocks. Additionally, the new U.S. presidential administration is pushing
for a tax cut, which may stimulate the economy and boost markets. And the
economy is still growing, albeit at a slower, more reasonable pace.
While European stock markets could still be volatile in the near term, the
region's outlook is positive. Spending on technology and communications
continues to increase, and many expect Europe's Internet penetration to surpass
that of the United States in the near future. Government policies are also
changing, with tax, pension and welfare reforms becoming more prevalent.
Cross-country consolidation is becoming more common as mergers and acquisitions
continue. And if the euro can sustain its upward trend and the U.S. economy
slows, Europe might grow faster than the United States in the year ahead.
PORTFOLIO COMPOSITION
[ART WORK]
As of 12/31/00, based on total net assets
=================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- -----------------------------------------------------------------------------------------------------------------
1. UnitedHealth Group Inc. 3.51% 1. Health Care (Drugs-Generic & Other) 8.37%
2. Dynegy Inc.-Class A 3.05 2. Oil & Gas (Drilling & Equipment) 7.64
3. Novartis A.G. (Switzerland) 2.74 3. Banks (Major Regional) 4.15
4. EMC Corp. 2.02 4. Insurance Brokers 4.06
5. Pfizer Inc. 1.82 5. Computers (Software & Services) 3.91
6. Anderson Exploration Ltd. (Canada) 1.61 6. Natural Gas 3.90
7. Aventis SA (France) 1.61 7. Health Care (Managed Care) 3.51
8. Calpine Corp. 1.53 8. Health Care (Diversified) 3.39
9. Sanofi-Synthelabo SA (France) 1.49 9. Computers (Peripherals) 3.17
10. Furukawa Electric Co., Ltd. (The) (Japan) 1.44 10. Manufacturing (Diversified) 3.11
TOP 10 COUNTRIES
1. UNITED STATES 51.32%
2. FRANCE 8.78%
3. NETHERLANDS 6.20%
4. GERMANY 6.14%
5. SWITZERLAND 4.97%
6. UNITED KINGDOM 4.69%
7. ITALY 3.65%
8. CANADA 2.95%
9. DENMARK 2.48%
10. NORWAY 1.56%
The fund's holdings are subject to change, and there is no assurance that the fund
will continue to hold any particular security.
=================================================================================================================
------------------------
EVEN IN THIS UNCERTAIN
ENVIRONMENT, THERE ARE
REASONS FOR OPTIMISM.
------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL TRENDS FUND
3
108
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL TRENDS FUND VS. BENCHMARK INDEXES (LINE CHART)
9/15/97-12/31/00
in thousands
=====================================================================================
AIM AIM
GLOBAL TRENDS FUND GLOBAL TRENDS FUND MSCI WORLD MSCI AC
CLASS A SHARES CLASS B SHARES INDEX WORLD INDEX
- -------------------------------------------------------------------------------------
9/15/97 $9,525 $10,000 $10,000 $10,000
9/30/97 9,725 10,201 10,000 10,000
10/31/97 9,317 9,773 9,472 9,386
11/30/97 9,175 9,624 9,638 9,526
12/31/97 9,269 9,716 9,753 9,647
1/31/98 9,034 9,470 10,024 9,858
2/28/98 9,775 10,239 10,700 10,539
3/31/98 10,298 10,778 11,151 10,984
4/30/98 10,403 10,888 11,258 11,081
5/31/98 10,150 10,622 11,115 10,864
6/30/98 10,333 10,797 11,377 11,054
7/31/98 10,106 10,568 11,357 11,058
8/31/98 8,380 8,756 9,840 9,507
9/30/98 8,485 8,866 10,013 9,697
10/31/98 8,860 9,241 10,916 10,583
11/30/98 9,418 9,827 11,563 11,224
12/31/98 10,139 10,575 12,126 11,742
1/31/99 10,483 10,927 12,391 11,980
2/28/99 10,129 10,556 12,060 11,687
3/31/99 10,660 11,103 12,560 12,218
4/30/99 11,279 11,743 13,054 12,754
5/31/99 10,854 11,298 12,575 12,312
6/30/99 11,544 12,012 13,160 12,940
7/31/99 11,429 11,891 13,119 12,877
8/31/99 11,349 11,808 13,094 12,877
9/30/99 11,473 11,929 12,965 12,730
10/31/99 12,224 12,708 13,637 13,377
11/30/99 13,339 13,856 14,019 13,791
12/31/99 15,401 15,988 15,152 14,947
1/31/00 14,620 15,179 14,282 14,168
2/29/00 15,645 16,223 14,319 14,218
3/31/00 15,675 16,263 15,307 15,145
4/30/00 14,758 15,291 14,658 14,456
5/31/00 14,123 14,636 14,286 14,089
6/30/00 14,690 15,210 14,764 14,563
7/31/00 14,427 14,933 14,346 14,137
8/31/00 15,627 16,171 14,811 14,572
9/30/00 14,983 15,495 14,022 13,766
10/31/00 13,802 14,267 13,785 13,491
11/30/00 13,167 13,602 12,947 12,656
12/31/00 $14,187 $14,659 $13,154 $12,866
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
This chart compares your fund's Class A and Class B shares to benchmark indexes.
It is intended to give you an idea of how your fund performed compared to these
benchmarks over the period 9/15/97-12/31/00. (Please note that the index results
are for the period 9/30/97-12/31/00.)
It is important to understand the differences between your fund and an
index. Your fund's total return includes sales charges, expenses and management
fees. An index measures the performance of a hypothetical portfolio. A market
index such as the MSCI World Index is not managed, incurring no sales charges,
expenses or fees. If you could buy all the securities that make up a market
index, you would incur expenses that would affect your investment's return.
Since the last reporting period, AIM Global Trends Fund has elected to use
the MSCI World Index as its benchmark instead of the MSCI AC World Index. The
new index more closely resembles the securities in which the fund invests. The
fund will no longer measure its performance against the MSCI AC World Index, the
index published in previous reports to shareholders. Because this is the first
reporting period since we have adopted the new index, SEC guidelines require
that we compare the fund's performance to both the old and the new indexes.
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (9/15/97) 11.20%
1 year -12.29*
*-7.90% excluding sales charges
CLASS B SHARES
Inception (9/15/97) 11.61%
1 year -12.50*
*-8.30% excluding CDSC
CLASS C SHARES
Inception (1/2/98) 14.77%
1 year -9.21
*-8.37% excluding CDSC
================================================================================
The performance of the fund's Class A, Class B and Class C shares will differ
due to different sales-charge structure and class expenses. For fund performance
calculations and descriptions of the indexes cited on this page, please see the
inside front cover.
AIM GLOBAL TRENDS FUND
4
109
APPENDIX IV
CHANGES TO GLOBAL TRENDS' INVESTMENT RESTRICTIONS
The Board of Trustees of AIM Series Trust has proposed changes to the
investment objective and investment restrictions of AIM Global Trends Fund. Set
forth below are AIM Global Trends Fund's revised investment objective and
investment restrictions (including those that will remain unchanged after the
Shareholders' meeting) if the Global Trends shareholders approve such changes at
the Shareholders' meeting scheduled to be held on August 17, 2001.
INVESTMENT OBJECTIVE (NON-FUNDAMENTAL)
Long-term growth of capital.
INVESTMENT POLICIES OR OBJECTIVES (FUNDAMENTAL)
1. The fund is a 'diversified company' as defined in the 1940 Act. The
fund will not purchase the securities of any issuer, if as a result, the fund
would fail to be a diversified company within the meaning of the 1940 Act, and
the rules and regulations promulgated thereunder, as such statute, rules and
regulations are amended from time to time or are interpreted from time to time
by the SEC staff (collectively, "the 1940 Act Laws and Interpretations") or to
the extent that the fund may be permitted to do so by exemptive order or similar
relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act
Laws, Interpretations and Exemptions"). In complying with this restriction,
however, the fund may purchase securities of other investment companies to the
extent permitted by the 1940 Act Laws, Interpretations and Exemptions.
2. The fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
3. The fund may not underwrite the securities of other issuers. This
restriction does not prevent the fund from engaging in transactions involving
the acquisition, disposition or resale of its portfolio securities, regardless
of whether the fund may be considered to be an underwriter under the 1933 Act.
4. The fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940 Act Laws,
Interpretations and Exemptions) of its investments in the securities of issuers
primarily engaged in the same industry. This restriction does not limit the
fund's investments in (i) obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or (ii) tax-exempt obligations
issued by governments or political sub-divisions of governments. In complying
with this restriction, the fund will not consider a bank-issued guaranty or
financial guaranty insurance as a separate security.
5. The fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments. This
restriction does not prevent the fund from investing in issuers that invest,
deal, or otherwise engage in transactions in real estate or interests therein,
or investing in securities that are secured by real estate or interests therein.
Appendix IV - Page 1
110
6. The fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the fund from engaging in
transactions involving futures contracts and options thereon or investing in
securities that are secured by physical commodities.
7. The fund may not make personal loans or loans of its assets to
persons who control or are under common control with the fund, except to the
extent permitted by 1940 Act Laws, Interpretations and Exemptions. This
restriction does not prevent the fund from, among other things, purchasing debt
obligations, entering into repurchase agreements, loaning its assets to
broker-dealers or institutional investors, or investing in loans, including
assignments and participation interests.
8. The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and restrictions as the fund.
INVESTMENT POLICIES OR OBJECTIVES (NON-FUNDAMENTAL)
1. In complying with the fundamental restriction regarding issuer
diversification, the fund will not, with respect to 75% of its total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities),
if, as a result, (i) more than 5% of the fund's total assets would be invested
in the securities of that issuer, or (ii) the fund would hold more than 10% of
the outstanding voting securities of that issuer. The fund may (i) purchase
securities of other investment companies as permitted by Section 12(d)(1) of the
1940 Act and (ii) invest its assets in securities of other money market funds
and lend money to other investment companies or their series portfolios that
have AIM or an affiliate of AIM as an investment adviser (an "AIM fund"),
subject to the terms and conditions of any exemptive orders issued by the SEC.
2. In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). The fund may borrow from banks, broker-
dealers or an AIM fund. The fund may not borrow for leveraging, but may borrow
for temporary or emergency purposes, in anticipation of or in response to
adverse market conditions, or for cash management purposes. The fund may not
purchase additional securities when any borrowings from banks exceed 5% of the
fund's total assets.
3. In complying with the fundamental restriction regarding industry
concentration, the fund may invest up to 25% of its total assets in the
securities of issuers whose principal business activities are in the same
industry.
4. In complying with the fundamental restriction with regard to making
loans, the fund may lend up to 33 1/3% of its total assets and may lend money to
another AIM fund, on such terms and conditions as the SEC may require in an
exemptive order.
Appendix IV - Page 2
111
5. Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the fund may not invest all of its assets in the
securities of a single open-end management investment company with the same
fundamental investment objectives, policies and restrictions as the fund.
Appendix IV - Page 3
112
AIM GLOBAL TRENDS FUND
A PORTFOLIO OF
AIM SERIES TRUST
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 347-4246
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
A PORTFOLIO OF
AIM INVESTMENT FUNDS
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 347-4246
STATEMENT OF ADDITIONAL INFORMATION
(August 17, 2001 Special Meeting of Shareholders of AIM Investment Funds)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement and Prospectus dated
June __, 2001 of AIM Series Trust (the "Company") for use in connection with the
Special Meeting of Shareholders of AIM Investment Funds to be held on August 17,
2001. Copies of the Combined Proxy Statement and Prospectus may be obtained at
no charge by writing the Company at the address shown above or by calling
1-800-347-4246. Unless otherwise indicated, capitalized terms used herein and
not otherwise defined have the same meanings as are given to them in the
Combined Proxy Statement and Prospectus.
A Statement of Additional Information for the Company dated May 1,
2001, has been filed with the Securities and Exchange Commission and is attached
hereto as Appendix I which is incorporated herein by this reference.
The date of this Statement of Additional Information is June __, 2001.
S-1
113
TABLE OF CONTENTS
THE COMPANY...........................................................................S-3
DESCRIPTION OF PERMITTED INVESTMENTS..................................................S-3
TRUSTEES AND OFFICERS OF THE COMPANY..................................................S-3
ADVISORY AND MANAGEMENT RELATED SERVICES AGREEMENTS AND PLANS OF DISTRIBUTION.........S-3
PORTFOLIO TRANSACTIONS................................................................S-3
DESCRIPTION OF SHARES.................................................................S-3
DETERMINATION OF NET ASSET VALUE......................................................S-4
TAXES.................................................................................S-4
PERFORMANCE DATA......................................................................S-4
FINANCIAL INFORMATION.................................................................S-4
Appendix I - AIM Series Trust Statement of Additional Information
Appendix II - Audited Financial Statements of AIM Global Consumer Products and
Services Fund
Appendix III - Pro Forma Financial Statements
S-2
114
THE COMPANY
This Statement of Additional Information relates to AIM Series Trust (the
"Company") and its investment portfolio, AIM Global Trends Fund. The Company is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). AIM Global Trends Fund is a
separate series of shares of beneficial interests of the Company. For a
discussion of the history of the Company, see heading "General Information About
the Trust" in the Company's Statement of Additional Information attached hereto
as Appendix I.
DESCRIPTION OF PERMITTED INVESTMENTS
For a discussion of the fundamental and nonfundamental investment policies of
AIM Global Trends Fund adopted by the Company's Board of Trustees, see heading
"Investment Limitations" in the Company's Statement of Additional Information
attached hereto as Appendix I.
TRUSTEES AND OFFICERS OF THE COMPANY
For a disclosure of the names and a brief occupational biography of each of the
Company's trustees and executive officers and identifying those who are
interested persons of the Company as well as stating their aggregate
remuneration, see heading "Management - Trustees and Executive Officers" in the
Company's Statement of Additional Information attached hereto as Appendix I.
ADVISORY AND MANAGEMENT RELATED SERVICES AGREEMENTS AND PLANS OF DISTRIBUTION
For a discussion of the Company's advisory and management-related services
agreements and plans of distribution, see headings "Management - Management
Services Relating to the Funds," "The Distribution Plans," and "The Distributor"
in the Company's Statement of Additional Information attached hereto as Appendix
I.
PORTFOLIO TRANSACTIONS
For a discussion of the Company's brokerage policy, see heading "Portfolio
Transactions and Brokerage" in the Company's Statement of Additional Information
attached hereto as Appendix I.
DESCRIPTION OF SHARES
For a discussion of the Company's authorized securities and the characteristics
of the Company's shares of beneficial interest, see heading "General Information
about the Trust" in the Company's Statement of Additional Information attached
hereto as Appendix I.
S-3
115
DETERMINATION OF NET ASSET VALUE
For a discussion of the Company's valuation and pricing procedures and a
description of its purchase and redemption procedures, see heading "Net Asset
Value Determination" in the Company's Statement of Additional Information
attached hereto as Appendix I.
TAXES
For a discussion of any tax information relating to ownership of the Company's
shares, see heading "Dividends, Distributions and Tax Matters" in the Company's
Statement of Additional information attached hereto as Appendix I.
PERFORMANCE DATA
For a description and quotation of certain performance data used by the Company,
see heading "Investment Results" in the Company's Statement of Additional
Information attached hereto as Appendix I.
FINANCIAL INFORMATION
The audited financial statements of AIM Global Trend Funds and the report
thereon by PricewaterhouseCoopers LLP, are set forth under the heading
"Financial Statements" in the Company's Statement of Additional Information
attached hereto as Appendix I.
The audited financial statements of AIM Global Consumer Products and Services
Fund and the report thereon by PricewaterhouseCoopers LLP, are set forth in the
Annual Report of AIM Global Consumer Products and Services Fund, dated October
31, 2000, which is incorporated herein by reference and attached hereto as
Appendix II.
Pro forma financial statements for AIM Global Trends Fund, giving effect to the
Reorganization, are attached hereto as Appendix III.
S-4
116
APPENDIX I
STATEMENT OF
ADDITIONAL INFORMATION
CLASS A, CLASS B, AND CLASS C SHARES OF
AIM GLOBAL TRENDS FUND
(A SERIES PORTFOLIO OF
AIM SERIES TRUST)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
---------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF
THE ABOVE-NAMED FUND, A COPY OF WHICH MAY BE OBTAINED
FREE OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS,INC.,
P.O. BOX 4739, HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
---------------
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2001
RELATING TO THE AIM GLOBAL TRENDS FUND PROSPECTUS DATED MAY 1, 2001
117
TABLE OF CONTENTS
PAGE
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE TRUST...............................................................................1
INVESTMENT STRATEGIES AND RISKS...................................................................................2
Primary Investment Practices of the Fund.................................................................2
Financial Services Industry.....................................................................3
Infrastructure Industry.........................................................................3
Natural Resources Industry......................................................................3
Consumer Products and Services Industry.........................................................4
Health Care Industry............................................................................5
Telecommunications and Technology Industry......................................................5
Other Investment Practices of the Fund...................................................................6
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................10
Introduction............................................................................................10
Special Risks of Options, Futures and Currency Strategies...............................................10
Writing Call Options....................................................................................11
Writing Put Options.....................................................................................12
Purchasing Put Options..................................................................................13
Purchasing Call Options.................................................................................13
Index Options...........................................................................................15
Interest Rate, Currency and Stock Index Futures Contracts...............................................16
Options on Futures Contracts............................................................................18
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................18
Forward Contracts.......................................................................................18
Foreign Currency Strategies -- Special Considerations...................................................19
Cover...................................................................................................20
ADDITIONAL RISK FACTORS..........................................................................................20
General.................................................................................................20
Financial Services Industry.............................................................................21
Infrastructure Industry.................................................................................21
Natural Resources Industry..............................................................................22
Consumer Products and Services Industry.................................................................22
Health Care Industry....................................................................................22
Telecommunications and Technology Industry..............................................................22
Debt Securities.........................................................................................23
Investing in Smaller Companies..........................................................................24
Illiquid Securities.....................................................................................24
Foreign Securities......................................................................................25
INVESTMENT LIMITATIONS...........................................................................................26
Investment Limitations of the Fund......................................................................26
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................29
General Brokerage Policy................................................................................29
Allocation of Portfolio Transactions....................................................................29
Allocation of Initial Public Offering ("IPO") Securities Transactions...................................30
Section 28(e) Standards.................................................................................30
Transactions with Regular Brokers.......................................................................31
i
118
Brokerage Commissions Paid..............................................................................31
Portfolio Turnover......................................................................................31
MANAGEMENT.......................................................................................................32
Trustees and Executive Officers.........................................................................32
Management Services Relating to the Fund................................................................34
Expenses of the Fund....................................................................................35
THE DISTRIBUTION PLANS...........................................................................................35
The Class A and C Plan..................................................................................35
The Class B Plan........................................................................................36
Both Plans..............................................................................................36
THE DISTRIBUTOR..................................................................................................40
Sales Charges and Dealer Concessions....................................................................42
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................44
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................48
HOW TO PURCHASE AND REDEEM SHARES................................................................................50
Backup Withholding......................................................................................51
NET ASSET VALUE DETERMINATION....................................................................................52
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................53
Reinvestment of Dividends and Distributions.............................................................53
Tax Matters.............................................................................................53
Taxation of the Fund....................................................................................53
Reinstatement Privileges and Wash Sales.................................................................54
Taxation of Certain Investment Activities...............................................................54
Taxation of the Fund's Shareholders.....................................................................56
SHAREHOLDER INFORMATION..........................................................................................57
MISCELLANEOUS INFORMATION........................................................................................59
Charges for Certain Account Information.................................................................59
Custodian...............................................................................................59
Transfer Agency and Fund Accounting Services............................................................60
Independent Accountants.................................................................................60
Legal Matters...........................................................................................60
Shareholder Liability...................................................................................60
Control Persons and Principal Holders of Securities.....................................................60
INVESTMENT RESULTS...............................................................................................61
Total Return Quotations.................................................................................61
Performance Information.................................................................................62
APPENDIX A......................................................................................................A-1
Description of Commercial Paper Ratings................................................................A-1
Description of Bond Ratings............................................................................A-1
Absence of Rating......................................................................................A-2
FINANCIAL STATEMENTS.............................................................................................FS
ii
119
INTRODUCTION
This Statement of Additional Information relates to the Class A, Class
B and Class C shares of AIM Global Trends Fund, formerly known as GT Global New
Dimension Fund, (the "Fund"). The Fund is a diversified series of AIM Series
Trust (the "Trust"), an open-end management investment company organized as a
Delaware business trust. The Fund seeks its investment objective by investing
substantially all of its assets in the following global industry sectors:
consumer products and services, financial services, health care infrastructure,
natural resources, and telecommunications and technology. A I M Advisors, Inc.
("AIM") serves as the investment manager of and administrator for the 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 a Prospectus (the "Prospectus"),
dated May 1, 2001, which relates to the Class A, Class B and Class C shares of
the Fund. Copies of the Prospectus and additional copies of this Statement of
Additional Information may be obtained without charge by writing the principal
distributor of the Fund's shares, A I M Distributors, Inc. ("AIM Distributors"),
P.O. Box 4739, Houston, TX 77210-4739, or by calling (800) 347-4246.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Fund. Some of
the information required to be in this Statement of Additional Information is
also included in the Fund's current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Trust's Registration Statement filed with
the SEC. Copies of the Registration Statement, including items omitted from the
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE TRUST
The Trust was previously organized as a Massachusetts business trust
named "GT Global Series Trust," which was established on August 26, 1996 and
which had one series named "GT Global New Dimension Fund." On May 29, 1998, the
Trust was reorganized into a Delaware business trust, which was initially
established on May 7, 1998. The Trust currently consists of one series, the
Fund. The Fund currently offers three different classes of shares: Class A
shares, Class B shares and Class C shares. From time to time the Board of
Trustees of the Trust may create new series of shares without the necessity of a
vote of the shareholders of the Trust. All historical financial and other
information contained in this Statement of Additional Information for periods
prior to May 29, 1998 relating to the Fund is that of GT Global New Dimension
Fund.
The term "majority of the outstanding shares" of the Trust, of the Fund
or of a particular class of the Fund means, respectively, the vote of the lesser
of (a) 67% or more of the shares of the Trust, Fund or such class present at a
meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, the Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, the Fund or such class.
Class A, Class B and Class C shares of the Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees with respect to the class of the Fund and, upon liquidation of the
Fund, to participate proportionately in the net assets of the Fund allocable to
such class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion
and exchange rights as set forth in the Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full
1
120
share. Other than the automatic conversion of Class B Shares to Class A Shares,
there are no conversion rights.
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 expenses, is subject to differing sales
loads, conversion features and exchange privileges, and has exclusive voting
rights on matters pertaining to that class' distribution plan (although Class A
shareholders and Class B shareholders of the Fund must approve any material
increase in fees payable with respect to the Class A shares of the Fund under
the Class A and C Plan). If any additional series of the Trust are established,
on any matter submitted to a vote of shareholders, shares of each series will be
voted by its shareholders individually when the matter affects the specific
interest of that series only, such as approval of its investment management
arrangements. The shares of the Trust's series would be voted in the aggregate
on other matters, such as the election of Trustees and ratification of the
selection by the Board of Trustees of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year,
except as required under the Investment Company Act of 1940, as amended ("1940
Act"). Fund shares do not have cumulative voting rights, which means that the
holders of a majority of the shares voting for the election of Trustees can
elect all the Trustees. A Trustee may be removed at any meeting of the
shareholders of the Trust by a vote of the shareholders owning at least
two-thirds of the outstanding shares. Any Trustee may call a special meeting of
shareholders for any purpose. Furthermore, Trustees shall promptly call a
meeting of shareholders solely for the purpose of removing one or more Trustees
when requested in writing to do so by shareholders holding 10% of the Trust's
outstanding shares.
Pursuant to the Trust's Declaration of Trust, the Trust may issue an
unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other Fund shares and is entitled
to such dividends and other distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Trustees. Each share of the Fund is equal in
earnings, assets and voting privileges, except that each class normally has
exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Fund shares, when
issued, are fully paid and nonassessable.
INVESTMENT STRATEGIES AND RISKS
PRIMARY INVESTMENT PRACTICES OF THE FUND
The following discussion of investment strategies and risks supplements
the discussion of investment objective and risks set forth in the Prospectus
under the headings "Investment Objective and Strategies" and "Principal Risks of
Investing in the Fund."
The Fund's investment objective is long-term growth of capital. The
Fund's investment objective may not be changed without the approval of the
holders of a majority of the Fund's outstanding shares. Unless specifically
noted, the Fund's investment policies described in the Prospectus and this
Statement of Additional Information, are not fundamental policies and may be
changed by the Trust's Board of Trustees without shareholder approval.
In addition to the investment practices described in the Prospectus,
the Fund may engage in certain other investment practices, including lending
their portfolio securities; purchasing securities on a when-issued or delayed
delivery basis; entering into repurchase or reverse repurchase agreements; and
borrowing money. There is no assurance that the Fund will achieve its investment
objective.
The Fund invests primarily in six global industry sectors; consumer
products and services, financial services, health care, infrastructure, natural
resources and telecommunications and technology, so the Fund's investment
performance is directly related to the investment performance of the companies
2
121
in those sectors. In particular, each of the sectors is subject to governmental
regulation that may have a material effect on the products and services offered
by companies in these industries.
Financial Services Industry
Examples of financial services companies include commercial banks and
savings institutions and loan associations and their holding companies; consumer
and industrial finance companies; diversified financial services companies;
investment banks; insurance brokerages; securities brokerage and investment
advisory companies; real estate-related companies; leasing companies; and a
variety of firms in all segments of the insurance field such as multi-line,
property and casualty and life insurance and insurance holding companies.
AIM believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in AIM's view, as the industries evolve, opportunities will emerge for
those companies positioned for the future. Thus, AIM expects that banking and
related financial institution consolidation in the developed countries,
increased demand for retail borrowing in developing countries, a growing need
for international trade-based financing, a rising demand for sophisticated risk
management, the proliferating number of liquid securities markets around the
world, and larger concentrations of investable assets should lead to growth in
financial services companies that are positioned for the future.
Infrastructure Industry
Examples of infrastructure companies include those engaged in
designing, developing or providing the following products and services:
electricity production; oil, gas, and coal exploration, development, production
and distribution; water supply, including water treatment facilities; nuclear
power and other alternative energy sources; transportation, including the
construction or operation of transportation systems; steel, concrete, or similar
types of products; communications equipment and services (including equipment
and services for both data and voice transmission); mobile communications and
cellular radio/paging; emerging technologies combining telephone, television
and/or computer systems; and other products and services, which, in AIM's
judgment, constitute services significant to the development of a country's
infrastructure.
AIM believes that a country's infrastructure is one key to the
long-term success of that country's economy. AIM believes that adequate energy,
transportation, water, and communications systems are essential elements for
long-term economic growth. AIM believes that many developing nations, especially
in Asia and Latin America, plan to make significant expenditures to the
development of their infrastructure in the coming years, which is expected to
facilitate increased levels of services and manufactured goods.
In the developed countries of North America, Europe, Japan and the
Pacific Rim, AIM expects that the replacement and upgrade of transportation and
communications systems should stimulate growth in the infrastructure industries
of those countries. In addition, in AIM's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
AIM believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide. In addition, the long-term growth rates of
certain foreign countries' economies may be substantially higher than the
long-term growth rate of the U.S. economy. An integral aspect of certain foreign
countries' economies may be the development or improvement of their
infrastructure.
Natural Resources Industry
Examples of natural resource companies include those which own, explore
or develop: energy sources (such as oil, gas and coal); ferrous and non-ferrous
metals (such as iron, aluminum, copper,
3
122
nickel, zinc and lead), strategic metals (such as uranium and titanium) and
precious metals (such as gold, silver and platinum); chemicals; forest products
(such as timber, coated and uncoated tree sheet, pulp and newsprint); other
basic commodities (such as foodstuffs); refined products (such as chemicals and
steel) and service companies that sell to these producers and refiners; and
other products and services, which, in AIM's opinion are significant to the
ownership and development of natural resources and other basic commodities.
AIM believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America is generating new demands for industrial materials that are
affecting world commodities markets. AIM believes these changes are likely to
create investment opportunities that benefit from new sources of supply and/or
from changes in commodities prices.
AIM also believes that investments in natural resource companies offer
an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. AIM believes that rising commodity prices and increasing
worldwide industrial production may favorably affect share prices of natural
resource companies, and investments in such companies can offer excellent
opportunities to offset the effects of inflation.
AIM has identified four areas in the natural resources industry that it
expects will create investment opportunities: (i) improving supply/demand
fundamentals, which may result in higher commodity prices; (ii) privatization of
state-owned natural resource businesses; (iii) management which can improve
production efficiencies without correspondingly increasing commodity prices; and
(iv) service companies with emerging technologies that can enhance productivity
or reduce production costs. Of course, there is no certainty that these factors
will produce the anticipated results.
Consumer Products and Services Industry
Examples of consumer products and services companies include those that
manufacture, market, retail, or distribute: durable goods (such as homes,
household goods, automobiles, boats, furniture and appliances, and computers);
non-durable goods (such as food and beverages and apparel); media,
entertainment, broadcasting, publishing and sports-related goods and services
(such as television and radio broadcast, motion pictures, wireless
communications, gaming casinos, theme parks, restaurants and lodging); and goods
and services to companies in the foregoing industries (such as advertisers,
textile companies and distribution and shipping companies).
The Fund expects that a significant portion of its assets may be
invested in the securities of U.S. issuers from time to time, particularly those
that market their products globally. However, consumer products and services
companies of a particular nation or region of the world are often operated and
owned in their local markets, close to their customers. These companies, AIM
believes, may offer superior opportunities for capital growth as compared to
their larger, multinational counterparts. Certain global markets may be more
attractive than others from time to time; companies dependent on U.S. markets,
for example, may be outperformed by companies not dependent on U.S. markets.
AIM also believes that the demand for consumer products and services
worldwide will increase along with rising disposable incomes in both developed
and developing nations. Emerging economies, such as those in China, Southeast
Asia, Eastern Europe and Latin America, offer opportunities for the growth and
expansion of consumer markets. These regions currently comprise a growing source
of inexpensive consumer products for export and a growing source of demand for
consumer products and services as the disposable incomes of their populations
increase. In AIM's view, these changes are likely to create investment
opportunities in companies, both local and multinational, that are able to
employ innovative manufacturing, marketing, retailing and distribution methods
to open new markets and/or expand existing markets.
4
123
Health Care Industry
Examples of health care companies include those that are substantially
engaged in the design, manufacture or sale of products or services used for or
in connection with health care or medicine. Such firms may include
pharmaceutical companies; firms that design, manufacture, sell or supply
medical, dental and optical products, hardware or services; companies involved
in biotechnology, medical diagnostic, and biochemical research and development;
and companies involved in the ownership and/or operation of health care
facilities.
The Fund expects that, from time to time, a significant portion of its
assets may be invested in the securities of U.S. issuers. Health care
industries, however, are global industries with significant, growing markets
outside of the United States. A sizable portion of the companies which comprise
the health care industries are headquartered outside of the United States, and
many important pharmaceutical and biotechnology discoveries and technological
breakthroughs have occurred outside of the United States, primarily in Japan,
the United Kingdom and Western Europe.
AIM believes that the global health care industries offer attractive
long-term supply/demand dynamics. While the United States, Western Europe, and
Japan presently account for a substantial portion of health care expenditures,
this should change dramatically in the coming decade if the populations of
developing countries devote an increasing percentage of income to health care.
Additionally, AIM believes demographics on aging point to a significant increase
in demand from the industrialized nations, as the elderly account for a growing
proportion of worldwide health care spending. Finally, in AIM's view, technology
will continue to expand the range of products and services offered, with new
drugs, medical devices and surgical procedures addressing medical conditions
previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. AIM believes that this transition offers investment opportunities in
those companies acting as consolidators or otherwise gaining market share at the
expense of less efficient competitors.
Telecommunications and Technology Industry
Examples of telecommunications and technology companies include those
engaged in designing, developing or providing the following products and
services: communications equipment and services (including equipment and
services for both data and voice transmission); electronic components and
equipment; broadcasting (including television and radio, satellite, microwave
and cable television and narrowcasting); computer components, equipment, and
software equipment; Internet technology; mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
AIM believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information technologies has
been accelerated by the lower costs and higher efficiencies that result from the
blending of computers with telecommunications systems. Accordingly, companies
engaged in the production of methods for using electronic and, potentially,
video technology to communicate information are expected to be important in the
Fund's portfolio. Older technologies, such as photography and print also may be
represented, however.
AIM has identified four areas in the telecommunications and technology
industry that it expects will create investment opportunities: (i) deregulation
of companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the
5
124
telecommunications industry. Of course, there is no certainty that these factors
will produce the anticipated results.
SELECTION OF EQUITY INVESTMENTS AND ASSET ALLOCATION. The Fund expects
that, from time to time, a significant portion of its assets may be invested in
the securities of domestic issuers. The industries represented in the Fund,
however, are global industries with significant, growing markets outside of the
United States. A sizable proportion of the companies that comprise the
industries in which the Fund invests are headquartered outside of the United
States.
For these reasons, AIM believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential return from
an investment by the Fund. AIM uses its financial expertise in markets located
throughout the world and the substantial global resources of AMVESCAP PLC in
attempting to identify those countries and companies then providing the greatest
potential for long-term capital appreciation. In this fashion, AIM seeks to
enable shareholders to capitalize on the substantial investment opportunities
and the potential for long-term capital presented by the industries represented
in the Fund.
OTHER INVESTMENT PRACTICES OF THE FUND
U.S. GOVERNMENT SECURITIES. The Fund may invest in various direct
obligations of the U.S. Treasury and obligations issued or guaranteed by the
U.S. government or one of its agencies or instrumentalities (collectively, "U.S.
government securities"). Among the U.S. government securities that may be held
by the Fund are securities that are supported by the full faith and credit of
the United States; securities that are supported by the right of the issuer to
borrow from the U.S. Treasury; and securities that are supported solely by the
credit of the instrumentality.
There may be times when, in AIM's opinion, prevailing market, economic
or political conditions warrant reducing the proportion of the Fund's assets
invested in equity securities and increasing the proportion held in cash (U.S.
dollars, foreign currencies or multinational currency units) or invested in debt
securities or high quality money market instruments issued by corporations, or
the United States, or a foreign government. A portion of the Fund's assets
normally will be held in cash (U.S. dollars, foreign currencies or multinational
currency units) or invested in foreign or domestic high quality money market
instruments pending investment of proceeds from new sales of Fund shares to
provide for ongoing expenses and to satisfy redemptions.
In certain countries, governmental restrictions and other limitations
on investment may affect the Fund's ability to invest in such countries. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals. AIM is not aware at this
time of the existence of any investment or exchange control regulations which
might substantially impair the operations of the Fund as described in the Fund's
Prospectus and Statement of Additional Information. Restrictions may in the
future, however, make it undesirable to invest in certain countries. The Fund
does not have a present intention of making any significant investment in any
country or stock market in which AIM considers the political or economic
situation to threaten the Fund with substantial or total loss of its investment
in such country or market.
EQUITY-LINKED DERIVATIVES. The Fund may invest in equity-linked
derivative products designed to replicate the composition and performance of
particular indices. Examples of such products include S&P Depositary Receipts
("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares
("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optomised
Portfolios as Listed Securities ("OPALS"). Investments in equity-linked
derivatives involve the same risks associated with a direct investment in the
types of securities included in the indices such products are designed to track.
There can be no assurance that the trading price of the equity-linked
derivatives will equal the underlying value of the basket of securities
purchased to replicate a particular index or that such basket will replicate the
index. Investments in equity-linked derivatives may constitute investments in
other investment companies. See "Investments in Other Investment Companies."
6
125
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain
countries, investments by the Fund presently may be made only by acquiring
shares of other investment companies (including investment vehicles or companies
advised by AIM or its affiliates) with local governmental approval to invest in
those countries. At such time as direct investment in these countries is
allowed, the Fund anticipates investing directly in these markets.
The Fund may invest in other investment companies to the extent
permitted by the 1940 Act, and the rules and regulations thereunder, and if
applicable, exemptive orders granted by the SEC. The following restrictions
apply to investments in other investment companies other than Affiliated Money
Market Funds (defined below): (i) the Fund may not purchase more than 3% of the
total outstanding voting stock of another investment company; (ii) the Fund may
not invest more than 5% of its total assets in securities issued by another
investment company; and (iii) the Fund may not invest more than 10% of its total
assets in securities issued by other investment companies other than Affiliated
Money Market Funds. With respect to the Fund's purchase of shares of another
investment company, including Affiliated Money Market Funds, the Fund will
indirectly bear its proportionate share of the advisory fees and other operating
expenses of such investment company. The Fund has obtained an exemptive order
from the SEC allowing them to invest in money market funds that have AIM or an
affiliate of AIM as an investment adviser (the "Affiliated Money Market Funds"),
provided that investments in Affiliated Money Market Funds do not exceed 25% of
the total assets of the Fund.
WARRANTS OR RIGHTS. Warrants or rights may be acquired by the Fund in
connection with other securities or separately and provide the Fund with the
right to purchase at a later date other securities of the issuer. Warrants are
securities permitting, but not obligating, their holder to subscribe for other
securities or commodities. Warrants do not carry with them the right to
dividends or voting rights with respect to the securities that they entitle
their holder to purchase, and they do not represent any rights in the assets of
the issuer. As a result, warrants may be considered more speculative than
certain other types of investments. In addition, the value of a warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to its expiration date.
LENDING OF FUND SECURITIES. For the purpose of realizing additional
income, the Fund may make secured loans of its securities holdings amounting to
not more than 33 1/3% of its total assets. Securities loans are made to
broker/dealers or institutional investors pursuant to agreements requiring that
the loans be continuously secured by collateral consisting of cash, U.S.
government securities, or certain irrevocable letters of credit at least equal
at all times to the value of the securities lent plus any accrued interest,
"marked to market" on a daily basis. The Fund may pay reasonable administrative
and custodial fees in connection with the loan of their securities. While the
securities loan is outstanding, the Fund will continue to receive the equivalent
of the interest or dividends paid by the issuer on the securities, as well as
interest on the investment of the collateral or a fee from the borrower. The
Fund will have a right to call each loan and obtain the securities within the
stated settlement period. The Fund will not have the right to vote equity
securities while they are being lent, but it may call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially. Loans will only be made to
firms deemed by AIM to be of good standing and will not be made unless, in AIM's
judgment, the consideration to be earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS. For the purposes of the Fund's investment
policies with respect to bank obligations, obligations of foreign branches of
U.S. banks and of foreign banks are obligations of the issuing bank and may be
general obligations of the parent bank. Such obligations may, however, be
limited by the terms of a specific obligation and by government regulation. As
with investments in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the Fund to investment risks that are different in some respects from those of
investments in obligations of U.S. issuers. Although the Fund will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of the Fund. For the
purposes of
7
126
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which
the Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer on an
agreed-upon date or upon demand and at a price reflecting a market rate of
interest unrelated to the coupon rate or maturity of the purchased securities.
Although repurchase agreements carry certain risks not associated with direct
investments in securities, including possible decline in the market value of the
underlying securities and delays and costs to the Fund if the other party to the
repurchase agreement becomes bankrupt, the Fund intends to enter into repurchase
agreements only with banks and dealers believed by AIM to present minimal credit
risks in accordance with guidelines established by the Board of Trustees. AIM
will review and monitor the creditworthiness of such institutions under the
Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price,
the Fund would suffer a loss. If the financial institution that is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings, there may be restrictions on the
Fund's ability to sell the collateral and it could suffer a loss. However, with
respect to financial institutions whose bankruptcy or liquidation proceedings
are subject to the U.S. Bankruptcy Code, the Fund intends to comply with
provisions under such code that would allow the immediate resale of such
collateral. The Fund will not enter into a repurchase agreement with a maturity
of more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS. The
Fund may borrow from banks or may borrow through reverse repurchase agreements
and "roll" transactions in connection with meeting requests for the redemptions
of the Fund's shares. The Fund's borrowings will not exceed 33 1/3% of its total
assets, i.e., the Fund's total assets at all times will equal at least 300% of
the amount of outstanding borrowings. If market fluctuations in the value of the
Fund's securities holdings or other factors cause the ratio of its total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. The Fund may also borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. However, no additional investments will be made if the Fund's
borrowings exceed 5% of its total assets. Any borrowing by the Fund may cause
greater fluctuation in the value of its shares than would be the case if it did
not borrow.
The Fund's fundamental investment limitations permit it to borrow money
for leveraging purposes. However, the Fund is currently prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the Board.
If the Fund employs leverage in the future, it would be subject to certain
additional risks. Use of leverage creates an opportunity for greater growth of
capital but would exaggerate any increases or decreases in the net asset value
of the Fund. When the income and gains on securities purchased with the proceeds
of borrowings exceed the costs of such borrowings, the Fund's earnings or net
asset value will increase faster than otherwise would be the case; conversely,
if such income and gains fail to exceed such costs, the Fund's earnings or net
asset value would decline faster than would otherwise be the case.
The Fund may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Fund transfers
possession of securities to another party, such as a bank or broker/dealer, in
return for cash, and agrees to repurchase the securities in the future at an
agreed upon price, which includes an interest component. The Fund may also
engage in "roll" borrowing transactions, which involve the sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Fund may receive a fee) to purchase similar, but not
8
127
identical, securities at a future date. The Fund will segregate cash or liquid
securities in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase
debt securities on a "when-issued" basis and may purchase or sell such
securities on a "forward commitment" basis in order to hedge against anticipated
changes in interest rates and prices. The price, which is generally expressed in
yield terms, is fixed at the time that the commitment is made, but delivery and
payment for the securities take place at a later date. When-issued securities
and forward commitments may be sold prior to the settlement date, but the Fund
will purchase or sell when-issued securities or enter into forward commitments
only with the intention of actually receiving or delivering the securities, as
the case may be. No income accrues on securities that have been purchased
pursuant to a forward commitment or on a when-issued basis prior to delivery to
the Fund. If the Fund disposes of the right to acquire a when-issued security
prior to its acquisition or disposes of its right to deliver or receive against
a forward commitment, it may incur a gain or loss. At the time that the Fund
enters into a transaction on a when-issued or forward commitment basis, the Fund
will segregate cash or liquid securities equal to the value of the when-issued
or forward commitment securities with its custodian and will mark to market
daily such assets. There is a risk that the securities may not be delivered and
that the Fund may incur a loss.
SHORT SALES. The Fund may make short sales of securities. A short sale
is a transaction in which the Fund sells a security in anticipation that the
market price of that security will decline. The Fund may make short sales (i) as
a form of hedging to offset potential declines in long positions in securities
it owns, or anticipates acquiring, or in similar securities, and (ii) in order
to maintain flexibility in its securities holdings.
When the Fund makes a short sale of a security it does not own, it must
borrow the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral deposited with the
intermediary. The Fund will also be required to deposit collateral with its
custodian to the extent, if any, necessary so that the value of both collateral
deposits in the aggregate is at all times equal to at least 100% of the current
market value of the security sold short. Depending on arrangements made with the
intermediary from which it borrowed the security regarding payment of any
amounts received by it on such security, the Fund may not receive any payments
(including interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of
the short sale and the time the Fund replaces the borrowed security, it will
incur a loss; conversely, if the price declines, the Fund will realize a gain.
Any gain will be decreased, and any loss increased, by the transaction costs
associated with the transaction. Although the Fund's gain is limited by the
price at which it sold the security short, its potential loss theoretically is
unlimited.
The Fund will not make a short sale if, after giving effect to the
sale, the market value of the securities sold short exceeds 25% of the value of
its total assets or its aggregate short sales of the securities of any one
issuer exceed the lesser of 2% of its net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange.
TEMPORARY DEFENSIVE STRATEGIES. In anticipation of or in response to
adverse market conditions, for cash management purposes, or for defensive
purposes, the Fund may temporarily hold all or a portion of its assets in cash,
(U.S. dollars, foreign currencies or multinational currency units) money market
instruments, or high-quality debt securities. The Fund may also invest up to 25%
of its total assets in Affiliated Money Market Funds for these purposes. To the
extent the Fund employs a temporary defensive strategy, it will not be invested
so as to achieve directly its investment objective.
9
128
Money market instruments in which the Fund may invest include, but are
not limited to, United States government securities; high-grade commercial
paper; bank certificates of deposit; bankers' acceptances and repurchase
agreements related to any of the foregoing. "High-grade commercial paper" refers
to commercial paper rated A-1 by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("S&P"), or P-1 by Moody's Investors Service, Inc.
("Moody's") or, if not rated, determined by AIM to be of comparable quality.
PRIVATIZATIONS. The governments of some foreign countries have been
engaged in programs of selling part or all of their stakes in government owned
or controlled enterprises ("privatizations"). AIM believes that privatizations
may offer opportunities for significant capital appreciation and intends to
invest assets of the Fund in privatizations in appropriate circumstances. In
certain foreign countries, the ability of foreign entities such as the Fund to
participate in privatizations may be limited by local law, or the terms on which
the Fund may be permitted to participate may be less advantageous than those for
local investors. There can be no assurance that foreign governments will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
The Fund may use forward currency contracts, futures contracts, options
on securities, options on indices, options on currencies, and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). The
Fund may invest in such instruments up to the full value of its portfolio
assets.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such future contracts
to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Fund or that AIM intends to include in the
Fund's holders. The Fund also may purchase and sell put and call options on
stock indexes to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market decline or a decline in a specific market sector
that could affect adversely the Fund's holders. The Fund also may purchase stock
index futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Fund of options, futures contracts and forward currency
contracts ("Forward Contracts") involves special considerations and risks, as
described below. Risks pertaining to particular instruments are described in the
sections that follow.
10
129
(1) Successful use of most of these instruments depends upon AIM's
ability to predict movements of the overall securities and currency
markets, which requires different skills than predicting changes in the
prices of individual securities. While AIM is experienced in the use of
these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument
used in a short hedge increased by less than the decline in value of
the hedged investment, the hedge would not be fully successful. Such a
lack of correlation might occur due to factors unrelated to the value
of the investments being hedged, such as speculative or other pressures
on the markets in which the hedging instrument is traded. The
effectiveness of hedges using hedging instruments on indices will
depend on the degree of correlation between price movements in the
index and price movements in the investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies
can also reduce opportunity for gain by offsetting the positive effect
of favorable price movements in the hedged investments. For example, if
the Fund entered into a short hedge because AIM projected a decline in
the price of a security in the Fund's portfolio, and the price of that
security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined
by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a
better position had it not hedged at all.
(4) There is no assurance that a liquid secondary market will exist for
any particular option, futures contract or option thereon at any
particular time.
(5) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when
it takes positions in instruments involving obligations to third
parties (i.e., instruments other than purchased options). If the Fund
were unable to close out its positions in such instruments, it might be
required to continue to maintain such assets or accounts or make such
payments until the position expired or matured. The requirements might
impair the Fund's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous
time. The Fund's ability to close out a position in an instrument prior
to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is
no assurance that any position can be closed out at a time and price
that is favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of AIM, are not expected to make any major price moves in
the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security
or currency at a specified price (the exercise price) at any time until
(American style) or on (European style) a certain date (the expiration date). So
long as the obligation of the writer of a call option continues, he or she may
be assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
Portfolio securities or currencies on which call options may be written
will be purchased solely on the basis of investment considerations consistent
with the Fund's investment objective. When writing a
11
130
call option, the Fund, in return for the premium, gives up the opportunity for
profit from a price increase in the underlying security or currency above the
exercise price, and retains the risk of loss should the price of the security or
currency decline. Unlike one who owns securities or currencies not subject to an
option, the Fund has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that the Fund has
written expires, it will realize a gain in the amount of the premium; however,
such gain may be offset by a decline in the market value of the underlying
security or currency during the option period. If the call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security or
currency, which will be increased or offset by the premium received. The Fund
does not consider a security or currency covered by a call option to be
"pledged" as that term is used in their policies that limit the pledging or
mortgaging of their assets.
Writing call options can serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security or
currency appreciates to a price higher than the exercise price of the call
option, it can be expected that the option will be exercised and the Fund will
be obligated to sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed
to constitute the market value of an option. The premium the Fund will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment,
and the length of the option period. In determining whether a particular call
option should be written, AIM will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security or currency from
being called or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
The Fund will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity are normally higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the
current market values of the underlying securities, indices or currencies at the
time the options are written. From time to time, the Fund may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A
put option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund generally would write put options in circumstances where AIM
wishes to purchase the underlying security or currency for the Fund's holdings
at a price lower than the current market price of
12
131
the security or currency. In such event, the Fund would write a put option at an
exercise price that, reduced by the premium received on the option, reflects the
lower price it is willing to pay. Since the Fund would also receive interest on
debt securities or currencies maintained to cover the exercise price of the
option, this technique could be used to enhance current return during periods of
market uncertainty. The risk in such a transaction would be that the market
price of the underlying security or currency would decline below the exercise
price less the premium received.
Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and
currencies. As the holder of a put option, the Fund would have the right to sell
the underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise such
option or permit such option to expire.
The Fund may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund in order to protect against an
anticipated decline in the value of the security or currency. Such hedge
protection is provided only during the life of the put option when the Fund, as
the holder of the put option, is able to sell the underlying security or
currency at the put exercise price regardless of any decline in the underlying
security's market price or currency's exchange value. The premium paid for the
put option and any transaction costs would reduce any profit otherwise available
for distribution when the security or currency is eventually sold.
The Fund may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that the Fund seeks to benefit from a decline in the
market price of the underlying security or currency. If the put option is not
sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Fund will lose its entire investment in the put
option. In order for the purchase of a put option to be profitable, the market
price of the underlying security or currency must decline sufficiently below the
exercise price to cover the premium and transaction costs, unless the put option
is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and
currencies. As the holder of a call option, the Fund would have the right to
purchase the underlying security or currency at the exercise price at any time
until (American style) or on (European style) the expiration date. The Fund may
enter into closing sale transactions with respect to such options, exercise such
options or permit such options to expire.
Call options may be purchased by the Fund for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
13
132
The Fund may also purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
its current return. For example, where the Fund has written a call option on an
underlying security or currency having a current market value below the price at
which it purchased the security or currency, an increase in the market price
could result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill its delivery obligations under its written
call (if it is exercised). This strategy could allow the Fund to avoid selling
the portfolio security or currency at a time when it has an unrealized loss;
however, the Fund would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of
the Fund's total assets at the time of each purchase.
The Fund may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives the Fund as purchaser the right (but not the obligation) to
sell a specified amount of currency at the exercise price at any time until
(American style) or on (European style) the expiration date of the option. A
call option gives the Fund as purchaser the right (but not the obligation) to
purchase a specified amount of currency at the exercise price at any time until
(American style) or on (European style) the expiration date of the option. The
Fund might purchase a currency put option, for example, to protect itself
against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund would be reduced by the premium it
had paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the dollar of a currency in which the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded in
over-the-counter ("OTC") markets. Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices and
expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. The Fund will not purchase an OTC option unless it
believes that daily valuations for such options are readily obtainable. OTC
options differ from exchange-traded options in that OTC options are transacted
with dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available, in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid
securities. The Fund may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
it. The assets used as cover for OTC options written by the Fund will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.
The Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. The Fund
intends to purchase or write only those exchange-traded options for which there
appear to be liquid secondary markets. However, there can be no assurance that
such a market will exist at any particular time. Closing transactions can be
made for OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with it, there is no assurance
that the Fund will in fact be able to close out an OTC option position at a
favorable price prior to expiration. In the event of insolvency of
14
133
the contra party, the Fund might be unable to close out an OTC option position
at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities
or futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
movements in individual securities or futures contracts. When the Fund writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Fund an amount of cash if the closing level of the index upon which the call
is based is greater than the exercise price of the call. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When the
Fund buys a call on an index, it pays a premium and has the same rights as to
such call as are indicated above. When the Fund buys a put on an index, it pays
a premium and has the right, prior to the expiration date, to require the seller
of the put, upon the Fund's exercise of the put, to deliver to the Fund an
amount of cash if the closing level of the index upon which the put is based is
less than the exercise price of the put, which amount of cash is determined by
the multiplier, as described above for calls. When the Fund writes a put on an
index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Fund, as the call writer, will
not know that it has been assigned until the next business day at the earliest.
The time lag between exercise and notice of assignment poses no risk for the
writer of a covered call on a specific underlying security, such as common
stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If the Fund purchases an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Fund will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
15
134
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate, currency or stock index futures
contracts (collectively, "Futures" or "Futures Contracts") as a hedge against
changes in prevailing levels of interest rates, currency exchange rates or stock
price levels, respectively, in order to establish more definitely the effective
return on securities or currencies held or intended to be acquired by it. The
Fund's hedging may include sales of Futures as an offset against the effect of
expected increases in interest rates, and decreases in currency exchange rates
and stock prices, and purchases of Futures as an offset against the effect of
expected declines in interest rates, and increases in currency exchange rates or
stock prices.
The Fund only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts
could be used to reduce the Fund's exposure to interest rate, currency exchange
rate and stock market fluctuations, the Fund may be able to hedge its exposure
more effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (security or currency) for a specified price at a designated date,
time and place. A stock index Futures Contract provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading on the contract and the price at which the Futures Contract is
originally struck; no physical delivery of stocks comprising the index is made.
Brokerage fees are incurred when a Futures Contract is bought or sold, and
margin deposits must be maintained at all times the Futures Contract is
outstanding.
Although Futures Contracts typically require future delivery of and
payment for financial instruments or currencies, Futures Contracts usually are
closed out before the delivery date. Closing out an open Futures Contract sale
or purchase is effected by entering into an offsetting Futures Contract purchase
or sale, respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one Futures Contract of September deutschmarks on an
exchange may be fulfilled at any time before delivery under the Futures Contract
is required (i.e., on a specified date in September, the "delivery month") by
the purchase of another Futures Contract of September deutschmarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that the Fund owns, or Futures
Contracts will be purchased to protect the Fund against an increase in the price
of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that
must be deposited by the Fund in order to initiate Futures trading and maintain
its open positions in Futures Contracts. A margin deposit made when the Futures
Contract is entered into ("initial margin") is intended to ensure the Fund's
16
135
performance under the Futures Contract. The margin required for a particular
Futures Contract is set by the exchange on which the Futures Contract is traded
and may be significantly modified from time to time by the exchange during the
term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of
Futures Contracts and prices of the securities or currencies in the Fund's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves
an extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted
in Futures Contract and options on Futures Contracts prices during a single
trading day. The daily limit establishes the maximum amount that the price of a
Futures Contract or option may vary either up or down from the previous day's
settlement price at the end of a trading session. Once the daily limit has been
reached in a particular type of Futures Contract or option, no trades may be
made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures Contracts and option prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of positions and subjecting some traders
to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk
that movements in the prices of Futures Contracts or options on Futures might
not correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship
17
136
between the Futures or options and the investments being hedged. Also, because
initial margin deposit requirements in the Futures market are less onerous than
margin requirements in the securities markets, there might be increased
participation by speculators in the Futures markets. This participation also
might cause temporary price distortions. In addition, activities of large
traders in both the Futures and securities markets involving arbitrage, "program
trading" and other investment strategies might result in temporary price
distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account,
which represents the amount by which the market price of the Futures Contract,
at exercise, exceeds (in the case of a call) or is less than (in the case of a
put) the exercise price of the option on the Futures Contract. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the securities, currencies
or index upon which the Futures Contract is based on the expiration date.
Purchasers of options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and
the purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing of an
option on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on
Futures Contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund, after taking into account
unrealized profits and unrealized losses on any contracts it has entered into.
In general, a call option on a Futures Contract is "in-the-money" if the value
of the underlying Futures Contract exceeds the strike, i.e., exercise, price of
the call; a put option on a Futures Contract is "in-the-money" if the value of
the underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by the Board, without a shareholder vote. This
limitation does not limit the percentage of the Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial
bank or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The Fund
either may accept or make delivery of the currency at the maturity of the
Forward Contract. The Fund may also, if its contra party agrees prior to
maturity, enter into a closing transaction involving the purchase or sale of an
offsetting contract.
18
137
The Fund engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. The Fund might
sell a particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
Forward Contract generally has no deposit requirement, and no commissions are
charged at any stage for trades. The Fund will enter into such Forward Contracts
with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Board.
The Fund may enter into Forward Contracts either with respect to
specific transactions or with respect to its overall investments. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, it either may sell a security and use the sale proceeds to make
delivery of the currency or retain the security and offset its contractual
obligation to deliver the currency by purchasing a second contract pursuant to
which it will obtain, on the same maturity date, the same amount of the currency
that it is obligated to deliver. Similarly, the Fund may close out a Forward
Contract requiring it to purchase a specified currency by entering into a second
contract, if its contra party agrees, entitling it to sell the same amount of
the same currency on the maturity date of the first contract. The Fund would
realize a gain or loss as a result of entering into such an offsetting Forward
Contract under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates of the first
contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund owns or intends to acquire, but it does establish
a rate of exchange in advance. In addition, while Forward Contract sales limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign
currencies, options on Futures on foreign currencies and Forward Contracts to
hedge against movements in the values of the foreign currencies in which the
Fund's securities are denominated. Such currency hedges can protect against
price movements in a security that the Fund owns or intends to acquire that are
attributable to changes in the value of the currency in which it is denominated.
Such hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
19
138
The Fund might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Fund may hedge against price
movements in that currency by entering into a contract on another currency or
basket of currencies, the values of which the portfolio manager believes will
have a positive correlation to the value of the currency being hedged. The risk
that movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward
Contracts and options on foreign currencies depends on the value of the
underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of Futures Contracts, Forward
Contracts or options, the Fund could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirements that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the
interbank market and thus might not reflect odd-lot transactions where rates
might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options
involving foreign currencies might be required to take place within the country
issuing the underlying currency. Thus, the Fund might be required to accept or
make delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options
(other than options purchased by the Fund) expose the Fund to an obligation to
another party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options, Forward Contracts or Futures Contracts or (2) cash, receivables
and short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Forward Contract, Futures Contract or
option is open, unless they are replaced with other appropriate assets. If a
large portion of the Fund's assets is used for cover or otherwise set aside, it
could affect portfolio management or the Fund's ability to meet redemption
requests or other current obligations.
ADDITIONAL RISK FACTORS
GENERAL
Equity securities, particularly common stocks, generally represent the
most junior position in an issuer's capital structure, and entitle holders to an
interest in the assets of the issuer, if any, remaining after all more senior
claims have been satisfied. The value of equity securities held by the Fund will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. The value of
debt securities held by the Fund generally will
20
139
fluctuate with changes in the perceived creditworthiness of the issuers of such
securities and interest rates.
FINANCIAL SERVICES INDUSTRY
Companies in the financial services sector are subject to rapid
business changes, significant competition, value fluctuations due to the
concentration of loans in particular industries significantly affected by
economic conditions (such as real estate or energy), and volatile performance
dependent upon the availability and cost of capital and prevailing interest
rates. In addition, general economic conditions significantly affect these
companies. Credit and other losses resulting from the financial difficulty of
borrowers or other third parties potentially may have an adverse effect on
companies in these industries. Foreign banks, particularly those of Japan, have
reported financial difficulties attributed to increased competition, regulatory
changes, and general economic difficulties.
The financial services area in the United States currently is changing
relatively rapidly as existing distinctions between various financial service
segments become less clear. For instance, recent business combinations have
included insurance, finance, and securities brokerage under single ownership.
Some primarily retail corporations have expanded into securities and insurance
fields. Investment banking, securities brokerage, and investment advisory
companies are subject to government regulation and risk due to securities
trading and underwriting activities.
Many of the investment considerations discussed in connection with
banks, savings institutions and loan associations, and finance companies also
apply to insurance companies. The performance of insurance company investments
will be subject to risk from several factors. The earnings of insurance
companies will be affected by interest rates, pricing (including severe pricing
competition from time to time), claims activity, marketing competition and
general economic conditions. Particular insurance lines also will be influenced
by specific matters. Property and casualty insurance profits may be affected by
certain weather catastrophes and other disasters. Life and health insurers'
profits may be affected by mortality and morbidity rates. Individual companies
may be exposed to material risks, including reserve inadequacy, problems in
investment portfolios (due to real estate or "junk" bond holdings, for example),
and the inability to collect from reinsurance carriers. Insurance companies are
subject to extensive governmental regulation, including the imposition of
maximum rate levels, which may not be adequate for some lines of business.
Proposed or potential anti-trust or tax law changes also may affect adversely
insurance companies' policy sales, tax obligations, and profitability.
INFRASTRUCTURE INDUSTRY
The nature of regulation of infrastructure industries continues to
evolve in both the United States and foreign countries, and changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the infrastructure
industries. Electric, gas, water, and most telecommunications companies in the
United States, for example, are subject to both federal and state regulation
affecting permitted rates of return and the kinds of services that may be
offered. Government regulation may also hamper the development of new
technologies. Adverse regulatory developments could therefore potentially affect
the performance of the Fund.
In addition, many infrastructure companies have historically been
subject to the risks attendant to increases in fuel and other operating costs,
high interest costs on borrowed funds, costs associated with compliance with
environmental, and other safety regulations and changes in the regulatory
climate. Changes in prevailing interest rates may also affect the Infrastructure
Fund's share values because prices of equity and debt securities of
infrastructure companies tend to increase when interest rates decline and
decrease when interest rates rise. Further, competition is intense for many
infrastructure companies. As a result, many of these companies may be adversely
affected in the future and such companies may be subject to increased share
price volatility. In addition, many companies have diversified into oil and gas
exploration and development, and therefore returns may be more sensitive to
energy prices.
Some infrastructure companies, such as water supply companies, operate
in highly fragmented market sectors due to local ownership. In addition, some of
these companies are mature and experience
21
140
little or no growth. Either of these factors could have a material effect on
infrastructure companies and could therefore affect the performance of the Fund.
NATURAL RESOURCES INDUSTRY
The Fund invests in companies that engage in the exploration,
development, and distribution of coal, oil and gas in the United States. These
companies are subject to significant federal and state regulation, which may
affect rates of return on such investments and the kinds of services that may be
offered. In addition, many natural resource companies historically have been
subject to significant costs associated with compliance with environmental and
other safety regulations. Governmental regulation may also hamper the
development of new technologies.
Further, competition is intense for many natural resource companies. As
a result, many of these companies may be adversely affected in the future and
the value of the securities issued by such companies may be subject to increased
price volatility. Such companies may also be subject to irregular fluctuations
in earnings due to changes in the availability of money, the level of interest
rates, and other factors.
The value of securities of natural resource companies will fluctuate in
response to market conditions for the particular natural resources with which
the issuers are involved. The price of natural resources will fluctuate due to
changes in worldwide levels of inventory, and changes, perceived or actual, in
production and consumption. With respect to precious metals, such price
fluctuations may be substantial over short periods of time. In addition, the
value of natural resources may fluctuate directly with respect to various stages
of the inflationary cycle and perceived inflationary trends and are subject to
numerous factors, including national and international politics.
CONSUMER PRODUCTS AND SERVICES INDUSTRY
The performance of consumer products and services companies relates
closely to the actual and perceived performance of the overall economy, interest
rates, and consumer confidence. In addition, many consumer products and services
companies have unpredictable earnings, due in part to changes in consumer tastes
and intense competition. As a result of either of these factors, consumer
products and services companies may be subject to increased share price
volatility.
The consumer products and services industry may also be subject to
greater government regulation than many other industries. Changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the consumer
products and services industries. Such governmental regulations may also hamper
the development of new business opportunities.
HEALTH CARE INDUSTRY
Health care industries generally are subject to substantial
governmental regulation. Changes in governmental policy or regulation could have
a material effect on the demand for products and services offered by companies
in the health care industries and therefore could affect the performance of the
Fund. Regulatory approvals are generally required before new drugs and medical
devices or procedures may be introduced and before the acquisition of additional
facilities by health care providers. In addition, the products and services
offered by such companies may be subject to rapid obsolescence caused by
technological and scientific advances.
TELECOMMUNICATIONS AND TECHNOLOGY INDUSTRY
Telecommunications and technology industries may be subject to greater
governmental regulation than many other industries and changes in governmental
policy and the need for regulatory approvals may have a material effect on the
products and services offered by companies in those industries. Telephone
operating companies in the United States, for example, are subject to both
federal and state regulation affecting permitted rates of return and the kinds
of services that may be offered. In
22
141
addition, certain types of companies in the telecommunications and technology
industries are engaged in fierce competition for market share that could result
in increased share price volatility.
DEBT SECURITIES
The value of the debt securities held by the Fund generally will vary
conversely with market interest rates. If interest rates in a market fall, the
value of the debt securities held by the Fund ordinarily will rise. If market
interest rates increase, however, the debt securities owned by the Fund in that
market will be likely to decrease in value.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P, and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. For S&P, BB indicates the lowest
degree of speculation for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Lower quality debt securities also are generally considered to be subject to
greater risk than securities with higher ratings with regard to a deterioration
of general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds." See
Appendix A for a description of the various debt ratings.
Ratings of debt securities represent the rating agency's opinion
regarding their quality and are not a guarantee of quality. Rating agencies
attempt to evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, rating agencies may
fail to make timely changes in credit ratings in response to subsequent events,
so that an issuer's current financial condition may be better or worse than a
rating indicates.
The market values of lower quality debt securities tend to reflect
individual developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call
or buy-back features that permit the issuer to call or repurchase the security
from the Fund. If an issuer exercises these provisions in a declining interest
rate market, the Fund may have to replace the security with a lower yielding
security, resulting in a decreased return for investors. In addition, the Fund
may have difficulty disposing of lower quality securities because they may have
a thin trading market. There may be no established retail secondary market for
many of these securities, and the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market also may have an adverse impact on market prices of
such instruments and may make it more difficult for the Fund to obtain accurate
market quotations for purposes of valuing their portfolio investments. The Fund
may also acquire lower quality debt securities during an initial underwriting or
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
23
142
In addition to the foregoing, factors that could have an adverse effect
on the market value of lower quality debt securities in which the Fund may
invest include: (i) potential adverse publicity; (ii) heightened sensitivity to
general economic or political conditions; and (iii) the likely adverse impact of
a major economic recession. The Fund may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Fund may have limited legal
recourse in the event of a default.
AIM attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors.
INVESTING IN SMALLER COMPANIES
While the Fund's holdings normally will include securities of
established suppliers of traditional products and services, the Fund may invest
in smaller companies which can benefit from the development of new products and
services. These smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks than large, established
issuers. Such smaller companies may have limited resources, and their securities
may trade less frequently and in more limited volume than the securities of
larger, more established companies. As a result, the prices of the securities of
such smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
it values such securities. See "Investment Limitations." The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than will the sale of liquid securities such as securities eligible for
trading on U.S. securities exchanges or in OTC markets. Moreover, restricted
securities, which may be illiquid for purposes of this limitation, often sell,
if at all, at a price lower than similar securities that are liquid.
Illiquid securities include those that are subject to restrictions
contained in the securities laws of other countries. However, securities that
are freely marketable in the country where they are principally traded, but
would not be freely marketable in the United States, will not be considered
illiquid. Where registration is required, the Fund may be obligated to pay all
or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
have developed as a result of Rule 144A, providing both readily ascertainable
values for restricted securities and the ability to liquidate an investment to
satisfy share redemption orders. Such
24
143
markets include automated systems for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. An
insufficient number of qualified institutional buyers interested in purchasing
Rule 144A-eligible restricted securities held by the Fund, however, could affect
adversely the marketability of such portfolio securities, and the Fund might be
unable to dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Board has the
ultimate responsibility for determining whether specific securities, including
restricted securities pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to AIM, in accordance with procedures approved by
the Board. AIM takes into account a number of factors in reaching liquidity
decisions, including (i) the frequency of trading in the security, (ii) the
number of dealers that make quotes for the security, (iii) the number of dealers
that have undertaken to make a market in the security, (iv) the number of other
potential purchasers and (v) the nature of the security and how trading is
effected (e.g., the time needed to sell the security, how offers are solicited
and the mechanics of transfer). AIM monitors the liquidity of securities held by
the Fund and periodically reports such determinations to the Board. If the
liquidity percentage restriction of the Fund is satisfied at the time of
investment, a later increase in the percentage of illiquid securities held by
the Fund resulting from a change in market value or assets will not constitute a
violation of that restriction. If as a result of a change in market value or
assets, the percentage of illiquid securities held by the Fund increases above
the applicable limit, AIM will take appropriate steps to bring the aggregate
amount of illiquid assets back within the prescribed limitations as soon as
reasonably practicable, taking into account the effect of any disposition on the
Fund. AIM believes that carefully selected investments in joint ventures,
cooperatives, partnerships and state enterprises that are illiquid
(collectively, "Special Situations") could enable the Fund to achieve capital
appreciation substantially exceeding the appreciation it would realize if it did
not make such investments. However, in order to attempt to limit investment
risk, the Fund will invest no more than 5% of its total assets in Special
Situations.
FOREIGN SECURITIES
The Fund may hold foreign securities. Such investments may include
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and
other securities representing underlying securities of foreign issuers. 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.
To the extent the Fund invests in securities denominated in foreign
currencies, the Fund bears the risk of changes in the exchange rates between U.
S. currency and the foreign currency, as well as the availability and status of
foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. The Fund may
also invest in foreign securities listed on recognized U.S. securities exchanges
or traded in the U.S. over-the-counter market. Such foreign securities may be
issued by foreign companies located in developing countries in various regions
of the world. A "developing country" is a country in the initial stages of its
industrial cycle. As compared to investment in the securities markets of
developed countries, investment in the securities markets of developing
countries involves exposure to markets 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.
25
144
Investments by the Fund in foreign securities, whether denominated in
U.S. currencies or foreign currencies, may entail all of the risks set forth
below. Investments by the Fund in ADRs, EDRs or similar securities also may
entail some or all of the risks as set forth below.
Currency Risk. The value of the Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated and increases when the
value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. On January 1, 2001, Greece became a member of
the EMU. It is anticipated that each participating country will replace its
local currency with the euro on July 1, 2002. Any other European country that is
a member of the European Union and satisfies the criteria for participation in
the EMU may elect to participate in the EMU and may supplement its existing
currency with euro. The anticipated replacement of existing currencies with the
euro on July 1, 2002 could cause market disruptions before or after July 1, 2002
and could adversely affect the value of securities held by the Fund.
Political and Economic Risk. The economies of many of the countries in
which the Fund may invest are not as developed as the United States economy and
may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of the
Fund's investments.
Regulatory Risk. Foreign companies are not registered with the SEC and
are generally not subject to the regulatory controls imposed on United States
issuers and, as a consequence, there is generally less publicly available
information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Fund may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Fund's shareholders.
Market Risk. The securities markets in many of the countries in which
the 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. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States.
INVESTMENT LIMITATIONS
INVESTMENT LIMITATIONS OF THE FUND
The following fundamental limitations of the Fund cannot be changed
without the affirmative vote of a majority of the outstanding shares of the
Fund.
1. The Fund is a "diversified company" as defined in the 1940 Act. The
Fund will not purchase the securities of any issuer if, as a result,
the Fund would fail to be a diversified company within the meaning of
the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules, and regulations are amended from time to time or
are interpreted from time to time by the SEC staff (collectively, the
"1940 Act Laws and Interpretations") or to the extent that the Fund
may be permitted to do so by exemptive
26
145
order or similar relief (collectively, with the 1940 Act Laws and
Interpretations, the "1940 Act Laws, Interpretations and Exemptions").
In complying with this restriction, however, the Fund may purchase
securities of other investment companies to the extent permitted by the
1940 Act Laws, Interpretations and Exemptions.
2. The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
3. The Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the Fund may be considered to be an
underwriter under the Securities Act of 1933.
4. The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act Laws, Interpretations and Exemptions, of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the Fund's investment in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, (ii) tax-exempt obligations issued by government or
political subdivisions of governments, or (iii) bank instruments. In
complying with this restriction, the Fund will not consider a
bank-issued guaranty or financial guaranty insurance as a separate
security.
5. The Fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the Fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein.
6. The Fund will not purchase or sell physical commodities unless
acquired as a result of owning securities or other instruments, but the
Fund may purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
7. The Fund may not make personal loans or loans to persons who control
or are under the common control with the Fund, except to the extent
permitted by 1940 Act Laws, Interpretations and Exemptions. This
restriction does not prevent the Fund from purchasing debt obligations,
entering into repurchase agreements, loaning its assets to
broker-dealers or institutional investors, or investing in loans,
including assignments and participation interests.
8. The Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objectives, policies and limitations as the
Fund.
The investment restrictions set forth above provide the Fund with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Fund has this flexibility, the Fund follows internal
guidelines relating to certain of these restrictions which the adviser must
follow in managing the Fund. Any changes to these guidelines, which are set
forth below, require the approval of the Board of Trustees.
1. In complying with the diversification restriction set forth in (1)
above, the Fund will not, with respect to 75% of its total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(ii) the fund would hold more than 10% of the outstanding voting
securities of that issuer. The Fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the 1940
Act and (ii) invest its assets in securities of other money market
27
146
funds and lend money to other investment companies and their series
portfolios that have AIM as an investment adviser, subject to the
terms and conditions of any exemptive orders issued by the SEC.
2. In complying with the borrowing restriction set forth in (2) above,
the Fund may borrow money in an amount not exceeding 33 1/3% of its
total assets (including the amount borrowed) less liabilities (other
than borrowings). The Fund may borrow from banks, broker/dealers or
other investment companies or their series portfolios that have AIM or
an affiliate of AIM as an investment adviser (an "AIM Fund"). The Fund
may not borrow for leveraging, but may borrow for temporary or
emergency purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The Fund may not purchase
additional securities when any borrowing from banks exceed 5% of the
Fund's total assets.
3. In complying with the concentration restriction set forth in (4)
above, the Fund may invest up to 25% of its total assets in the
securities of issuers whose principal business activities are in the
same industry.
4. In complying with the lending restrictions set forth in (7) above,
the Fund may lend up to 33 1/3% of its total assets and may lend money
to another AIM Fund, on such terms and conditions as the SEC may
require in an exemptive order.
5. Notwithstanding the restriction set forth in (8) above, the Fund may
not invest all of its assets in the securities of a single open-end
management investment company with the same fundamental investment
objectives, policies and limitations as the Fund.
6. The Fund will not invest more than 15% of its net assets in illiquid
securities, a term which means securities that cannot be disposed of
within seven days in the ordinary course of business at approximately
the amount at which the Fund has valued the securities and includes,
among other things, repurchase agreements maturing in more than seven
days;
7. The Fund will not purchase portfolio securities while borrowings in
excess of 5% of its total assets are outstanding;
8. The Fund will not purchase securities on margin, except for
short-term credit necessary for clearance of portfolio transactions and
except that the Fund may make margin deposits in connection with its
use of financial options and futures, forward and spot currency
contracts, swap transactions and other financial contract or derivative
instruments;
9. The Fund will not purchase securities of other investment companies,
except to the extent permitted by the 1940 Act Laws, Interpretations
and Exemptions and except that this limitation does not apply to
securities received or acquired as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
If a percentage restriction on investment or utilization of assets in
an investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions. The
percentage limitations applicable to borrowings and reverse repurchase
agreements will be applied in accordance with applicable provisions of the 1940
Act and the rules and regulations promulgated thereunder which specifically
limit the Fund's borrowing abilities. The Fund may exchange securities, exercise
conversion or subscription rights, warrants or other rights to purchase common
stock or other equity securities and may hold, except to the extent limited by
the 1940 Act, any such securities so acquired without regard to the Fund's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of the Fund's
compliance with the investment percentage limitations referred to above and in
the Prospectus.
28
147
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Fund, selects
broker-dealers, effects the Fund's investment portfolio transactions, allocates
brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate. While AIM seeks reasonably competitive commission rates, the Fund may not
pay the lowest commission or spread available. See "Section 28(e) Standards"
below.
Some of the securities in which the Fund invests are traded in
over-the-counter markets. In such transactions, the Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Fund) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Fund and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Fund and of the other AIM Funds. In connection with (3)
above, the Fund's trades may be executed directly by dealers that sell shares of
the AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
The Fund may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Fund, provided the conditions of an exemptive order received
by the Funds from the SEC are met. In addition, the Fund may purchase or sell a
security from or to another AIM Fund or account (and may invest in affiliated
money market funds) provided the Fund follows procedures adopted by the Boards
of Directors/Trustees of the various AIM Funds, including the Trust. These
inter-fund transactions do not generate brokerage commissions but may result in
custodial fees or taxes or other related expenses.
Under the 1940 Act, certain persons affiliated with the Trust are
prohibited from dealing with the Fund as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the Funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust are members except in accordance with certain conditions.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some
of these accounts may have investment objectives similar to the Fund.
Occasionally, identical securities will be appropriate for investment by the
Funds and by another Fund or one or more of these investment accounts. However,
the position of each account in the same securities and the length of time that
each account may hold its investment in the same securities may vary. The timing
and amount of purchase by each account will also be determined by its cash
position. If the purchase or sale of securities is consistent with the
investment policies of the Fund and one or more of these accounts, and is
considered at or about the same time, AIM will fairly allocate transactions in
such securities among the Fund and these
29
148
accounts. AIM may combine such transactions, in accordance with applicable laws
and regulations, to obtain the most favorable execution. Simultaneous
transactions could, however, adversely affect the Fund's ability to obtain or
dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") SECURITIES TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed
by AIM may become interested in participating in security distributions that are
available in an IPO, and occasions may arise when purchases of such securities
by one AIM Fund or account may also be considered for purchase by one or more
other AIM Funds or accounts. In such cases, it shall be AIM's practice to
specifically combine or otherwise bunch indications of interest for IPO
securities for all AIM Funds and accounts participating in purchase transactions
for that security, and to allocate such transactions in accordance with the
following procedures:
AIM will determine the eligibility of each AIM Fund and account that
seeks to participate in a particular IPO by reviewing a number of factors,
including suitability of the investment with the AIM Fund's or account's
investment objective, policies and strategies, the liquidity of the AIM Fund or
account if such investment is purchased, and whether the portfolio manager
intends to hold the security as a long-term investment. The allocation of
limited supply securities issued in IPOs will be made to eligible AIM Funds and
accounts in a manner designed to be fair and equitable for the eligible AIM
Funds and accounts, and so that there is equal allocation of IPOs over the
longer term. Where multiple funds or accounts are eligible, rotational
participation may occur, based on the extent to which an AIM Fund or account has
participated in previous IPOs as well as the size of the AIM Fund or account.
Each eligible AIM Fund and account with an asset level of less than $500 million
will be placed in one of three tiers, depending upon each AIM Fund's or
account's asset level. The AIM Funds and accounts in the tier containing funds
and accounts with the smallest asset levels will participate first, each
receiving a 40 basis point allocation (rounded to the nearest share round lot
that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's
or account's net assets. This process continues until all of the AIM Funds and
accounts in the three tiers receive their Allocations, or until the shares are
all allocated. Should securities remain after this process, eligible AIM Funds
and accounts will receive their Allocations on a straight pro rata basis. For
the tier of AIM Funds and accounts not receiving a full Allocation, the
Allocation may be made only to certain AIM Funds or accounts so that each may
receive close to or exactly 40 basis points.
When any AIM Funds and/or accounts with substantially identical
investment objectives and policies participate in syndicates, they will do so in
amounts that are substantially proportionate to each other. In these cases, the
net assets of the largest AIM Fund will be used to determine in which tier, as
described in the paragraph above, such group of AIM Funds or accounts will be
placed. If no AIM Fund is participating, then the net assets of the largest
account will be used to determine tier placement. The price per share of
securities purchased in such syndicate transactions will be the same for each
AIM Fund and account.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and
30
149
appropriately assist AIM in the performance of its investment decision-making
responsibilities. Accordingly, in recognition of research services provided to
it, the Fund may pay a broker higher commissions than those available from
another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally, in
written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Fund. However, the Fund is not under any obligation to deal with
any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Fund is not reduced because AIM receives such services.
However, to the extent that AIM would have purchased research services had they
not been provided by broker-dealers, the expenses to AIM could be considered to
have been reduced accordingly.
TRANSACTIONS WITH REGULAR BROKERS
As of December 31, 2000, the Fund held an amount of common stock issued
by Merrill Lynch & Co. having a market value of $450,038, and common stock
issued by Lehman Brothers Holdings having a market value of $351,650.
BROKERAGE COMMISSIONS PAID
For the fiscal year ended December 31, 2000, and for the period ended
December 31, 1999, the Fund paid aggregate brokerage commissions of $295,680 and
$81,004, respectively.
PORTFOLIO TURNOVER
Although the Fund does not intend generally to trade for short-term
profits, the securities held by the Fund will be sold whenever management
believes it is appropriate to do so, without regard to the length of time a
particular security may have been held. Portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by the Fund's
average month-end portfolio value, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when management deems
portfolio changes appropriate. Higher portfolio turnover involves
correspondingly
31
150
greater brokerage commissions and other transaction costs that the Fund will
bear directly, and may result in the realization of net capital gains that are
taxable when distributed to the Fund's shareholders.
Prior to August 27, 1999, the Fund invested substantially all of its
assets in the AIM Theme Funds and periodically rebalanced its investments among
those funds. In August 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. This led to a
substantial difference in portfolio turnover rates in fiscal years ending in
1999 and 2000. For the fiscal years ended December 31, 2000 and 1999, the
portfolio turnover rates were 260% and 147%, respectively.
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless
otherwise indicated, the address of each Executive Officer is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046.
PAST
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
*ROBERT H. GRAHAM (54) Trustee, Chairman and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and
Fund Management Company; and Director and Vice
Chairman, AMVESCAP PLC.
C. DEREK ANDERSON (60) Trustee Senior Managing Partner, Plantagenet Capital
456 Montgomery Street Management, LLC (an investment partnership); Chief
Suite 200 Executive Officer, Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); Director, PremiumWear,
Inc. (formerly Munsingwear, Inc.) (a casual apparel
company), 'R' Homes, Inc. and various other
privately owned companies.
- ----------
* A trustee who is an "interested person" of the Trust and AIM
as defined in the 1940 Act.
32
151
PAST
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
FRANK S. BAYLEY (61) Trustee Partner, law firm of Baker & McKenzie; Director
Two Embarcadero Center and Chairman, Stimson Marina, Inc., a subsidiary
Suite 2400 of C. D. Stimson Company (a private investment
San Francisco, CA 94111 company) and Trustee, The Badgley Funds.
RUTH H. QUIGLEY (66) Trustee Private investor; and President, Quigley Friedlander
1055 California Street & Co., Inc. (a financial advisory services firm) from
San Francisco, CA 94108 1984 to 1986.
MELVILLE B. COX (57) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc.
and Fund Management Company.
GARY T. CRUM (53) Vice President Director and President, A I M Capital Management,
Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
CAROL F. RELIHAN (46) Vice President Director, Senior Vice President, General Counsel
and Secretary and Secretary, A I M Advisors, Inc.; Senior Vice
President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company; Vice
President and General Counsel, A I M Fund Services,
Inc.; and Vice President, A I M Capital Management,
Inc. and A I M Distributors, Inc.
DANA R. SUTTON (42) Vice President and Vice President and Fund Controller, A I M Advisors,
Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
The Board of Trustees has a Nominating and Audit Committee, comprised
of Ms. Quigley (Chairman) and Messrs. Anderson and Bayley, which is responsible
for nominating persons to serve as
33
152
Trustees, reviewing audits of the Trust and its funds and recommending firms to
serve as independent auditors of the Trust. All of the Trust's Trustees also
serve as trustees of some or all of the other investment companies managed,
administered or advised by AIM. All of the Trust's executive officers hold
similar offices with some or all of the other investment companies managed,
administered or advised by AIM. Each Trustee who is not a director, officer or
employee of AIM or any other affiliated company is paid an annual retainer
component, plus a per-meeting fee component and reimbursed travel and other
expenses incurred in connection with attendance at such meetings.
For the fiscal year ended December 31, 2000, Mr. Anderson, Mr. Bayley
and Ms. Quigley, who are not directors, officers or employees of AIM or any
affiliated company, received total compensation of $3,346, $3,415 and $3,415,
respectively, from the Trust for their services as Trustees. For the fiscal year
ended December 31, 2000, Mr. Anderson, Mr. Bayley and Ms. Quigley, who are not
directors, officers or employees of AIM or any other affiliated company,
received total compensation of $103,000, $105,000 and $105,000, respectively,
from the investment companies managed or administered by AIM for which he or she
served as a Trustee. Fees and expenses disbursed to the Trustees contained no
accrued or payable pension or retirement benefits. Other Trustees and officers
receive no compensation or expense reimbursement from the Trust. As of March 30,
2001, the Trustees and officers of the Trust, as a group, owned less than 1% of
the outstanding shares of the Fund.
MANAGEMENT SERVICES RELATING TO THE FUND
AIM was organized in 1976, and along with its subsidiaries, manages or
advises approximately 135 investment portfolios encompassing a broad range of
investment objectives.
AIM is a direct, 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 is the sole shareholder of the Fund's
principal underwriter, AIM Distributors.
AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC,
11 Devonshire Square, London, EC2M 4YR, England. AMVESCAP PLC and its
subsidiaries are independent investment management groups that have a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston office, AIM
draws upon the expertise, personnel, data and systems of other offices in
Atlanta, Boston, Dallas, Denver, Louisville, Miami, Portland (Oregon),
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Fund, AIM employs a team approach, taking advantage of its investment
resources around the world.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees to (a) pre-clear all personal
securities transactions subject to the Code of Ethics; (b) file reports
regarding such transactions; (c) refrain from personally engaging in (i)
short-term trading of a security, (ii) transactions involving a security within
seven days of an AIM Fund transaction involving the same security (subject to a
de minimis exception), and (iii) transactions involving securities being
considered for investment by an AIM Fund (subject to the de minimis exception);
and (d) abide by certain other provisions of the Code of Ethics. The de minimis
exception under the Code of Ethics covers situations where there is no material
conflict of interest because of the large market capitalization of a security
and the relatively small number of shares involved in a personal transaction.
The Code of Ethics also generally prohibits AIM employees from purchasing
securities in initial public offerings. Personal trading reports are
periodically reviewed by AIM, and the Board of Trustees reviews quarterly and
annual reports (which summarize any significant violations of the Code of
Ethics). Sanctions for violating the Code of Ethics may include censure,
monetary penalties, suspension or termination of employment.
AIM serves as the Fund's investment advisor under an investment
advisory contract between the Trust and AIM ("Master Investment Advisory
Agreement," the "Agreement"). As investment advisor, AIM makes all investment
decisions for the Fund, and, as administrator, administers the Fund's affairs.
Among other things, AIM furnishes the services and pays the compensation and
travel expenses of
34
153
persons who perform the executive, administrative, clerical and bookkeeping
functions of the Fund and provides suitable office space, necessary small office
equipment and utilities.
The Agreement may be renewed with respect to the Fund for additional
one-year terms, provided that any such renewal has been specifically approved at
least annually by (i) the Fund's Board of Trustees or the vote of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act) and (ii) a
majority of Trustees who are not parties to the Agreement or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Agreement and the Administration Contract provide that with respect to the Fund,
either the Trust or AIM may terminate either the Agreement or the Administration
Contract without penalty upon sixty days' written notice to the other party. The
Agreement terminates in the event of its assignment (as defined in the 1940
Act).
For investment advisory services, the Fund pays AIM fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on the amounts thereafter. The investment
advisory fees paid by the Fund are higher than those paid by most mutual funds.
AIM has undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate of
2.00%, 2.50% and 2.50% of the average daily net assets of the Fund's Class A,
Class B and Class C shares, respectively, until June 30, 2001.
AIM may from time to time further waive or reduce its fee. Voluntary
fee waivers or reductions may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in the
Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM and the Fund.
For the fiscal year ended December 31, 2000, and the period ended
December 31, 1999, the Fund paid AIM the following net investment advisory fees
in the amounts of $410,775 and $142,786, respectively.
For the fiscal year ended December 31, 2000 and the period ended
December 31, 1999, AIM waived investment advisory fees for the Fund in the
amounts of $66,219 and 52,643, respectively.
AIM also serves as administrator and pricing and fund accounting agent
to the Fund under a Master Administrative Services Agreement between the Trust
and AIM ("Administration Contract"). For the fiscal year ended December 31, 2000
and for the period ended December 31, 1999, the Fund paid AIM $50,000 and
$17,100, respectively, in administrative fees.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by AIM, AIM Distributors and
other agents. These expenses include, in addition to the investment advisory and
administration fees discussed above, distribution, transfer agency, pricing and
accounting agency and brokerage fees, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. Expenditures, including costs incurred in connection with
the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses.
The ratio of the Fund's expenses to its relative net assets can be expected to
be higher than the expense ratios of funds investing solely in domestic
securities, since the cost of maintaining the custody of foreign securities and
the rate of investment management fees paid by the Fund generally are higher
than the comparable expenses of such other funds.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan, as amended, pursuant
to Rule 12b-1 under the 1940 Act relating to the Class A and Class C shares of
the Fund (the "Class A and C Plan"). The Class A and C Plan provides that the
Class A shares pay 0.50% per annum of their average daily net assets
attributable to Class A shares as compensation to AIM Distributors for the
purpose of financing any activity which is primarily intended to result in the
sale of Class A shares. Under the Class A and C Plan, Class C shares of the Fund
pays compensation to AIM Distributors at an annual rate of 1.00% of the average
daily net assets attributable to 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
35
154
seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class A and C Plan.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of 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
Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments
to dealers and other financial institutions including AIM Distributors, acting
as principal, for providing continuing personal shareholder services to their
customers who purchase and own shares of the Fund, in amounts of up to 0.25% of
the average net assets of the Fund attributable to the customers of such dealers
or financial institutions are characterized as a service fee, and payments to
dealers and other financial institutions including AIM Distributors, acting as
principal, in excess of such amount would be characterized as an asset-based
sales charge pursuant to the Class A and C Plan. The Class A and C Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A and
C Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A and C Plan on behalf of the Fund. Thus, under the Class A and C Plan,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Fund will not be obligated to pay
more than that fee. If AIM Distributors' expenses are less than the fee it
receives, AIM Distributors will retain the full amount of the fee.
THE CLASS B PLAN
The Trust has also adopted a Master Distribution Plan as amended,
pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the Fund
(the "Class B Plan," and collectively with the Class A and C Plan, the "Plans").
Under the Class B Plan, the Fund pays compensation to AIM Distributors at an
annual rate of 1.00% of the average daily net assets attributable to Class B
shares. Of such amount, the Fund pays a service fee of 0.25% of the average
daily net assets attributable to Class B shares to selected dealers and other
institutions which furnish continuing personal shareholder services to their
customers who purchase and own Class B shares. Amounts paid in accordance with
the Class B Plan may be used to finance any activity primarily intended to
result in the sale of Class B shares, including but not limited to printing of
prospectuses and statements of additional information and reports for other than
existing shareholders; overhead; preparation and distribution of advertising
material and sales literature; expenses of organizing and conducting sales
seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class B Plan.
BOTH PLANS
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Fund's shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Fund; assisting customers in
changing dividend options, account designations and addresses, and in enrolling
in any of the several special investment plans offered in connection with
36
155
the purchase of the Fund's shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Fund's shares; and providing such other
information and services as the Fund or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding the Fund,
performing sub-accounting; establishing and maintaining shareholder accounts and
records; processing customer purchase and redemption transactions; providing
periodic statements showing a shareholder's account balance and the integration
of such statements with those of other transactions and balances in the
shareholder's other accounts serviced by the bank; forwarding applicable
prospectuses, proxy statements, reports and notices to bank clients who hold
Fund shares; and such other administrative services as the Fund reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
The Trust may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Fund
authorizing payments to selected insurance companies offering variable annuity
contracts to employers as funding vehicles for retirement plans qualified under
Section 401(a) of the Code. Services provided pursuant to such Variable Contract
Agreements may include some or all of the following: answering inquiries
regarding the Fund and the Trust; performing sub-accounting; establishing and
maintaining contractholder accounts and records; processing and bunching
purchase and redemption transactions; providing periodic statements of contract
account balances; forwarding such reports and notices to contractholders
relative to the Fund as deemed necessary; generally, facilitating communications
with contractholders concerning investments in the Fund on behalf of plan
participants; and performing such other administrative services as deemed to be
necessary or desirable, to the extent permitted by applicable statute, rule or
regulation to provide such services.
Similar agreements may be permitted under the Plans for institutions
which provide recordkeeping for and administrative services to 401(k) plans.
In addition, Shareholder Service Agreements may be permitted under the
Plans for bank trust departments and brokers for bank trust departments which
provide shareholder services to their customers.
AIM Distributors, acting as principal, may also enter into Shareholder
Service Agreements with the Fund, substantially identical to those agreements
entered into with investment dealers or other financial institutions,
authorizing payments to AIM Distributors for providing continuing personal
shareholder services to those customers for which AIM Distributors serves as
dealer of record.
37
156
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, the Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment period
for each business day of the Fund during such period at the annual rate of 0.25%
of the average daily net asset value of the Fund's shares purchased or acquired
through exchange. Fees calculated in this manner shall be paid only to those
selected dealers or other institutions who are dealers or institutions of record
at the close of business on the last business day of the applicable payment
period for the account in which the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made
to dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund
to no more than 0.25% per annum of the average daily net assets of the funds
attributable to the customers of such dealers or financial institutions, and by
imposing a cap on the total sales charges, including asset based sales charges,
that may be paid by the Fund and its respective classes.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for Class A shares and Class C shares. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM Distributors will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Funds, pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund, in
making dealer incentive and shareholder servicing payments to dealers and other
financial institutions under the Plans. These payments are an obligation of the
Fund and not of AIM Distributors. Financial intermediaries and any other person
entitled to receive compensation for selling Fund shares may receive different
compensation for selling shares of one class over another.
For the fiscal year ended December 31, 2000, the Fund paid the
following amounts under the current plan:
% OF CLASS AVERAGE DAILY
NET ASSETS
------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Year Ended
December 31, 2000 $106,433 $263,363 $11,910 0.50% 1.00% 1.00%
An estimate of fees by category paid by the Fund with regard to Class
A, Class B and Class C shares during the fiscal year ended December 31, 2000
follows:
38
157
CLASS A
Advertising........................................................................ $ 8,721
Printing and Mailing prospectuses, semi-annual reports
and annual reports (other than to current shareholders)........................ 677
Seminars........................................................................... 1,880
Compensation to Underwriters to partially offset
other marketing expenses....................................................... 0
Compensation to Dealers including Finder's Fees.................................... 95,155
Compensation to Sales Personnel.................................................... 0
CLASS B
Advertising........................................................................ $ 2,082
Printing and Mailing prospectuses, semi-annual reports
and annual reports (other than to current shareholders)........................ 206
Seminars........................................................................... 382
Compensation to Underwriters to partially offset
other marketing expenses....................................................... 197,523
Compensation to Dealers............................................................ 63,170
Compensation to Sales Personnel.................................................... 0
CLASS C
Advertising........................................................................ $ 0
Printing and Mailing prospectuses, semi-annual reports
and annual reports (other than to current shareholders)........................ 0
Seminars........................................................................... 0
Compensation to Underwriters....................................................... 6,151
Compensation to Dealers............................................................ 5,759
Compensation to Sales Personnel.................................................... 0
The Plans require AIM Distributors to provide the Board of Trustees at
least quarterly with a written report of the amounts expended pursuant to the
Plans and the purposes for which such expenditures were made. The Board of
Trustees reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Trustees, including a majority
of the Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans ("Qualified Trustees").
In approving the Plans in accordance with the requirements of Rule 12b-1, the
trustees considered various factors and determined that there is a reasonable
likelihood that the Plans would benefit each class of the Fund and their
respective shareholders.
The Plans do not obligate the Fund to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect from year to year thereafter, as long as such continuance is
specifically approved at least annually by the Board of Trustees, including a
majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified
Trustees, or, with respect to a particular class, by the vote a majority of the
outstanding voting securities of that class.
39
158
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the Trustees, including a majority of the Qualified
Trustees, by votes cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plans are in effect, the selection or
nomination of the Qualified Trustees is committed to the discretion of the
Qualified Trustees. In the event the Class A and C Plan is amended in a manner
which the Board of Trustees determines would materially increase the charges
paid under the Class A and C Plan, the Class B shares of the Fund will no longer
convert into Class A shares of the same Fund unless the Class B shares, voting
separately, approve such amendment. If the Class B shareholders do not approve
such amendment, the Board of Trustees will (i) create a new class of shares of
the Fund which is identical in all material respects to the Class A shares as
they existed prior to the implementation of the amendment and (ii) ensure that
the existing Class B shares of the Fund will be exchanged or converted into such
new class of shares no later than the date the Class B shares were scheduled to
convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.50% of average daily net assets of the Class A shares of the Fund, as
compared to 1.00% of such assets of the Fund's Class B shares; (ii) the Class B
Plan obligates the Class B shares to continue to make payments to AIM
Distributors following termination of the Class B shares Distribution Agreement
with respect to Class B shares sold by or attributable to the distribution
efforts of AIM Distributors and its predecessor, GT Global, Inc. unless there
has been a complete termination of the Class B Plan (as defined in such Plan)
and (iii) the Class B Plan expressly authorizes AIM Distributors to assign,
transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Fund's shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." Master
Distribution Agreements with AIM Trustees relating to the Class A, Class B and
Class C shares of the Funds were approved by the Board of Directors on May 7,
1998. Certain trustees and officers of the Trust are affiliated with AIM
Distributors. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Fund's
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Fund), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Fund's shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Fund.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B 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 the
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
40
159
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the Fund 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 Trust (on behalf of any class of the Fund) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors and its predecessor; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all payments by the Fund of asset based distribution fees
and service fees to AIM Distributors. Termination of the Class B Plan or
Distribution Agreement does not affect the obligation of the Class B
shareholders to pay contingent deferred sales charges.
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreement relating to Class B Shares in order to
finance distribution expenditures in respect of Class B Shares.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of the Fund and the amount retained by GT
Global, Inc., the Fund's distributor prior to June 1, 1998, for the fiscal
period ended December 31, 1998.
JANUARY 1, 1998 TO
JUNE 1, 1998
---------------------
SALES AMOUNT
CHARGES RETAINED
------- --------
AIM Global Trends Fund............................................ $85,590 $ 14,589
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of the Fund and the amount retained by AIM
Distributors for the fiscal years ended December 31, 2000, 1999 and the period
June 1, 1998 to December 31, 1998, respectively:
YEAR ENDED YEAR ENDED JUNE 1, 1998 TO
DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- ------------------- -------------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
------- -------- ------- -------- ------- --------
AIM Global Trends Fund........... $70,734 $12,562 $ 30,132 $ 5,165 $ 5,303 $ 5,203
The following chart reflects the contingent deferred sales charges paid
by Class A, Class B and Class C shareholders and retained by AIM Distributors
for the fiscal years ended December 31, 2000, 1999 and 1998, respectively:
2000 1999 1998
---------- ---------- --------
AIM Global Trends Fund........................... $ 427 $ 1,175 $ 77,466
41
160
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge
ranging from 5.50% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Aggressive Growth Fund, AIM
Asian Growth Fund, AIM Basic Value Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic
Trends Fund, AIM Emerging Growth Fund AIM European Development Fund, AIM
European Small Company Fund, AIM Euroland Growth Fund, AIM Global Utilities
Fund, AIM International Emerging Growth Fund, AIM International Equity Fund, AIM
Japan Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund,
AIM Large Cap Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth
Fund, AIM Mid Cap Opportunities Fund, AIM New Technology Fund, AIM Select Growth
Fund, AIM Small Cap Equity Fund, AIM Small Cap Growth Fund, AIM Small Cap
Opportunities Fund, AIM Value Fund, AIM Value II Fund, AIM Weingarten Fund and
AIM Worldwide Spectrum Fund.
Dealer
Concession
Investor's Sales Charge -----------
----------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
----------------------- ------------- ---------- -----------
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Global
Aggressive Growth Fund, AIM Global Consumer Products and Services Fund, AIM
Global Financial Services Fund, AIM Global Growth Fund, AIM Global Health Care
Fund, AIM Global Income Fund, AIM Global Infrastructure Fund, AIM Global
Resources Fund, AIM Global Telecommunications and Technology Fund, AIM Global
Trends Fund, AIM High Income Municipal Fund, AIM High Yield Fund, AIM High Yield
Fund II, AIM Income Fund, AIM Intermediate Government Fund, AIM Latin American
Growth Fund, AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM
Tax-Exempt Bond Fund of Connecticut.
42
161
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
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
Dealer
Concession
Investor's Sales Charge ----------
----------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment In Offering Amount Offering
Single Transaction Price Invested Price
--------------------------- ------------- ---------- ----------
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
There is no sales charge on purchases of $1,000,000 or more of Category
I, II or III funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the 1933 Act.
In addition to or instead of amounts paid to dealers as a sales
commission, AIM Distributors may, from time to time, at its expense or as an
expense for which it may be compensated under a distribution plan, if
applicable, pay a bonus or other consideration or incentive to dealers. The
total amount of such additional bonus payments or other consideration shall not
exceed 0.25% of the public offering price of the shares sold or of average daily
net assets of the AIM Fund attributable to the particular dealer. At the option
of the dealer, such incentives may take the form of payment for travel expenses,
including lodging, incurred in connection with trips taken by qualifying
registered representatives and their families to places within or outside the
United States. Any such bonus or incentive programs will not change the price
paid by investors for the purchase of the applicable AIM Fund's shares or the
amount that any particular AIM Fund will receive as proceeds from such sales.
Dealers may not use sales of the AIM Funds' shares to qualify for any incentives
to the extent that such incentives may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge,
43
162
for all AIM Funds other than Class A shares of each of AIM Limited Maturity
Treasury Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2
million of such purchases, plus 0.80% of the next $1 million of such purchases,
plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in
excess of $20 million of such purchases. AIM Distributors may make payments to
dealers and institutions who are dealers of record for purchases of $1 million
or more of Class A shares (or shares which normally involve payment of initial
sales charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class B shares of the AIM Funds at the time of such sales. Payments
with respect to Class B shares will equal 4.00% of the purchase price of the
Class B shares sold by the dealer or institution, and will consist of a sales
commission equal to 3.75% of the purchase price of the Class B shares sold plus
an advance of the first year service fee of 0.25% with respect to such shares.
The portion of the payments to AIM Distributors under the Class B Plan which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of such sales commissions plus financing
costs.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. These
commissions are not paid on sales to investors exempt from the CDSC, including
shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who
purchase additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class
B shares or Class C shares are considered sales of such Class B shares or Class
C shares for purposes of the sales charges and dealer concessions discussed
above.
AIM Distributors may pay investment dealers or other financial service
firms for share purchases (measured on an annual basis) of Class A Shares of all
AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate
Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit
plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the
next $1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity
Treasury Fund sold at net asset value to an employee benefit plan in accordance
with this paragraph.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge
tables (quantity discounts) apply to purchases of shares of the AIM Funds that
are otherwise subject to an initial sales charge, provided that such purchases
are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of
AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and
Class B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
44
163
The term "purchaser" means:
o an individual and his or her spouse and children, including
any trust established exclusively for the benefit of any such
person; or a pension, profit-sharing, or other benefit plan
established exclusively for the benefit of any such person,
such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual
participant in a 403(b) Plan (unless such 403(b) plan
qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an
organization described under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for
all participating employees in a single contribution
transmittal (i.e., the Funds will not accept
contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single
check or wire transfer; and
c. all new participants must be added to the 403(b) plan
by submitting an application on behalf of each new
participant with the contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate
or single fiduciary account (including a pension,
profit-sharing or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Code)
and 457 plans, although more than one beneficiary or
participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and
other Elective Simplified Employee Pension account (SAR-SEP)
or a Savings Incentive Match Plans for Employees IRA (SIMPLE
IRA), where the employer has notified the distributor in
writing that all of its related employee SEP, SAR-SEP or
SIMPLE IRA accounts should be linked;
o any other organized group of persons, whether incorporated or
not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase
at a discount of redeemable securities of a registered
investment company;
o Qualified State Tuition Programs created and maintained in
accordance with Section 529 of the Code; and
o Participants in select brokerage programs for defined
contribution plans and rollover IRAs who purchase shares
through an electronic brokerage platform offered by entities
with which AIM Distributors has entered into a written
agreement.
Investors or dealers seeking to qualify orders for a reduced initial
sales charge must identify such orders and, if necessary, support their
qualification for the reduced charge. AIM Distributors reserves the right to
determine whether any purchaser is entitled, by virtue of the foregoing
definition, to the reduced sales charge. No person or entity may distribute
shares of the AIM Funds without payment of the applicable sales charge other
than to persons or entities who qualify for a reduction in the sales charge as
provided herein.
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay
reduced initial sales charges by completing the appropriate section of the
account application and by fulfilling a Letter of Intent ("LOI"). The LOI
privilege is also available to holders of the Connecticut General Guaranteed
Account, established for tax qualified group annuities, for contracts purchased
on or before June 30, 1992. The LOI confirms such purchaser's intention as to
the total investment to be made in shares of the AIM Funds (except for (i) Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares
of
45
164
AIM Floating Rate Fund) within the following 13 consecutive months. By marking
the LOI section on the account application and by signing the account
application, the purchaser indicates that he understands and agrees to the terms
of the LOI and is bound by the provisions described below.
Each purchase of Fund shares normally subject to an initial sales
charge made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all shares, to make up
such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes
to cancel the agreement, he must give written notice to AIM Distributors. If at
any time before completing the LOI Program the purchaser requests the Transfer
Agent to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may
also qualify for reduced initial sales charges based upon such purchaser's
existing investment in shares of any of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares
of AIM Floating Rate Fund) at the time of the proposed purchase. Rights of
Accumulation are also available to holders of the Connecticut General Guaranteed
Account, established for tax-qualified group annuities, for contracts purchased
on or before June 30, 1992. To determine whether or not a reduced initial sales
charge applies to a proposed purchase, AIM Distributors takes into account not
only the money which is invested upon such proposed purchase, but also the value
of all shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt
Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and
Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund)
owned by such purchaser, calculated at their then current public offering price.
If a purchaser so qualifies for a reduced sales charge, the reduced sales charge
applies to the total amount of money then being invested by such purchaser and
not just to the portion that exceeds the breakpoint above which a
46
165
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund, with a maximum initial sales charge of 5.50%,
the reduced initial sales charge of 5.25% will apply to the full $20,000
purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To
qualify for obtaining the discount applicable to a particular purchase, the
purchaser or his dealer must furnish AFS with a list of the account numbers and
the names in which such accounts of the purchaser are registered at the time the
purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM
Funds at net asset value (without payment of an initial sales charge) may be
made in connection with: (a) the reinvestment of dividends and distributions
from a fund; (b) exchanges of shares of certain funds; (c) use of the
reinstatement privilege; or (d) a merger, consolidation or acquisition of assets
of a fund.
The following purchasers will not pay initial sales charges on
purchases of Class A shares because there is a reduced sales effort involved in
sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and
members of their immediate family) of AIM Management, its
affiliates or The AIM Family of Funds--Registered Trademark--,
and any foundation, trust or employee benefit plan established
exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and
members of their immediate family), of CIGNA Corporation or
its affiliates, or of First Data Investor Services Group; and
any deferred compensation plan for directors of investment
companies sponsored by CIGNA Investments, Inc. or its
affiliates;
o Sales representatives and employees (and members of their
immediate family) of selling group members or financial
institutions that have arrangements with such selling group
members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined
above, and non-qualified plans offered in conjunction
therewith, provided the initial investment in the plan(s) is
at least $1 million; the sponsor signs a $1 million LOI; the
employer-sponsored plan(s) has at least 100 eligible
employees; or all plan transactions are executed through a
single omnibus account per Fund and the financial institution
or service organization has entered into the appropriate
agreements with the distributor. Section 403(b) plans
sponsored by public educational institutions are not eligible
for a sales charge exception based on the aggregate investment
made by the plan or the number of eligible employees.
Purchases of AIM Small Cap Opportunities Fund by such plans
are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or
AIM Constellation Fund on September 8, 1986, or of AIM Charter
Fund on November 17, 1986, who have continuously owned shares
having a market value of at least $500 and who purchase
additional shares of the same Fund;
o Shareholders of record of Advisor Class shares of AIM
International Growth Fund or AIM Worldwide Growth Fund on
February 12, 1999 who have continuously owned shares of the
AIM Funds;
o Unitholders of G/SET series unit investment trusts investing
proceeds from such trusts in shares of AIM Weingarten Fund or
AIM Constellation Fund; provided, however, prior to the
termination date of the trusts, a unitholder may invest
proceeds from the redemption or
47
166
repurchase of his units only when the investment in shares of
AIM Weingarten Fund and AIM Constellation Fund is effected
within 30 days of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an
AIM Fund or that sells its assets to an AIM Fund in exchange
for shares of an AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who
since that date continually have owned shares of one or more
of these funds;
o Certain former AMA Investment Advisers' shareholders who
became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the GT
Global funds since that time; and
o Shareholders of record of Advisor Class shares of an AIM Fund
on February 11, 2000 who have continuously owned shares of
that AIM Fund, and who purchase additional shares of that AIM
Fund.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in the former GT Global
funds, which are permitted to be made without penalty pursuant to the Code,
other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global funds; (6) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (7) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (8) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code; (10) redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in Section 401(k) of the
Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code
upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Former GT Global funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption: (1) total or partial redemptions resulting from a
distribution following retirement in the case of a tax-qualified
employer-sponsored retirement; (2) minimum required distributions made in
connection with an IRA, Keogh Plan or custodial account under Section 403(b) of
the Code or other retirement plan following attainment of age 70 1/2; (3)
redemptions pursuant to distributions from a tax-qualified employer-sponsored
retirement plan, which is invested in the former GT Global funds, which are
permitted to be made without
48
167
penalty pursuant to the Code, other than tax-free rollovers or transfers of
assets, and the proceeds of which are reinvested in the former GT Global funds;
(4) redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (5) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (6) redemptions made in connection with a distribution from any
retirement plan or account that is permitted in accordance with the provisions
of Section 72(t)(2) of the Code, and the regulations promulgated thereunder; (7)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (8) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex
Fund, AIM Advisor International Value Fund and AIM Advisor
Real Estate Fund by shareholders of record on April 30, 1995,
of these Funds, except that shareholders whose broker-dealers
maintain a single omnibus account with AFS on behalf of those
shareholders, perform sub-accounting functions with respect to
those shareholders, and are unable to segregate shareholders
of record prior to April 30, 1995, from shareholders whose
accounts were opened after that date will be subject to a CDSC
on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor
of a living trust, of shares held in the account at the time
of death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result from (i) required minimum distributions to
plan participants or beneficiaries who are age 70-1/2 or
older, and only with respect to that portion of such
distributions that does not exceed 12% annually of the
participant's or beneficiary's account value in a particular
AIM Fund; (ii) in kind transfers of assets where the
participant or beneficiary notifies the distributor of the
transfer no later than the time the transfer occurs; (iii)
tax-free rollovers or transfers of assets to another plan of
the type described above invested in Class B or Class C shares
of one or more of the AIM Funds; (iv) tax-free returns of
excess contributions or returns of excess deferral amounts;
and (v) distributions on the death or disability (as defined
in the Internal Revenue Code of 1986, as amended) of the
participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual
amount of 12% of the account value on a per fund basis, at the
time the withdrawal plan is established, provided the investor
reinvests his dividends;
o Liquidation by the Fund when the account value falls below the
minimum required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies
the distributor prior to the time of investment that the
dealer waives the payment otherwise payable to him.
Upon the redemption of shares of funds in sales charge Categories I and
II (see "Sales Charges and Dealer Concessions") purchased in amounts of $1
million or more, no CDSC will be applied in the following situations:
49
168
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as
qualified purchasers, as defined above, where the redemptions
are in connection with employee terminations or withdrawals,
provided the total amount invested in the plan is at least
$1,000,000; the sponsor signs a $1 million LOI; or the
employer-sponsored plan has at least 100 eligible employees;
provided, however, that 403(b) plans sponsored by public
educational institutions shall qualify for the CDSC waiver on
the basis of the value of each plan participant's aggregate
investment in the AIM Funds, and not on the aggregate
investment made by the plan or on the number of eligible
employees;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's
dealer waives the amounts otherwise payable to it by the
distributor and notifies the distributor prior to the time of
investment; and
o Shares acquired by exchange from Class A shares of funds in
sales charge Categories I and II unless the shares acquired by
exchange are redeemed within 18 months of the original
purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Fund may be
purchased appears in the Prospectus under the caption "Purchasing Shares."
The sales charge normally deducted on purchases of Class A shares of
the Fund is used to compensate AIM Distributors and participating dealers for
their expenses incurred in connection with the distribution of such shares.
Since there is little expense associated with unsolicited orders placed directly
with AIM Distributors by persons, who because of their relationship with the
Fund or with AIM and its affiliates, are familiar with the Fund, or whose
programs for purchase involve little expense (e.g., because of the size of the
transaction and shareholder records required), AIM Distributors believes that it
is appropriate and in the Fund's best interests that such persons be permitted
to purchase Class A shares of the Fund through AIM Distributors without payment
of a sales charge. The persons who may purchase Class A shares of the Fund
without a sales charge are listed under the caption "REDUCTIONS IN INITIAL SALES
CHARGES - Purchases at Net Asset Value". You may also be charged a transaction
or other fee by the financial institution managing your account.
Complete information concerning the method of exchanging shares of the
Fund for shares of the other mutual funds managed or advised by AIM is set forth
in the Prospectus under the caption "Exchanging Shares."
Information concerning redemption of the Fund's shares is set forth in
the Prospectus under the caption "Redeeming Shares." Shares of the AIM Funds may
be redeemed directly through AIM Distributors or through any dealer who has
entered into an agreement with AIM Distributors. In addition to the Fund's
obligation to redeem shares, AIM Distributors may also repurchase shares as an
accommodation to shareholders. To effect a repurchase, those dealers who have
executed Selected Dealer Agreements with AIM Distributors must phone orders to
the order desk of the Fund telephone (800) 959-4246 and guarantee delivery of
all required documents in good order. A repurchase is effected at the net asset
value of the Fund next determined after such order is received. Such arrangement
is subject to timely receipt by AFS of all required documents in good order. If
such documents are not received within a reasonable time after the order is
placed, the order is subject to cancellation. While there is no charge imposed
by the Fund or by AIM Distributors (other than any applicable CDSC) when
50
169
shares are redeemed or repurchased, dealers may charge a fair service fee for
handling the transaction. AIM intends to redeem all shares of the Fund in cash.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange ("NYSE") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of the Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations,
withhold 31% of redemption payments and reportable dividends (whether paid or
accrued) in the case of any shareholder who fails to provide the Fund with a
taxpayer identification number ("TIN") and a certification that he is not
subject to backup withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an
incorrect TIN, or
(3) the investor or the Fund is notified by the IRS that the
investor is subject to backup withholding because the investor
failed to report all of the interest and dividends on such
investor's tax return (for reportable interest and dividends
only), or
(4) the investor fails to certify to the Fund that the investor is
not subject to backup withholding under (3) above (for
reportable interest and dividend accounts opened after 1983
only), or
(5) the investor does not certify his TIN. This applies only to
non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all
five situations discussed above. Redemption proceeds and long-term gain
distributions are subject to backup withholding only if (1) (2) or (5) above
applies.
Certain payees and payments are exempt from backup withholding and
information reporting. A complete listing of such exempt entities appears in the
Instructions for the Requester of Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an individual
retirement plan (IRA), or a custodial account under Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities
o a foreign government or any of its political subdivisions, agencies or
instrumentalities
o an international organization or any of its agencies or
instrumentalities
51
170
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
o a futures commission merchant registered with the Commodity Futures
Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the 1940
Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a
correct TIN will be subject to a $50 penalty imposed by the IRS unless such
failure is due to reasonable cause and not willful neglect. If an investor
falsifies information on this form or makes any other false statement resulting
in no backup withholding on an account which should be subject to backup
withholding, such investor may be subject to a $500 penalty imposed by the IRS
and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign
entities are not subject to the backup withholding previously discussed, but
must certify their foreign status by attaching IRS Form W-8 to their
application. Form W-8 generally remains in effect for three calendar years
beginning with the calendar year in which it is received by the Fund. Such
shareholders may, however, be subject to federal income tax withholding at a 30%
rate on ordinary income dividends and distributions and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
NET ASSET VALUE DETERMINATION
The net asset value per share of the Fund is normally determined daily
as of the close of the customary trading session of the NYSE (generally 4:00
p.m. Eastern time) on each business day of the Fund. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of the Fund is determined as of the close of the NYSE on such day.
For purposes of determining net asset value per share, futures and options
contract closing prices which are available fifteen (15) minutes after the close
of the customary trading session of the NYSE will generally be used. Net asset
value per share is determined by dividing the value of a Fund's securities, cash
and other assets (including interest accrued but not collected) attributable to
a particular class, less all its liabilities (including accrued expenses and
dividends payable) attributable to that class, buy the total number of shares
outstanding of that class. Determination of a Fund's net asset value per share
is made in accordance with generally accepted accounting principles.
Each security held (excluding convertible bonds) by the Fund is valued
at its last sales price on the exchange where the security is principally traded
or, lacking any sales on a particular day, the security
52
171
is valued at the closing bid price on that day. Each security traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) is valued at the closing bid price furnished by
independent pricing services or market makers. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the closing bid price on that day; option
contracts are valued at the mean between the closing bid and asked prices on the
exchange where the contracts are principally traded; futures contracts are
valued at final settlement price quotations from the primary exchange on which
they are traded. Debt securities (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided by
the pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as institution-size trading in
similar groups of securities, developments related to special securities,
dividend rate yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Securities for which market
prices are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations the mean between
the bid and asked prices. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations having
60 days or less to maturity are valued on the basis of amortized cost which
approximates market value.
Generally, trading in foreign securities, corporate bonds, U.S.
Government securities and money market instruments is substantially completed
each day at various times prior to the close of the customary trading session of
the NYSE. The values of such securities used in computing the net asset value of
the Fund's shares are determined at such times. Foreign currency exchange rates
are also generally determined prior to the close of the NYSE. Occasionally,
events affecting the values of such securities and such exchange rates may occur
between the times at which such values are determined and the close of the
customary trading session of the NYSE which will not be reflected in computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value as determined in good faith by or under the supervision of the
Board of Trustees of the Trust.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of the Fund unless the
shareholder has requested in writing to receive such dividends and distributions
in cash or that they be invested in shares of another AIM Fund, subject to the
terms and conditions set forth in "Shareholder Information -- Dividends and
Distributions." If a shareholder's account does not have any shares in it on a
dividend or capital gains distribution payment date, the dividend or
distribution will be paid in cash whether or not the shareholder has elected to
have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
TAXATION OF THE FUND
To continue to qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income and net short-term capital gain)
("Distribution Requirement") and must meet several additional requirements.
These requirements include
53
172
the following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash items, U.S. government securities, securities of other RICs
and other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (3) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities or the securities of other
RICs) of any one issuer.
By qualifying for treatment as a RIC, the Fund (but not its
shareholders) will be relieved of federal income tax on the part of its
investment company taxable income and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) that it distributes to
its shareholders. If the Fund failed to qualify for treatment as a RIC for any
taxable year, (1) it would be taxed as an ordinary corporation on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would treat
all those distributions, including distributions of net capital gain, as
dividends (that is, ordinary income) to the extent of the Fund's earnings and
profits. In addition, the Fund could be required to recognize unrealized gains,
pay substantial taxes and interest and make substantial distributions before
requalifying for RIC treatment.
The Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of the Fund's shares ("original shares")
within 120 days after purchase thereof and subsequently reacquires shares of the
Fund or acquires shares of another AIM Fund on which a sales charge normally is
imposed ("replacement shares"), without paying the sales charge (or paying a
reduced charge) due to an exchange privilege or a reinstatement privilege, then
(1) any gain on the disposition of the original shares will be increased, or the
loss thereon decreased, by the amount of the sales charge paid when those shares
were acquired and (2) that amount will increase the adjusted basis of the
replacement shares that were subsequently acquired. In addition, if a
shareholder purchases shares of a Fund (whether pursuant to the reinstatement
privilege or otherwise) within 30 days before or after redeeming at a loss other
shares of the Fund (regardless of class), all or part of that loss will not be
deductible and instead will increase the basis of the newly purchased shares.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
Foreign Taxes. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions ("foreign taxes") that would reduce
the total return on its securities. Tax conventions between certain countries
and the United States may reduce or eliminate foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors. If more than 50% of the value of the Fund's total assets
at the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it.
Pursuant to the election, the Fund would treat those taxes as dividends paid to
its shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents income from
foreign and U.S. possessions sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of its foreign taxes and
income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this
54
173
election. Individuals who have no more than $300 ($600 for married persons
filing jointly) of creditable foreign taxes included on Form 1099 and all of
whose foreign source income is "qualified passive income" may elect each year to
be exempt from the foreign tax credit limitation in which event they would be
able to claim a foreign tax credit without having to file the detailed Form 1116
that otherwise is required.
Passive Foreign Investment Companies. The Fund may invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is any foreign
corporation (with certain exceptions) that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent it distributes that income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each year
its pro rata share of the QEF's ordinary earnings and net capital gain -- which
the fund most likely would have to distribute to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if they did not
receive those earnings and gain from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included in income by the
Fund for prior taxable years under the election (and under regulations proposed
in 1992 that provided a similar election with respect to the stock of certain
PFICs). A Fund's adjusted basis in each PFIC's stock subject to the election
would be adjusted to reflect the amounts of income included and deductions taken
thereunder.
Options, Futures and Foreign Currency Transactions. The Fund's use of
hedging transactions, such as selling (writing) and purchasing options and
Futures and entering into Forward Contracts, involves complex rules that will
determine, for federal income tax purposes, the amount, character and timing of
recognition of the gains and losses the Fund realizes in connection therewith.
Gains from the disposition of foreign currencies (except certain gains that may
be excluded by future regulations), and gains from options, Futures and Forward
Contracts derived by the Fund with respect to its business of investing in
securities or foreign currencies, will qualify as permissible income under the
Income Requirement for the Fund.
Futures and foreign currency contracts that are subject to
section 1256 of the Code (other than those that are part of a "mixed straddle"
with respect to which a fund has elected not to have the following rules apply)
("Section 1256 Contracts") and that are held by the Fund at the end of its
taxable year generally will be deemed to have been sold at that time at market
value for federal income tax purposes. Sixty percent of any net gain or loss
recognized on these deemed sales, and 60% of any net gain or loss realized from
any actual sales of Section 1256 Contracts, will be treated as long-term capital
gain or loss, and the balance will be treated as short-term capital gain or
loss. These rules may operate to increase the amount that a Fund must distribute
to satisfy the Distribution Requirement (i.e., with respect to the portion
treated as short-term capital gain), which will be taxable to the shareholders
as ordinary income, and to increase the net capital gain a Fund recognizes,
without in either case increasing the cash available to the Fund.
Section 988 of the Code also may apply to gains and losses from
transactions in foreign currencies, foreign-currency-denominated debt securities
and options, Futures and Forward Contracts on
55
174
foreign currencies ("Section 988" gains and losses). Each section 988 gain or
loss generally is computed separately and treated as ordinary income or loss. In
the case of overlap between sections 1256 and 988, special provisions determine
the character and timing of any income, gain or loss. The Fund attempts to
monitor section 988 transactions to minimize any adverse tax impact.
Code section 1092 (dealing with straddles) also may affect the taxation
of certain hedging instruments in which a Fund may invest. That section defines
a "straddle" as offsetting positions with respect to actively traded personal
property; for these purposes, options, Futures and Forward Contracts are
personal property. Under that section, any loss from the disposition of a
position in a straddle generally may be deducted only to the extent the loss
exceeds the unrealized gain on the offsetting position(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise would
be recognized under the mark-to-market rules discussed above. The regulations
under section 1092 also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting position is
acquired within a prescribed period, and "short sale" rules applicable to
straddles. If a Fund makes certain elections, the amount, character and timing
of recognition of gains and losses from the affected straddle positions would be
determined under rules that vary according to the elections made. Because only a
few of the regulations implementing the straddle rules have been promulgated,
the tax consequences to a Fund of straddle transactions are not entirely clear.
If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures or Forward Contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the position, the
Fund will be treated as having made an actual sale thereof, with the result that
gain will be recognized at that time unless the closed transaction exception
applies. A constructive sale generally consists of a short sale, an offsetting
notional principal contract or Futures or Forward Contract entered into by the
Fund or a related person with respect to the same or substantially identical
property. In addition, if the appreciated financial position is itself a short
sale or such a contract, acquisition of the underlying property or substantially
identical property will be deemed a constructive sale.
TAXATION OF THE FUND'S SHAREHOLDERS
Dividends and other distributions declared by the Fund, and payable to
shareholders of record as of a date, in October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for any dividend or other distribution, the shareholder will pay
full price for the shares and receive some portion of the price back as a
taxable distribution.
Dividends paid by the Fund to a shareholder who, as to the United
States, is a nonresident alien individual, nonresident alien fiduciary of a
trust or estate, foreign corporation or foreign partnership ("foreign
shareholder") generally will be subject to U.S. withholding tax (at a rate of
30% or lower treaty rate). Withholding will not apply, however, to a dividend
paid by the Fund to a foreign shareholder that is "effectively connected with
the conduct of a U.S. trade or business," in which case the reporting and
withholding requirements applicable to domestic shareholders will apply. A
distribution of net capital gain by the Fund to a foreign shareholder generally
will be subject to U.S. federal income tax (at the rates applicable to domestic
persons) only if the distribution is "effectively connected" or the foreign
shareholder is treated as a resident alien individual for federal income tax
purposes.
The foregoing is a general and abbreviated summary of certain federal
tax considerations affecting the Fund and its shareholders. Investors are urged
to consult their own tax advisors for more
56
175
detailed information and for information regarding any foreign, state and local
taxes applicable to distributions received from the Fund.
SHAREHOLDER INFORMATION
This information supplements the discussion in the Fund's Prospectus
under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. If a check used to purchase
shares does not clear, or if any investment order must be canceled due to
nonpayment, the investor will be responsible for any resulting loss to an AIM
Fund or to AIM Distributors.
SHARE CERTIFICATES. The Fund will issue share certificates upon written
request to AFS. Otherwise, shares are held on the shareholder's behalf and
recorded on the Fund books. AIM Funds will not issue certificates for shares
held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all
shares are to be held by the Transfer Agent and all dividends and distributions
are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To
provide funds for payments made under the Systematic Withdrawal Plan, the
Transfer Agent redeems sufficient full and fractional shares at their net asset
value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events.
Since such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGE. Normally, shares of an AIM Fund to be
acquired by exchange are purchased at their net asset value or applicable
offering price, as the case may be, determined on the date that such request is
received, but under unusual market conditions such purchases may be delayed for
up to five business days if it is determined that a fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into a fund paying daily dividends, and the release of
the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day
after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with
certain dealers and investment advisory firms to accept telephone instructions
to exchange shares between any of the AIM Funds. AIM Distributors reserves the
right to impose conditions on dealers or investment advisors who make telephone
exchanges of shares of the funds, including the condition that any such dealer
or investment advisor enter into an agreement (which contains additional
conditions with respect to exchanges of shares) with AIM Distributors. To
exchange shares by telephone, a shareholder, dealer or investment advisor who
has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
shareholder is unable to reach AFS by telephone, he may also request exchanges
by fax, telegraph or use overnight courier services to expedite exchanges by
mail, which will be effective on the business day received by the Transfer Agent
as long as such request is received prior to the close of the customary trading
session of the NYSE. The Transfer Agent and AIM Distributors may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
57
176
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
By signing an account application form, an investor appoints the
Transfer Agent as his true and lawful attorney-in-fact to surrender for
redemption any and all unissued shares held by the Transfer Agent in the
designated account(s), or in any other account with any of the AIM Funds,
present or future, which has the identical registration as the designated
account(s), with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption proceeds to be applied to purchase shares
in any one or more of the AIM Funds, provided that such fund is available for
sale and provided that the registration and mailing address of the shares to be
purchased are identical to the registration of the shares being redeemed. An
investor acknowledges by signing the form that he understands and agrees that
the Transfer Agent and AIM Distributors may not be liable for any loss, expense
or cost arising out of any telephone exchange requests effected in accordance
with the authorization set forth in these instructions if they reasonably
believe such request to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions. Procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transactions. The Transfer Agent reserves the
right to modify or terminate the telephone exchange privilege at any time
without notice. An investor may elect not to have this privilege by marking the
appropriate box on the application. Then any exchanges must be effected in
writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints the Transfer Agent as his true and lawful attorney-in-fact to
surrender for redemption any and all unissued shares held by the Transfer Agent
in the designated account(s), present or future, with full power of substitution
in the premises. The Transfer Agent and AIM Distributors are thereby authorized
and directed to accept and act upon any telephone redemptions of shares held in
any of the account(s) listed, from any person who requests the redemption. An
investor acknowledges by signing the form that he understands and agrees that
the Transfer Agent and AIM Distributors may not be liable for any loss, expense
or cost arising out of any telephone redemption requests effected in accordance
with the authorization set forth in these instructions if they reasonably
believe such request to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions. Procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction. The Transfer Agent reserves the
right to cease to act as attorney-in-fact subject to this appointment, and AIM
Distributors reserves the right to modify or terminate the telephone redemption
privilege at any time without notice. An investor may elect not to have this
privilege by marking the appropriate box on the application. Then any
redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of the Fund's prospectus, signature guarantees
are required in the following situations: (1) requests to transfer the
registration of shares to another owner; (2) telephone exchange and telephone
redemption authorization forms; (3) changes in previously designated wiring or
electronic funds transfer instructions; and (4) written redemptions or exchanges
of shares previously reported as lost, whether or not the redemption amount is
under $250,000 or the proceeds are to be sent to the address of record. AIM
Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the SEC, and
further provided that such guarantor institution is listed in one of the
reference guides contained in the Transfer Agent's current Signature Guarantee
Standards and Procedures, such as certain domestic banks, credit unions,
securities dealers, or securities exchanges. The Transfer Agent will also accept
signatures with either: (1) a signature guaranteed with a medallion stamp of the
STAMP Program, or (2) a
58
177
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that the Transfer Agent and AIM Distributors will not be liable for any loss,
expense or cost arising out of any internet transaction effected in accordance
with the instructions set forth in the forms if they reasonably believe such
request to be genuine. Procedures for verification of internet transactions
include requests for confirmation of the shareholder's personal identification
number and mailing of confirmations promptly after the transactions. The
investor also acknowledges that (1) if he no longer wants the AIM Internet
Connect option, he will notify the Transfer Agent in writing, and (2) the AIM
Internet Connect option may be terminated at any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital
gains, if any, available for distribution, net capital gains are offset against
available net capital losses, if any, carried forward from previous fiscal
periods.
For funds that do not declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to the Transfer Agent and are effective
as to any subsequent payment if such notice is received by the Transfer Agent
prior to the record date of such payment. Any dividend and distribution election
remains in effect until the Transfer Agent receives a revised written election
by the shareholder.
Any dividend or distribution paid by a fund which does not declare
dividends daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes.
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
The Transfer Agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, Massachusetts 02110, acts as custodian of the Fund's assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Trust to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
59
178
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
The Transfer Agency and Service Agreement between the Trust and AFS, a
registered transfer agent and wholly owned subsidiary of AIM, P. O. Box 4739,
Houston, Texas 77210-4739, provides that AFS will perform certain shareholder
services for the Fund for a fee per account serviced. The Transfer Agency and
Service Agreement provides that AFS will receive a per account fee plus
out-of-pocket expenses to process orders for purchases, redemptions and
exchanges of shares; prepare and transmit payments for dividends and
distributions declared by the Fund; maintain shareholder accounts and provide
shareholders with information regarding the Fund and their accounts. The
Transfer Agency and Service Agreement became effective on September 8, 1998.
Pursuant to the Master Administrative Services Agreement, AIM serves as
the Fund's pricing and accounting agent. Under the Fund's previous
administration contract, the Fund paid no fund accounting fees for the fiscal
years ended December 31, 1997 and 1998.
INDEPENDENT ACCOUNTANTS
The Trust's independent accountants are PricewaterhouseCoopers LLP.
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110,
conducts annual audits of the Fund's financial statements, assists in the
preparation of the Fund's federal and state income tax returns and consults with
the Trust as to matters of accounting, regulatory filings, and federal and state
income taxation.
The audited financial statements of the Trust included in this
Statement of Additional Information have been examined by PricewaterhouseCoopers
LLP, as stated in their opinion appearing herein, and are included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and the Fund.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same
limitations of liability extended to shareholders of private, for-profit
corporations. There is a remote possibility, however, that under certain
circumstances shareholders of the Trust may be held personally liable for the
Trust's obligations. However, the Trust Agreement disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or a trustee. If a shareholder is held personally liable
for the obligations of the Trust, the Trust Agreement provides that the
shareholder shall be entitled out of the assets belonging to the Fund (or
allocable to the applicable Class), to be held harmless from and indemnified
against all loss and expense arising from such liability in accordance with the
Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring
financial loss on account of such liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Trust's
equity securities as of March 30, 2001, and the percentage of the outstanding
shares held by such holders are set forth below.
60
179
Percent Percent Owned
Name and Address Owned of of Record and
of Record Owner Record* Beneficially
--------------- -------- -------------
CLASS C
-------
Merrill Lynch Pierce Fenner & Smith 6.97% 0
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n
P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the
applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year
periods (or fractional portion of such period).
The standardized returns for the Class A, Class B and Class C shares
for the Fund, stated as average annual total returns for the one year period
ended December 31, 2000, and since inception, (which include the maximum sales
charge of 4.75% and reinvestment of all dividends and distributions, were:
One Year
Period Ended Since
December 31, 2000 Inception
----------------- ---------
Class A Shares (12.29)% 11.20%
Class B Shares (12.50)% 11.61%
Class C Shares (9.21)% 14.77%
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
- ----------
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record are also owned beneficially.
61
180
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of
only a stated portion of, or none of, the
applicable maximum sales load at the beginning of
the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
Cumulative total return across a stated period may be calculated as
follows:
n
P(1+V) =ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all
of, a stated portion of, or none of, the
applicable maximum sales load at the beginning of
the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
The cumulative total returns for Class A, Class B and Class C shares of
the Fund for the periods shown, were:
Periods ended
December 31, 2000
----------------------------
1 Year Since Inception
------ ---------------
Class A Shares......................................................... (12.29)% 41.87%
Class B Shares......................................................... (12.50)% 43.59%
Class C Shares......................................................... (9.21% 51.06%
The inception date of Class A, Class B and Class C shares of the Fund
are September 15, 1997, September 15, 1997 and January 2, 1998, respectively.
PERFORMANCE INFORMATION
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the Fund's shares. If
any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. Further information regarding
the Fund's performance is contained in the Fund's annual report to shareholders,
which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of
their fees and/or assume certain expenses of the Fund. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM and the Fund. Fee waivers or
reductions or commitments to reduce expenses will have the effect of increasing
the Fund's yield and total return.
The performance of the Fund will vary from time to time and past
results are not necessarily indicative of future results. The Fund's performance
is a function of its portfolio management in selecting
62
181
the type and quality of portfolio securities and is affected by operating
expenses of the Fund and market conditions. A shareholder's investment in the
Fund is not insured or guaranteed. These factors should be carefully considered
by the investor before making an investment in the Fund.
The Fund may participate in the IPO market, and a significant portion
of the Fund's returns may be attributable to its investment in IPOs. Investment
in IPOs could have a magnified impact on the Fund with a small asset base. There
is no guarantee that as the Fund's assets grow, it will continue to experience
substantially similar performance by investing in IPOs.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. Standardized total return
for Class A shares reflects the deduction of the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B and Class
C shares reflects the deduction of the maximum applicable contingent deferred
sales charge on a redemption of shares held for the period.
The Fund's total return shows its overall change in value, including
changes in share price and assuming all the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical compounded annual rate of return that would have
produced the same cumulative total return if the Fund's performance had been
constant over the entire period. Because average annual returns tend to even out
variations in the Fund's return, investors should recognize that such returns
are not the same as actual year-by-year results. To illustrate the components of
overall performance, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
Total return and yield figures for the Fund are neither fixed nor
guaranteed, and the Fund's principal is not insured. Performance quotations
reflect historical information and should not be considered representative of
the Fund's performance for any period in the future. Performance is a function
of a number of factors which can be expected to fluctuate. The Fund may provide
performance information in reports, sales literature and advertisements. The
Fund may also, from time to time, quote information about the Fund published or
aired by publications or other media entities which contain articles or segments
relating to investment results or other data about the Fund. Such publications
or media entities may include the following, among others:
Advertising Age Insurance Forum
Barron's Institutional Investor
Best's Review Insurance Week
Broker World Investor's Daily
Business Week Journal of the American Society of CLU & ChFC
Changing Times Kiplinger Letter
Christian Science Monitor Money
CNBC Mutual Fund Forecaster
CNN Mutual Fund Magazine
Consumer Reports Nation's Business
Economist New York Times
EuroMoney PBS
FACS of the Week Pension World
Financial Planning Pensions & Investments
Financial Product News Personal Investor
Financial Services Week Philadelphia Inquirer
Financial World Smart Money
Forbes USA Today
Fortune U.S. News & World Report
Global Finance Wall Street Journal
Hartford Courant Inc. Washington Post
63
182
The Fund and AIM Distributors may from time to time, in advertisements,
sales literature and reports furnished to present or prospective shareholders,
compare the Fund with the following, or compare the Fund's performance to
performance data of similar mutual funds as published in the following, among
others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services (data and mutual fund rankings and
comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and Development (publications)
International Finance Corporation Emerging Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Inc. (data and mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All
Country (AC) World Index
Morgan Stanley Capital International World Indices
Morningstar, Inc. (data and mutual fund rankings and comparisons)
NASDAQ
Organization for Economic Cooperation and Development (publications)
Salomon Brothers Global Telecommunications Index
Salomon Brothers World Government Bond Index -- Non-U.S.
Salomon Brothers World Government Bond Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price Index
Stangar
Wilshire Associates
World Bank (publications and reports)
The World Bank Publication of Trends in Developing Countries
Worldscope
The Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Fund or AIM
Distributors. Advertising for the Fund may from time to time include discussions
of general economic conditions and interest rates. Advertising for the Fund may
also include reference to
64
183
the use of the Fund as part of an individual's overall retirement investment
program. From time to time, sales literature and/or advertisements for the Fund
may disclose (i) the largest holdings in the Fund's portfolio, (ii) certain
selling group members and/or (iii) certain institutional shareholders.
From time to time, the Fund's sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information about
mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money
markets, certificates of deposit, retirement, retirement plans, asset
allocation, tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when
comparing the Fund's performance with other funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by the Fund.
The information quoted will not be independently verified by the Fund
or AIM Distributors and will be based on data provided that is believed to be
reliable and accurate from sources including, but not limited to, the following:
o Consumer and trade groups
o Fortune magazine and other periodicals
o The World Bank and its publications
o The International Monetary Fund (IMF) and its publications
o IFC and its publications
o OECD and its publications
65
184
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc. ("Moody's") employs the designations
"Prime-1" and "Prime-2" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P") rates commercial paper in four categories ranging from "A-1" for the
highest quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment. D
- -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities
from "Aaa" to "C." Investment Grade Ratings are the first four categories: Aaa
- -- Best quality. These securities carry the smallest degree of investment risk
and are generally referred to as "gilt edged." Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues. Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities. A -- 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 -- 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 -- Have speculative elements and 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 -- 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 -- Poor standing.
Such issues may be in default or there may be present elements of danger with
respect to principal or interest. Ca -- Speculative in a high degree. Such
issues are often in default or have other marked shortcomings. C --
A-1
185
Lowest rated class of bonds. Issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
S&P rates the debt securities of various entities in categories ranging
from "AAA" to "D" according to quality. Investment grade ratings are the first
four categories: AAA -- Highest rating. Capacity to pay interest and repay
principal is extremely strong. AA -- Very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in a small degree.
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 -- Regarded as
having adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories. BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, 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. 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 -- 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 -- 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 --
Typically applied to debt subordinated to senior debt that is assigned an actual
or implied "CCC" rating. C -- Typically applied to debt subordinated to senior
debt that 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 -- Reserved for income bonds on which no
interest is being paid. D -- In payment default. The "D" category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. This rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS ( -- ): The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended
or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or
companies that are not rated as a matter of policy.
A-2
186
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is
not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa to B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
A-3
187
FINANCIAL STATEMENTS
FS
188
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Series Trust and Shareholders of
AIM Global Trends Fund:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Global Trends Fund (hereafter referred to as the "Fund")
at December 31, 2000, and the results of its operations,
the changes in its net assets and the financial
highlights for each of the periods indicated, in
conformity with accounting principles generally accepted
in the United States of America. These financial
statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express
an opinion on these financial statements based on our
audits. We conducted our audits of these financial
statements in accordance with auditing standards
generally accepted in the United States of America which
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
December 31, 2000 by correspondence with the custodian
and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 19, 2001
FS-1
189
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-51.32%
AEROSPACE/DEFENSE-1.16%
Boeing Co. (The) 7,900 $ 521,400
=============================================================
BANKS (MAJOR REGIONAL)-1.15%
Northern Trust Corp. 6,300 513,844
=============================================================
BEVERAGES (NON-ALCOHOLIC)-2.45%
Pepsi Bottling Group, Inc., (The) 12,600 503,212
- -------------------------------------------------------------
PepsiCo, Inc. 12,000 594,750
=============================================================
1,097,962
=============================================================
BIOTECHNOLOGY-0.43%
Albany Molecular Research, Inc.(a) 3,100 191,037
=============================================================
COMMUNICATIONS EQUIPMENT-1.41%
Corning Inc. 7,000 369,687
- -------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 3,400 261,800
=============================================================
631,487
=============================================================
COMPUTERS (PERIPHERALS)-3.17%
Brocade Communications Systems,
Inc.(a) 5,600 514,150
- -------------------------------------------------------------
EMC Corp(a) 13,600 904,400
=============================================================
1,418,550
=============================================================
COMPUTERS (SOFTWARE & SERVICES)-3.91%
Adobe Systems Inc. 5,300 308,394
- -------------------------------------------------------------
Ariba, Inc.(a) 3,900 209,625
- -------------------------------------------------------------
BEA Systems, Inc.(a) 5,900 397,144
- -------------------------------------------------------------
i2 Technologies, Inc.(a) 7,700 418,687
- -------------------------------------------------------------
VERITAS Software Corp.(a) 4,800 420,000
=============================================================
1,753,850
=============================================================
ELECTRONICS (SEMICONDUCTORS)-0.82%
Analog Devices, Inc.(a) 7,200 368,550
=============================================================
FINANCIAL (DIVERSIFIED)-1.20%
Citigroup Inc. 10,533 537,841
=============================================================
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.64%
International Game Technology(a) 6,000 288,000
=============================================================
HEALTH CARE (DIVERSIFIED)-0.65%
IVAX Corp.(a) 7,600 291,080
=============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.35%
Andrx Group(a) 4,700 272,012
- -------------------------------------------------------------
Forest Laboratories, Inc.(a) 2,500 332,187
=============================================================
604,199
=============================================================
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.82%
Pfizer Inc. 17,700 814,200
=============================================================
MARKET
SHARES VALUE
HEALTH CARE (HOSPITAL
MANAGEMENT)-1.31%
HCA-Healthcare Co. (The) 8,300 $ 365,283
- -------------------------------------------------------------
Tenet Healthcare Corp.(a) 5,000 222,187
=============================================================
587,470
=============================================================
HEALTH CARE (MANAGED CARE)-3.51%
UnitedHealth Group Inc. 25,600 1,571,200
=============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-2.41%
Alza Corp.(a) 7,800 331,500
- -------------------------------------------------------------
Laboratory Corp. of America
Holdings(a) 2,400 422,400
- -------------------------------------------------------------
Quest Diagnostics Inc.(a) 2,300 326,600
=============================================================
1,080,500
=============================================================
INVESTMENT BANKING/BROKERAGE-1.79%
Lehman Brothers Holdings Inc. 5,200 351,650
- -------------------------------------------------------------
Merrill Lynch & Co., Inc. 6,600 450,038
=============================================================
801,688
=============================================================
MANUFACTURING (DIVERSIFIED)-0.91%
Honeywell International Inc. 8,600 406,888
=============================================================
NATURAL GAS-3.90%
Dynegy Inc.-Class A 24,400 1,367,925
- -------------------------------------------------------------
El Paso Energy Corp. 5,300 379,613
=============================================================
1,747,538
=============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-7.64%
BJ Services Co.(a) 9,200 633,650
- -------------------------------------------------------------
ENSCO International Inc. 18,900 643,781
- -------------------------------------------------------------
Global Marine, Inc.(a) 12,600 357,525
- -------------------------------------------------------------
Marine Drilling Cos., Inc.(a) 19,600 524,300
- -------------------------------------------------------------
Nabors Industries, Inc.(a) 8,100 479,115
- -------------------------------------------------------------
Patterson Energy, Inc.(a) 9,300 346,425
- -------------------------------------------------------------
Schlumberger Ltd. 1,400 111,913
- -------------------------------------------------------------
Smith International, Inc.(a) 4,400 328,075
=============================================================
3,424,784
=============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-1.32%
Anadarko Petroleum Corp. 8,326 591,812
=============================================================
OIL & GAS (REFINING &
MARKETING)-0.66%
Valero Energy Corp. 8,000 297,500
=============================================================
POWER PRODUCERS (INDEPENDENT)-1.53%
Calpine Corp.(a) 15,200 684,950
=============================================================
RESTAURANTS-0.74%
Brinker International, Inc.(a) 7,900 333,775
=============================================================
RETAIL (DRUG STORES)-1.06%
Walgreen Co. 11,400 476,663
=============================================================
FS-2
190
MARKET
SHARES VALUE
RETAIL (SPECIALTY-APPAREL)-0.49%
Talbots, Inc. (The) 4,800 $ 219,000
=============================================================
SAVINGS & LOAN COMPANIES-2.61%
Downey Financial Corp. 5,000 275,000
- -------------------------------------------------------------
Golden West Financial Corp. 6,200 418,500
- -------------------------------------------------------------
Washington Mutual, Inc. 9,000 477,563
=============================================================
1,171,063
=============================================================
SERVICES (DATA PROCESSING)-1.28%
DST Systems, Inc.(a) 5,400 361,800
- -------------------------------------------------------------
Learning Tree International, Inc.(a) 4,300 212,850
=============================================================
574,650
=============================================================
Total Domestic Common Stocks
(Cost $19,511,483) 23,001,481
=============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-47.27%
AUSTRALIA-1.16%
Australia & New Zealand Banking Group
Ltd. (Banks-Major Regional) 64,900 519,220
=============================================================
CANADA-2.95%
Anderson Exploration Ltd.
(Oil-Domestic Integrated)(a) 31,800 721,812
- -------------------------------------------------------------
Bombardier Inc.-Class B
(Aerospace/Defense) 33,400 515,439
- -------------------------------------------------------------
Dynetek Industries Ltd.
(Manufacturing-Diversified)
(Acquired 09/08/00; Cost
$164,473)(a)(b) 32,400 84,234
=============================================================
1,321,485
=============================================================
DENMARK-2.48%
Danske Bank A.S. (Banks-Major
Regional) 21,000 378,100
- -------------------------------------------------------------
Novo Nordisk A.S.-Class B (Health
Care-Drugs-Generic & Other) 2,600 466,487
- -------------------------------------------------------------
Novozymes A.S.-Class B
(Biotechnology)(a) 2,600 52,050
- -------------------------------------------------------------
Vestas Wind Systems A.S.
(Manufacturing-Specialized) 4,000 216,560
=============================================================
1,113,197
=============================================================
FRANCE-8.78%
Altran Technologies S.A.
(Services-Commercial & Consumer) 1,000 226,311
- -------------------------------------------------------------
Assurances Generales de France
(Insurance-Multi-Line) 6,600 458,632
- -------------------------------------------------------------
Aventis S.A.
(Chemicals-Diversified)(a) 8,200 719,970
- -------------------------------------------------------------
Bouygues Offshore S.A. (Engineering &
Construction) 5,744 261,604
- -------------------------------------------------------------
Hermes International
(Manufacturing-Diversified) 1,600 226,724
- -------------------------------------------------------------
Remy Cointreau S.A.
(Beverages-Alcoholic) 7,400 312,704
- -------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health
Care-Drugs-Generic & Other) 10,000 666,725
- -------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio &
Cable) 7,000 377,968
- -------------------------------------------------------------
MARKET
SHARES VALUE
FRANCE-(CONTINUED)
TotalFinaElf S.A. (Oil-International
Integrated) 3,300 $ 490,860
- -------------------------------------------------------------
Zodiac SA (Manufacturing-Diversified) 700 193,256
=============================================================
3,934,754
=============================================================
GERMANY-6.14%
Altana A.G. (Health
Care-Drugs-Generic & Other) 4,000 631,418
- -------------------------------------------------------------
Bayerisch Motoren Werke A.G.
(Automobiles)(a) 7,800 254,896
- -------------------------------------------------------------
Beiersdorf A.G. (Personal Care)(a) 2,600 269,789
- -------------------------------------------------------------
Ergo Versicherungs Gruppe A.G.
(Insurance Brokers) 2,300 384,447
- -------------------------------------------------------------
Hugo Boss A.G.-Pfd.
(Manufacturing-Specialized) 850 227,485
- -------------------------------------------------------------
Muenchener
Rueckversicherungs-Gesellschaft
A.G. (Insurance Brokers)(a) 1,400 499,575
- -------------------------------------------------------------
Siemens A.G.
(Manufacturing-Diversified) 3,700 483,822
=============================================================
2,751,432
=============================================================
IRELAND-1.16%
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 11,100 519,619
=============================================================
ISRAEL-0.96%
Teva Pharmaceutical Industries
Ltd.-ADR (Health Care-Drugs-Generic
& Other) 5,900 432,175
=============================================================
ITALY-3.65%
Bulgari S.p.A. (Consumer-Jewelry,
Novelties & Gifts)(a) 23,600 290,317
- -------------------------------------------------------------
Credito Italiano S.p.A. (Banks-Major
Regional)(a) 86,100 450,347
- -------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Refining &
Marketing)(a) 85,000 542,771
- -------------------------------------------------------------
Riunione Adriatica di Sicurta S.p.A
(Insurance Brokers) 22,600 352,506
=============================================================
1,635,941
=============================================================
JAPAN-1.44%
Furukawa Electric Co., Ltd. (The)
(Metal Fabricators) 37,000 645,575
=============================================================
NETHERLANDS-6.20%
Elsevier N.V. (Specialty Printing)(a) 23,200 341,168
- -------------------------------------------------------------
Heineken N.V. (Beverages-Alcoholic) 8,200 496,278
- -------------------------------------------------------------
ING Groep N.V. (Insurance Brokers) 7,300 583,229
- -------------------------------------------------------------
Koninklijke Ahold N.V. (Retail-Food
Chains)(a) 15,400 496,893
- -------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 6,500 327,165
- -------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil-International Integrated) 8,700 533,157
=============================================================
2,777,890
=============================================================
NORWAY-1.56%
Norsk Hydro A.S.A.
(Chemicals-Diversified)(a) 11,200 473,259
- -------------------------------------------------------------
Tomra Systems A.S.A.
(Manufacturing-Specialized) 11,600 224,712
=============================================================
697,971
=============================================================
FS-3
191
MARKET
SHARES VALUE
SPAIN-0.48%
Grupo Dragados, S.A.
(Construction-Cement & Aggregates) 19,700 $ 214,592
=============================================================
SWEDEN-0.65%
Swedish Match A.B. (Tobacco) 75,000 292,652
=============================================================
SWITZERLAND-4.97%
Nestle S.A. (Foods)(a) 240 559,827
- -------------------------------------------------------------
Novartis A.G. (Health
Care-Diversified) 695 1,228,741
- -------------------------------------------------------------
Serono S.A.-Class B (Health
Care-Drugs-Generic & Other) 446 429,349
- -------------------------------------------------------------
Syngenta A.G.
(Chemicals-Specialty)(a) 173 9,288
=============================================================
2,227,205
=============================================================
UNITED KINGDOM-4.69%
Aggreko PLC (Services-Facilities &
Environmental) 43,300 267,403
- -------------------------------------------------------------
Allied Domecq PLC
(Beverages-Alcoholic) 36,600 241,898
- -------------------------------------------------------------
Bunzl PLC (Paper & Forest Products) 45,000 275,883
- -------------------------------------------------------------
Centrica PLC (Oil & Gas-Exploration &
Production) 125,200 $ 485,346
- -------------------------------------------------------------
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Spirent PLC (Communications
Equipment) 36,100 329,281
- -------------------------------------------------------------
Tesco PLC (Retail-Food Chains) 122,900 501,239
=============================================================
2,101,050
=============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$18,457,266) 21,184,758
=============================================================
MONEY MARKET FUNDS-2.73%
STIC Liquid Assets Portfolio(c) 611,210 611,210
- -------------------------------------------------------------
STIC Prime Portfolio(c) 611,210 611,210
=============================================================
Total Money Market Funds (Cost
$1,222,420) 1,222,420
=============================================================
TOTAL INVESTMENTS-101.32% (Cost
$39,191,169) 45,408,659
=============================================================
LIABILITIES LESS OTHER ASSETS-(1.32)% (590,075)
=============================================================
NET ASSETS-100.00% $44,818,584
_____________________________________________________________
=============================================================
Investment Abbreviations:
ADR - American Depositary Receipt
Pfd. - Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 12/31/00 represented
0.19% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-4
192
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS:
Investments, at market value (cost $39,191,169) $45,408,659
- ------------------------------------------------------------
Foreign currencies, at value (cost $131) 6,294
- ------------------------------------------------------------
Receivables for:
Investments sold 547,375
- ------------------------------------------------------------
Fund shares sold 60,150
- ------------------------------------------------------------
Dividends 41,659
- ------------------------------------------------------------
Other assets 10,596
============================================================
Total assets 46,074,733
============================================================
LIABILITIES:
Payables for:
Investments purchased 935,398
- ------------------------------------------------------------
Fund shares reacquired 140,912
- ------------------------------------------------------------
Accrued advisory fees 27,726
- ------------------------------------------------------------
Accrued administrative services fees 4,235
- ------------------------------------------------------------
Accrued distribution fees 91,958
- ------------------------------------------------------------
Accrued transfer agent fees 12,314
- ------------------------------------------------------------
Accrued operating expenses 43,606
============================================================
Total liabilities 1,256,149
============================================================
Net assets applicable to shares outstanding $44,818,584
____________________________________________________________
============================================================
NET ASSETS:
Class A $20,750,956
____________________________________________________________
============================================================
Class B $22,278,511
____________________________________________________________
============================================================
Class C $ 1,789,117
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 1,556,298
____________________________________________________________
============================================================
Class B 1,698,209
____________________________________________________________
============================================================
Class C 136,437
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 13.33
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $13.33 divided by
95.25%) $ 13.99
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 13.12
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 13.11
____________________________________________________________
============================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$23,362) $ 262,703
- ------------------------------------------------------------
Dividends from affiliated money market funds 88,909
- ------------------------------------------------------------
Interest 4,356
============================================================
Total investment income 355,968
============================================================
EXPENSES:
Advisory fees 476,994
- ------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------
Custodian fees 41,879
- ------------------------------------------------------------
Distribution fees -- Class A 106,433
- ------------------------------------------------------------
Distribution fees -- Class B 263,363
- ------------------------------------------------------------
Distribution fees -- Class C 11,910
- ------------------------------------------------------------
Professional service fees 55,117
- ------------------------------------------------------------
Transfer agent fees 104,890
- ------------------------------------------------------------
Trustees' fees 10,182
- ------------------------------------------------------------
Other 62,015
============================================================
Total expenses 1,182,783
============================================================
Less: Fees waived (66,219)
- ------------------------------------------------------------
Expenses paid indirectly (1,018)
============================================================
Net expenses 1,115,546
============================================================
Net investment income (loss) (759,578)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 235,846
- ------------------------------------------------------------
Foreign currencies (186,435)
============================================================
49,411
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (3,480,394)
- ------------------------------------------------------------
Foreign currencies (5,172)
============================================================
(3,485,566)
============================================================
Net gain (loss) from investment securities and
foreign currencies (3,436,155)
============================================================
Net increase (decrease) in net assets resulting
from operations $(4,195,733)
____________________________________________________________
============================================================
See Notes to Financial Statements.
FS-5
193
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income (loss) $ (759,578) $ (323,556)
- ----------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 49,411 9,996,732
- ----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (3,485,566) 8,406,245
========================================================================================
Net increase (decrease) in net assets resulting from
operations (4,195,733) 18,079,421
========================================================================================
Distributions to shareholders from net investment income:
Advisor Class* -- (2,325)
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (1,628,810) (1,767,423)
- ----------------------------------------------------------------------------------------
Class B (1,840,396) (2,505,025)
- ----------------------------------------------------------------------------------------
Class C (129,369) (39,159)
- ----------------------------------------------------------------------------------------
Advisor Class* -- (82,148)
- ----------------------------------------------------------------------------------------
Share transactions-net:
Class A 3,252,026 (2,708,897)
- ----------------------------------------------------------------------------------------
Class B (2,668,253) (4,238,502)
- ----------------------------------------------------------------------------------------
Class C 1,530,731 143,802
- ----------------------------------------------------------------------------------------
Advisor Class* (703,288) (125,191)
========================================================================================
Net increase (decrease) in net assets (6,383,092) 6,754,553
========================================================================================
NET ASSETS:
Beginning of year 51,201,676 44,447,123
========================================================================================
End of year $44,818,584 $51,201,676
________________________________________________________________________________________
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $38,511,197 $37,900,018
- ----------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities
and foreign currencies 88,258 3,596,963
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 6,219,129 9,704,695
========================================================================================
$44,818,584 $51,201,676
________________________________________________________________________________________
========================================================================================
* Advisor Class shares were converted to Class A shares effective as of the
close of business on February 11, 2000.
See Notes to Financial Statements.
FS-6
194
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Trends Fund (the "Fund") is a separate series of AIM Series Trust
(the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company having an unlimited number
of shares of beneficial interest. The Fund consists of three different classes
of shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000, the Advisor Class shares were converted to Class A shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares were sold
without a sales charge. Matters affecting each portfolio or class will be voted
on exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income (loss) was
increased by $759,578, undistributed net realized gains increased by $40,459
and paid in capital decreased by $800,037 as a result of differing book/tax
treatment of foreign currency transactions, passive foreign investment
companies and net operating loss reclassifications. Net assets of the Fund
were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into
FS-7
195
U.S. dollar amounts on the respective dates of such transactions. The Fund
does not separately account for the portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Put Options -- The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
I. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest, extraordinary items and increases in expenses due
to expense offset arrangements, if any) to the maximum annual rate of 2.00%,
2.50% and 2.50% of the average daily net assets of the Fund's Class A, Class B
and Class C shares, respectively. During the year ended December 31, 2000, AIM
waived fees of $66,219.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 2000, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 2000, AFS was
paid $67,304 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to
FS-8
196
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 2000, the Class A,
Class B and Class C shares paid AIM Distributors $106,433, $263,363 and $11,910,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $12,562 from sales of the Class A
shares of the Fund during the year ended December 31, 2000. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 2000,
AIM Distributors received $427 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $774 and reductions in custodian
fees of $244 under expense offset arrangements which resulted in a reduction of
the Fund's total expenses of $1,018.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended December 31,
2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 2000 was
$121,157,020 and $121,955,381, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of
investment securities $ 7,398,161
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,189,497)
=========================================================
Net unrealized appreciation of investment
securities $ 6,208,664
_________________________________________________________
=========================================================
Cost of investments for tax purposes is $39,199,995.
NOTE 6-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999
were as follows:
2000 1999
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
Sold:
Class A 401,071 $ 6,300,770 200,188 $ 2,730,032
- ----------------------------------------------------------------------------------------------------------------
Class B 255,608 3,844,813 181,716 2,419,036
- ----------------------------------------------------------------------------------------------------------------
Class C 106,895 1,598,239 14,063 186,601
- ----------------------------------------------------------------------------------------------------------------
Advisor Class* 864 13,351 17,792 225,871
================================================================================================================
Issued as reinvestment of dividends:
Class A 121,642 1,549,644 118,185 1,690,082
- ----------------------------------------------------------------------------------------------------------------
Class B 133,455 1,673,704 160,713 2,277,307
- ----------------------------------------------------------------------------------------------------------------
Class C 10,019 125,635 2,695 38,132
- ----------------------------------------------------------------------------------------------------------------
Advisor Class* -- -- 5,723 81,816
================================================================================================================
Conversion of Advisor Class shares to Class A shares:**
Class A 61,297 680,172 -- --
- ----------------------------------------------------------------------------------------------------------------
Advisor Class (61,105) (680,172) -- --
================================================================================================================
Reacquired:
Class A (333,179) (5,278,560) (568,367) (7,129,011)
- ----------------------------------------------------------------------------------------------------------------
Class B (554,682) (8,186,770) (719,011) (8,934,845)
- ----------------------------------------------------------------------------------------------------------------
Class C (12,464) (193,143) (6,636) (80,931)
- ----------------------------------------------------------------------------------------------------------------
Advisor Class* (2,291) (36,467) (32,673) (432,878)
================================================================================================================
127,130 $ 1,411,216 (625,612) $(6,928,788)
________________________________________________________________________________________________________________
================================================================================================================
* Advisor Class share activity for the period January 1, 2000 through February
11, 2000.
** Effective as of the close of business February 11, 2000, pursuant to approval
by the Board of Trustees on November 3, 1999, all outstanding shares of
Advisor Class shares were converted to Class A shares of the fund.
FS-9
197
NOTE 7-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
CLASS A(a)
---------------------------------------------------
SEPTEMBER 15, 1997
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
----------------------------- DECEMBER 31,
2000(b) 1999(b) 1998(b) 1997(b)
------- ------- ------- ------------------
Net asset value, beginning of period $15.78 $11.46 $10.63 $ 11.43
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.06) (0.02) (0.01)
- -----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.11) 5.86 1.01 (0.31)
=================================================================================================================
Total from investment operations (1.30) 5.80 0.99 (0.32)
=================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.02) --
- -----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.15) (1.48) (0.14) --
- -----------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.48)
=================================================================================================================
Total distributions (1.15) (1.48) (0.16) (0.48)
=================================================================================================================
Net asset value, end of period $13.33 $15.78 $11.46 $ 10.63
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(c) (7.90)% 51.93% 9.37% (2.68)%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,751 $20,595 $17,822 $15,145
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(d) 1.03% 0.50% 0.50%(e)
- -----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.14%(d) 1.16% 0.50% 0.50%(e)
=================================================================================================================
Ratio of net investment income (loss) to average net assets (1.27)%(d) (0.50)% (0.21)% (0.35)%(e)
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 260% 147% 28% 1%
_________________________________________________________________________________________________________________
=================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) Ratios are based on average daily net assets of $21,286,571.
(e) Annualized.
FS-10
198
NOTE 7-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B(a)
---------------------------------------------------
SEPTEMBER 15, 1997
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
----------------------------- DECEMBER 31,
2000(b) 1999(b) 1998(b) 1997(b)
------- ------- ------- ------------------
Net asset value, beginning of period $15.62 $11.41 $10.62 $ 11.43
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.26) (0.13) (0.07) (0.02)
- -----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.09) 5.82 1.00 (0.32)
=================================================================================================================
Total from investment operations (1.35) 5.69 0.93 (0.34)
=================================================================================================================
Less distributions:
Distributions from net realized gains (1.15) (1.48) (0.14) --
- -----------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- (0.47)
=================================================================================================================
Total distributions (1.15) (1.48) (0.14) (0.47)
=================================================================================================================
Net asset value, end of period $13.12 $15.62 $11.41 $ 10.62
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(c) (8.30)% 51.18% 8.83% (2.83)%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $22,279 $29,118 $25,555 $19,184
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(d) 1.53% 1.00% 1.00%(e)
- -----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.64%(d) 1.66% 1.00% 1.00%(e)
=================================================================================================================
Ratio of net investment income (loss) to average net assets (1.77)%(d) (1.00)% (0.71)% (0.85)%(e)
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 260% 147% 28% 1%
_________________________________________________________________________________________________________________
=================================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average daily net assets of $26,336,340.
(e) Annualized.
CLASS C(a)
-------------------------------------
JANUARY 2, 1998
YEAR ENDED (DATE SALES
DECEMBER 31, COMMENCED) TO
------------------ DECEMBER 31,
2000(b) 1999(b) 1998(b)
------- ------- ---------------
Net asset value, beginning of period $15.62 $11.40 $10.62
- ---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.26) (0.13) (0.08)
- ---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.10) 5.83 1.00
===================================================================================================
Total from investment operations (1.36) 5.70 0.92
===================================================================================================
Less distributions from net realized gains (1.15) (1.48) (0.14)
===================================================================================================
Net asset value, end of period $13.11 $15.62 $11.40
___________________________________________________________________________________________________
===================================================================================================
Total return(c) (8.37)% 51.33% 8.94%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,789 $ 500 $ 249
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(d) 1.53% 1.00%(e)
- ---------------------------------------------------------------------------------------------------
Without fee waivers 2.64%(d) 1.66% 1.00%(e)
===================================================================================================
Ratio of net investment income (loss) to average net assets (1.77)%(d) (1.00)% (0.71)%(e)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 260% 147% 28%
___________________________________________________________________________________________________
===================================================================================================
(a) Effective August 27, 1999, the Fund was restructured to directly invest
primarily in equity securities of U.S. and foreign issuers. Prior to the
Fund restructuring, the Fund operated as a "fund of funds" investing in AIM
theme mutual funds.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) Ratios are based on average daily net assets of $1,190,966.
(e) Annualized.
FS-11
199
APPENDIX II
ANNUAL REPORT / OCTOBER 31 2000
AIM GLOBAL CONSUMER PRODUCTS
AND SERVICES FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
200
[COVER IMAGE]
-------------------------------------
SHOPPERS BY DIANA ONG
ONG IS A PROLIFIC AND EXPERIMENTAL ARTIST WHO CONSTANTLY COMBINES
DIFFERENT MEDIUMS TO PUSH THE BOUNDARIES OF ART. SHE IS A TRUE
MULTIMEDIA ARTIST, PROFICIENT IN WATERCOLOR, ACRYLIC, ETCHING,
WOODCUT, SILKSCREEN, COMPUTER ART AND CERAMIC ART. THE ENERGY
AND DIVERSITY OF HER "SHOPPERS," CREATED WITH COMPUTER GRAPHICS,
FITTINGLY CHARACTERIZE MODERN GLOBAL CONSUMERS.
-------------------------------------
AIM Global Consumer Products and Services Fund is for shareholders who seek
long-term growth of capital through investments in companies around the world
that manufacture, market, retail or distribute consumer products and services.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Consumer Products and Services Fund's performance figures are
historical, and they reflect the reinvestment of distributions and changes
in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of its Class A shares due to different sales-charge structure and class
expenses.
o During the fiscal year ended 10/31/00, the fund paid distributions of $5.67
per Class A, Class B and Class C share.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custodial arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o The fund participates in the initial public offering (IPO) market, and a
substantial portion of the fund's returns are attributable to its investment
in IPOs, which have a magnified impact due to the fund's relatively small
asset base. There is no guarantee that as the fund's assets grow, it will
continue to experience substantially similar performance by investing in
IPOs.
o Investing in a single-sector mutual fund may involve greater risk and
potential reward than investing in a more diversified fund.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged MSCI All Country (AC) World Index tracks the performance of
approximately 50 countries covered by Morgan Stanley Capital International
that are considered either developing or emerging markets.
o The unmanaged MSCI World Index is a group of global securities tracked by
Morgan Stanley Capital International.
o The National Association of Securities Dealers Automated Quotation System
Composite Index (the Nasdaq) is a market-value-weighted index comprising all
domestic and non-U.S.-based common stocks listed on the Nasdaq system. It
includes more than 5,000 companies, and it is often considered
representative of the small and medium-sized company stock universe. While
it includes many small and mid-sized company stocks, large-capitalization
technology companies tend to dominate the index.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
represents the performance of the U.S. stock market.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not include sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the fund.
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
201
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
It's an honor to address you as the AIM Funds' new chairman.
[PHOTO OF I feel privileged to succeed Ted Bauer, who recently retired
Robert H. from the funds' board and will soon retire as A I M
Graham Management Group's chairman after a long, successful career
Chairman of in the investment industry. Ted has always shown the highest
the Board of degree of integrity and commitment to excellence, and I have
THE FUND always admired him. I'm also proud to be part of the team
APPEARS HERE] that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost
a decade of double-digit returns, the S&P 500 was down 1.81% year-to-date as of
October 31, 2000. But market returns in the 20% to 30% range, such as we have
seen in recent years, are not typical. If you expect these kinds of returns
every year, you'll be disappointed. Historically, markets decline in one out of
every four years. What we're seeing now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please contact us through our
Web site, www.aimfunds.com, or call our Client Services Department at
800-959-4246 during normal business hours. Information about your account is
available at our Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ Robert H. Graham
Robert H. Graham
Chairman
-------------------------------------
THE CURRENT
ENVIRONMENT
ILLUSTRATES THE VALUE
OF PROFESSIONAL
MONEY MANAGEMENT.
KNOWING WHEN TO BUY
AND SELL TAKES
EXPERTISE AND
DISCIPLINE EVEN IN THE
BEST OF MARKETS.
-------------------------------------
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
202
ANNUAL REPORT / MANAGERS' OVERVIEW
TECH EUPHORIA, THEN SELL-OFF, FELT AROUND THE WORLD
HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
High-tech stocks led worldwide equity rallies late in 1999 and early 2000. Heavy
profit-taking, however, plunged world markets into a sell-off in March. Despite
global market volatility, AIM Global Consumer Products and Services Fund posted
favorable returns for the fiscal year ended October 31, 2000. Total returns,
excluding sales charges, for the fund's Class A, Class B and Class C shares were
5.15%, 4.57% and 4.64%, respectively. These returns include gains made during
late 1999 and early 2000, when markets were more exuberant than they became
later in the fiscal year. More recently, performance has been affected by the
sell-off in the technology sector and other market difficulties. The fund's
performance, however, outdistanced that of the MSCI AC World and the MSCI World
Indexes, which returned 0.85% and 1.09%, respectively, for the same period.
WHAT WERE THE MAJOR TRENDS IN THE U.S. MARKETS DURING THE REPORTING PERIOD?
The mantra of world markets this past year could be "Easy dot-com come ... Easy
dot-com go." Markets had a real love/hate affair with tech stocks--there were
incredible bouts of optimism and pessimism, sometimes a day apart. As 1999 ended
and 2000 began, investors were giddy with TMT (telephone, media and
telecommunications) stock euphoria. Sky-high stock valuations seemed of little
consequence. In late March, however, tech optimism was replaced by skepticism
and heavy profit-taking by investors. Investors feared that stocks were now
overvalued and that the Federal Reserve Board (the Fed) might continue to raise
interest rates to slow torrid economic growth.
After raising interest rates in May, the Fed ceased its monetary tightening
policy for the remainder of the reporting period. (The Fed raised rates six
times between June 1999 and May 2000.) Markets rallied in late May and June amid
mounting evidence that economic growth was slowing, reducing the probability of
additional Fed rate hikes. However, in late summer and early fall, rising oil
prices (which hit 10-year highs during the third quarter), unrest in the Middle
East and (perhaps most importantly) concern about corporate earnings converged
to produce another steep market decline. A number of major corporations reported
earnings disappointments in September and October, as rising oil prices and a
weak euro cut into profit margins.
Because of strong performance during the first half of the fiscal year, most
market indexes recorded gains for the reporting period. After tech stocks faded,
stocks in several other sectors (such as health care, financial services, energy
and utilities) posted healthy gains.
WHAT HAPPENED IN OTHER WORLD MARKETS OVER THE FISCAL YEAR?
The Japanese stock market mirrored its U.S. counterpart in terms of volatility
following the spring technology sell-off. However, there are signs that
corporate Japan is beginning to take a more aggressive stance toward
cost-cutting to bolster profits. Outside Japan, investment in Asia has weakened
because of political turmoil in many countries and interest-rate concerns.
European markets also moved largely with the Nasdaq. Beyond the market's
concern over high stock valuations, Europe had to contend with a weakening euro.
The euro, Euroland's 11-country common currency, hit a record low during the
reporting period. Since its launch in January 1999 at $1.15, the currency has
spent most of its existence below parity with the U.S. dollar. During the
reporting period, European investors bought dollar-based assets, and U.S.
investors tended to keep their money in U.S. markets. Near the end of the fiscal
year, the European Central Bank increased interest rates to 4.5%, spurred by
rising oil prices, a higher-than-expected rise in producer prices and
employment increases in Germany and France. On a positive note, European
economies remain strong. As a region, Europe is witnessing its best economic
growth in 10 years, with a 3.5% increase in its gross domestic product since
mid-1999.
WHAT SECTORS/COUNTRIES CONTRIBUTED TO THE FUND'S PERFORMANCE?
Over the fiscal year, the fund's performance has been driven by three main
sectors: oil and gas, health care and technology. The bias has been toward the
consumer elements of the better-performing energy/oil and technology sectors.
Over the second and third quarters of 2000, the fund
FUND VS. INDEXES
As of 10/31/00
One-year returns, excluding sales charges
================================================================================
FUND CLASS A SHARES 5.15%
FUND CLASS B SHARES 4.57%
FUND CLASS C SHARES 4.64%
MSCI WORLD INDEX 1.09%
MSCI ALL COUNTRY WORLD INDEX 0.85%
================================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
2
203
ANNUAL REPORT / MANAGERS' OVERVIEW
[ART WORK]
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
====================================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
- ------------------------------------------------------------------------------------------------------------------------------------
1. United Healthcare Corp. 2.95% 1. Health Care (Drugs-Generic & Other) 7.81% 1. United States 48.50%
2. EMC Corp. 2.64 2. Oil & Gas (Drilling & Equipment) 7.26 2. France 8.17
3. Dynegy Inc. 2.41 3. Computers (Peripherals) 4.04 3. United Kingdom 5.58
4. Novartis A.G. (Switzerland) 2.24 4. Banks (Major Regional) 3.19 4. Switzerland 4.93
5. Adobe Systems, Inc. 2.16 5. Oil (International Integrated) 3.16 5. Netherlands 4.37
6. Furukawa Electric Co., Ltd. (The) (Japan) 2.14 6. Health Care (Managed Care) 2.95 6. Germany 3.20
7. Pfizer Inc. 1.69 7. Oil & Gas (Exploration & Production) 2.84 7. Canada 2.57
8. Centrica PLC (U.K.) 1.68 8. Communications Equipment 2.78 8. Japan 2.14
9. CDW Computer Centers, Inc. 1.43 9. Health Care (Specialized Services) 2.78 9. Denmark 1.69
10. Brocade Communications Systems, Inc. 1.40 10. Computers (Software & Services) 2.71 10. Italy 1.63
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
====================================================================================================================================
began to build significant weightings in health care and financials as these
sectors' fundamentals and earnings improved. Shifts in regional or country
allocation have been more a function of stock selection than regional strategy.
We did increase our weighting in Europe, however, to take advantage of a soft
market and better valuations there, especially in financial and energy
positions.
WHAT WERE SOME OF THE FUND'S TOP HOLDINGS?
o Dynegy: This company markets and trades electricity, natural gas, coal and
other energy products in the United States, the United Kingdom and
continental Europe. The company, which invests in power projects, has formed
alliances with utility companies to sell energy in deregulated markets.
o Novartis: The company's health-care operations, which account for 55% of
sales, include prescription drugs, contact lenses and ophthalmic
medications. Novartis is one of the world's top five pharmaceutical firms.
o Furukawa Electric: The company makes optical-fiber cable, optical fibers and
superconductive wire. It is also a top producer of electric wire and cable,
nonferrous metal and related products.
WHAT IS YOUR SHORT-TERM OUTLOOK FOR THE MARKET?
At the close of the reporting period, the economic climate appeared favorable
for stocks despite often extreme market volatility. The U.S. unemployment rate
was at its lowest level in three decades. Consumer spending, which slowed down
for much of the second half of the fiscal year, picked up again in September.
And except for higher oil prices, inflation was moderate.
Interest rates stabilized as the Federal Reserve Board took at least a
temporary respite from its monetary tightening policy, which had periodically
roiled markets for more than a year. Perhaps most importantly, corporate
profits, while declining, were still impressive for many companies. However,
because of a degree of uncertainty surrounding near-term economic trends and
international developments, all markets may continue to be volatile.
READ THIS REPORT ONLINE!
Early in 2001, a new service will be available--electronic
delivery of fund reports and prospectuses. Soon,
you can read the same AIM report you are reading
now--online. Once you sign up for the service, we will send
you a link to the report via e-mail. If you choose to
receive your reports online, you will not receive a
paper copy by mail. You may cancel the service at any time by
visiting our Web site.
Please visit our Web site at www.aimfunds.com and go to
"Your AIM Account." Log into your account and then
click on the "View Other Account Options" dropdown
menu and select "eDelivery."
See important fund and index disclosures inside front cover.
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
3
204
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND VS. BENCHMARK INDEXES
12/30/94-10/31/00
in thousands
================================================================================
AIM Global Consumer AIM Global Consumer MSCI MSCI
Products and Products and AC World World
Services Fund, Services Fund, Index Index
Class A Shares Class B Shares
- --------------------------------------------------------------------------------
12/94 $9,525.00 $10,000.00 $10,000.00 $10,000.00
10/95 12,158.00 12,712.00 11,150.00 11,340.00
10/96 18,094.00 18,828.00 12,889.00 13,188.00
10/97 20,004.00 20,702.00 14,919.00 15,400.00
10/98 21,736.00 22,391.00 16,822.00 17,750.00
10/99 30,910.00 31,688.00 21,264.00 22,172.00
10/00 32,501.00 33,036.00 21,445.00 22,415.00
$32,501.00 $33,036.00 $21,445.00 $22,415.00
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
This chart compares the performance of your fund's Class A and Class B shares to
benchmark indexes over the period 12/30/94-10/31/00. (Please note that index
performance figures are for the period 12/31/94-10/31/00.) Since the last
reporting period, AIM Global Consumer Products and Services Fund has elected to
use the MSCI World Index as its benchmark instead of the MSCI AC World Index.
The new index more closely resembles the securities in which the fund invests.
The fund will no longer measure its performance against the MSCI AC World Index,
the index published in previous reports to shareholders. Because this is the
first reporting period since we have adopted the new index, SEC guidelines
require that we compare the fund's performance to both the old and the new
index. It is important to understand the differences between your fund and an
index. Your fund's total return is shown with a sales charge, and it includes
fund expenses and management fees. An index measures the performance of a
hypothetical portfolio. A market index is not managed, incurring no sales
charges, expenses or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (12/30/94) 22.38%
5 Years 20.55
1 Year 0.14*
*5.15%, excluding sales charges
CLASS B SHARES
Inception (12/30/94) 22.73%
5 Years 20.93
1 Year 0.25*
*4.57%, excluding CDSC
CLASS C SHARES
Inception (3/1/99) 15.43%
1 Year 3.78*
*4.64%, excluding CDSC
================================================================================
The fund's average annual total returns as of the close of the reporting period
are shown in the table above. In addition, industry regulations require us to
provide average annual total returns (including sales charges) as of 9/30/00,
the most recent calendar quarter-end, which were: Class A shares, one year,
15.11%; five years, 22.66%; inception (12/30/94), 24.47%. Class B shares, one
year, 15.27%; five years, 23.06%; inception (12/30/94), 24.84%. Class C shares,
one year, 19.27%; inception (3/1/99), 22.39%.
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class C shares will differ from that of its Class
A and Class B shares due to differing sales-charge structure and class expenses.
For fund performance calculations and descriptions of the indexes on this page,
please see the inside front cover.
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
4
205
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-48.45%
AEROSPACE/DEFENSE-1.19%
Boeing Co. (The) 34,500 $ 2,339,531
==============================================================
BANKS (MAJOR REGIONAL)-1.18%
Northern Trust Corp. 27,300 2,330,737
==============================================================
BEVERAGES (NON-ALCOHOLIC)-2.18%
Pepsi Bottling Group, Inc., (The) 54,300 1,880,137
- --------------------------------------------------------------
PepsiCo, Inc. 50,000 2,421,875
==============================================================
4,302,012
==============================================================
COMMUNICATIONS EQUIPMENT-1.71%
Cable Design Technologies Corp.(a) 44,700 1,030,894
- --------------------------------------------------------------
Corning Inc. 30,500 2,333,250
==============================================================
3,364,144
==============================================================
COMPUTERS (HARDWARE)-1.28%
McDATA Corp.-Class B(a) 30,300 2,525,789
==============================================================
COMPUTERS (PERIPHERALS)-4.04%
Brocade Communications Systems,
Inc.(a) 12,100 2,751,237
- --------------------------------------------------------------
EMC Corp.(a) 58,400 5,201,250
==============================================================
7,952,487
==============================================================
COMPUTERS (SOFTWARE &
SERVICES)-2.71%
Adobe Systems Inc. 55,800 4,244,287
- --------------------------------------------------------------
Cybear Group(a) 5,211 3,583
- --------------------------------------------------------------
i2 Technologies, Inc.(a) 6,400 1,088,000
==============================================================
5,335,870
==============================================================
ELECTRICAL EQUIPMENT-1.24%
General Electric Co. 44,500 2,439,156
==============================================================
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.78%
Arrow Electronics, Inc.(a) 48,000 1,536,000
==============================================================
ELECTRONICS (INSTRUMENTATION)-0.76%
Varian Inc.(a) 48,300 1,488,244
==============================================================
ELECTRONICS (SEMICONDUCTORS)-1.94%
Analog Devices, Inc.(a) 31,200 2,028,000
- --------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 31,900 1,796,369
==============================================================
3,824,369
==============================================================
ENTERTAINMENT-1.02%
Walt Disney Co. (The) 56,200 2,012,662
==============================================================
FINANCIAL (DIVERSIFIED)-1.20%
Citigroup Inc. 45,066 2,371,598
==============================================================
MARKET
SHARES VALUE
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.50%
Alpharma Inc.-Class A 11,300 $ 438,581
- --------------------------------------------------------------
Andrx Group(a) 35,000 2,520,000
==============================================================
2,958,581
==============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-1.69%
Pfizer Inc. 76,900 3,321,119
==============================================================
HEALTH CARE (MANAGED CARE)-2.96%
UnitedHealth Group Inc. 53,200 5,818,750
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-2.06%
Laboratory Corp. of America
Holdings(a) 10,300 1,389,212
- --------------------------------------------------------------
Quest Diagnostics Inc.(a) 27,800 2,675,750
==============================================================
4,064,962
==============================================================
INVESTMENT BANKING/BROKERAGE-2.08%
Lehman Brothers Holdings Inc. 22,800 1,470,600
- --------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 32,700 2,626,219
==============================================================
4,096,819
==============================================================
INVESTMENT MANAGEMENT-1.22%
Alliance Capital Management Holding
L.P. 50,000 2,400,000
==============================================================
NATURAL GAS-2.41%
Dynegy Inc.-Class A 102,400 4,742,400
==============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-6.51%
BJ Services Co.(a) 38,200 2,003,113
- --------------------------------------------------------------
ENSCO International Inc. 81,300 2,703,225
- --------------------------------------------------------------
Global Marine, Inc.(a) 54,600 1,446,900
- --------------------------------------------------------------
Marine Drilling Cos., Inc.(a) 81,700 1,950,588
- --------------------------------------------------------------
Nabors Industries, Inc.(a) 35,100 1,786,590
- --------------------------------------------------------------
Patterson Energy, Inc.(a) 39,900 1,122,188
- --------------------------------------------------------------
Schlumberger Ltd. 6,200 471,975
- --------------------------------------------------------------
Smith International, Inc.(a) 19,000 1,339,500
==============================================================
12,824,079
==============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-1.15%
Anadarko Petroleum Corp. 35,444 2,270,188
==============================================================
OIL & GAS (REFINING &
MARKETING)-0.58%
Valero Energy Corp. 34,400 1,137,350
==============================================================
POWER PRODUCERS (INDEPENDENT)-1.32%
Calpine Corp.(a) 32,900 2,597,044
==============================================================
RESTAURANTS-0.68%
Brinker International, Inc.(a) 34,000 1,334,500
==============================================================
5
206
MARKET
SHARES VALUE
RETAIL (COMPUTERS &
ELECTRONICS)-1.43%
CDW Computer Centers, Inc.(a) 43,600 $ 2,809,475
==============================================================
SAVINGS & LOAN COMPANIES-0.88%
Washington Mutual, Inc. 39,300 1,729,200
==============================================================
SERVICES (DATA PROCESSING)-0.75%
DST Systems, Inc.(a) 10,300 634,738
- --------------------------------------------------------------
Learning Tree International, Inc.(a) 18,600 841,650
==============================================================
1,476,388
==============================================================
Total Domestic Common Stocks
(Cost $76,728,667) 95,403,454
==============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-39.54%
AUSTRALIA-1.07%
Australia & New Zealand Banking
Group Ltd. (Banks-Major
Regional)(a) 284,700 2,102,933
==============================================================
BELGIUM-0.28%
ICOS Vision Systems Corp. N.V.
(Equipment-Semiconductor)(a) 18,100 541,869
==============================================================
CANADA-2.57%
Anderson Exploration Ltd.
(Oil-Domestic Integrated)(a) 132,300 2,425,457
- --------------------------------------------------------------
Bombardier Inc.-Class B
(Aerospace/Defense) 143,700 2,253,398
- --------------------------------------------------------------
Dynetek Industries Ltd.
(Manufacturing-Diversified)(a) 76,100 373,699
==============================================================
5,052,554
==============================================================
DENMARK-1.69%
Novo Nordisk A.S.-Class B (Health
Care-Drugs-Generic & Other)(a) 11,200 2,375,533
- --------------------------------------------------------------
Vestas Wind Systems A.S.
(Manufacturing-Specialized) 17,700 958,731
==============================================================
3,334,264
==============================================================
FRANCE-8.17%
Alcatel Optronics S.A.
(Communications Equipment)(a) 11,000 654,394
- --------------------------------------------------------------
Assurances Generales de France
(Insurance-Multi-Line) 27,200 1,488,872
- --------------------------------------------------------------
Aventis S.A.
(Chemicals-Diversified)(a) 35,700 2,575,228
- --------------------------------------------------------------
Azeo (Ez-Gaz it Eaux) (Investments) 17,300 1,123,146
- --------------------------------------------------------------
Banque Nation de Paris (Banks-Major
Regional), Wts., expiring
07/15/02(b) 5,460 26,180
- --------------------------------------------------------------
BNP Paribas (Banks-Major Regional) 21,100 1,819,302
- --------------------------------------------------------------
Bouygues Offshore S.A. (Oil &
Gas-Drilling & Equipment) 29,800 1,466,807
- --------------------------------------------------------------
Remy Cointreau S.A.
(Beverages-Alcoholic) 32,200 1,076,665
- --------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health
Care-Drugs- Generic & Other) 43,400 2,283,547
- --------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio &
Cable) 30,000 1,637,046
- --------------------------------------------------------------
MARKET
SHARES VALUE
FRANCE-(CONTINUED)
Total Fina Elf S.A.
(Oil-International Integrated) 13,600 $ 1,945,921
==============================================================
16,097,108
==============================================================
GERMANY-3.20%
Altana A.G. (Health
Care-Drugs-Generic & Other) 17,400 2,111,611
- --------------------------------------------------------------
Bayerische Motoren Werke A.G.
(Automobiles)(a) 34,000 1,125,310
- --------------------------------------------------------------
Hugo Boss A.G.-Pfd
(Manufacturing-Specialized) 3,900 986,301
- --------------------------------------------------------------
Siemens A.G.
(Manufacturing-Diversified) 16,300 2,074,949
==============================================================
6,298,171
==============================================================
IRELAND-1.22%
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 46,400 2,409,900
==============================================================
ISRAEL-0.77%
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 25,500 1,507,688
==============================================================
ITALY-1.63%
Bulgari S.p.A. (Consumer-Jewelry,
Novelties & Gifts)(a) 103,700 1,220,629
- --------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Refining &
Marketing)(a) 368,000 1,992,494
==============================================================
3,213,123
==============================================================
JAPAN-2.14%
Furukawa Electric Co., Ltd. (The)
(Metal Fabricators) 160,000 4,208,404
==============================================================
NETHERLANDS-4.37%
Heineken N.V. (Beverages-Alcoholic) 35,700 1,938,996
- --------------------------------------------------------------
ING Groep N.V. (Insurance Brokers) 31,800 2,183,794
- --------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 48,100 2,249,186
- --------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil-International Integrated) 37,600 2,230,137
==============================================================
8,602,113
==============================================================
NORWAY-1.35%
Norsk Hydro A.S.A.
(Chemicals-Diversified) 66,900 2,660,742
==============================================================
SWEDEN-0.57%
Swedish Match A.B. (Tobacco) 329,500 1,131,124
==============================================================
SWITZERLAND-4.93%
Nestle S.A. (Foods)(a) 1,040 2,155,455
- --------------------------------------------------------------
Novartis A.G. (Health
Care-Diversified) 2,904 4,406,169
- --------------------------------------------------------------
Serono S.A.-Class B (Health
Care-Drugs-Generic & Other) 1,935 1,740,886
- --------------------------------------------------------------
Straumann A.G. (Health
Care-Specialized Services) 653 1,411,509
==============================================================
9,714,019
==============================================================
UNITED KINGDOM-5.58%
Aggreko PLC (Services-Facilities &
Environmental) 187,700 1,005,259
- --------------------------------------------------------------
6
207
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Bunzl PLC (Paper & Forest Products) 195,400 $ 1,117,398
- -----------------------------------------------------------------------
Centrica PLC (Oil & Gas-Exploration
& Production) 964,400 3,317,360
- -----------------------------------------------------------------------
Shell Transport & Trading Co.
(Oil-International Integrated) 253,700 2,041,781
- -----------------------------------------------------------------------
Spirent PLC (Communications
Equipment) 158,000 1,465,362
- -----------------------------------------------------------------------
Tesco PLC (Retail-Food Chains) 533,800 2,035,675
=======================================================================
10,982,835
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $72,388,910) 77,856,847
=======================================================================
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
PUT OPTIONS
PURCHASED-0.05%
Washington Mutual,
Inc. (Savings &
Loan Companies)
(Cost $73,342) 385 $45 Dec-00 107,078
=======================================================================
SHARES
MONEY MARKET FUNDS-6.77%
STIC Liquid Assets Portfolio(c) 6,664,746 6,664,746
- -----------------------------------------------------------------------
STIC Prime Portfolio(c) 6,664,746 6,664,746
=======================================================================
Total Money Market Funds
(Cost $13,329,492) 13,329,492
=======================================================================
TOTAL INVESTMENTS-94.81%
(Cost $162,520,411) 186,696,871
=======================================================================
OTHER ASSETS LESS LIABILITIES-5.19% 10,223,630
=======================================================================
NET ASSETS-100.00% $196,920,501
_______________________________________________________________________
=======================================================================
Investment Abbreviations:
ADR - American Depositary Receipt
Ltd. - Limited
Pfd. - Preferred
Wts. - Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
7
208
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost
$162,520,411) $186,696,871
- ------------------------------------------------------------
Foreign currencies, at value (cost $7,945,040) 7,938,488
- ------------------------------------------------------------
Receivables for:
- ------------------------------------------------------------
Investments sold 4,053,583
- ------------------------------------------------------------
Fund shares sold 272,233
- ------------------------------------------------------------
Dividends 302,831
- ------------------------------------------------------------
Collateral for securities loaned 5,610,412
- ------------------------------------------------------------
Other assets 29,931
============================================================
Total assets $204,904,349
============================================================
LIABILITIES:
Payables for:
Investments purchased 1,748,139
- ------------------------------------------------------------
Fund shares reacquired 227,942
- ------------------------------------------------------------
Collateral upon return of securities loaned 5,610,412
- ------------------------------------------------------------
Accrued advisory fees 129,583
- ------------------------------------------------------------
Accrued administrative services fees 4,235
- ------------------------------------------------------------
Accrued distribution fees 143,953
- ------------------------------------------------------------
Accrued trustees' fees 3,295
- ------------------------------------------------------------
Accrued transfer agent fees 45,845
- ------------------------------------------------------------
Accrued operating expenses 70,444
============================================================
Total liabilities 7,983,848
============================================================
Net assets applicable to shares outstanding $196,920,501
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 82,692,332
____________________________________________________________
============================================================
Class B $110,664,334
____________________________________________________________
============================================================
Class C $ 3,563,835
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 3,078,176
____________________________________________________________
============================================================
Class B 4,276,551
____________________________________________________________
============================================================
Class C 137,648
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 26.86
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $26.86 divided by
95.25%) $ 28.20
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 25.88
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 25.89
____________________________________________________________
============================================================
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$196,505) $ 1,497,717
- ------------------------------------------------------------
Dividends from affiliated money market funds 633,924
- ------------------------------------------------------------
Interest 21,592
- ------------------------------------------------------------
Security lending income 66,393
============================================================
Total investment income 2,219,626
============================================================
EXPENSES:
Advisory fees 2,032,116
- ------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------
Custodian fees 94,792
- ------------------------------------------------------------
Distribution fees -- Class A 431,352
- ------------------------------------------------------------
Distribution fees -- Class B 1,213,920
- ------------------------------------------------------------
Distribution fees -- Class C 18,599
- ------------------------------------------------------------
Transfer agent fees 399,263
- ------------------------------------------------------------
Trustees' fees 15,211
- ------------------------------------------------------------
Other 173,374
============================================================
Total expenses 4,428,627
============================================================
Less: Expenses reimbursed (6,151)
- ------------------------------------------------------------
Expenses paid indirectly (8,766)
============================================================
Net expenses 4,413,710
============================================================
Net investment income (loss) (2,194,084)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 27,078,834
- ------------------------------------------------------------
Foreign currencies (468,568)
============================================================
26,610,266
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (15,821,294)
- ------------------------------------------------------------
Foreign currencies (81,049)
============================================================
(15,902,343)
============================================================
Net gain on investment securities and foreign
currencies 10,707,923
============================================================
Net increase in net assets resulting from
operations $ 8,513,839
____________________________________________________________
============================================================
See Notes to Financial Statements.
8
209
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $ (2,194,084) $ (1,748,031)
- ------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 26,610,266 44,474,962
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (15,902,343) 20,709,969
==========================================================================================
Net increase in net assets resulting from operations 8,513,839 63,436,900
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (13,665,029) (1,486,208)
- ------------------------------------------------------------------------------------------
Class B (20,642,170) (2,314,110)
- ------------------------------------------------------------------------------------------
Class C (64,428) --
- ------------------------------------------------------------------------------------------
Advisor Class* (212,239) (341,039)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 13,348,888 (8,462,976)
- ------------------------------------------------------------------------------------------
Class B 16,239,334 (14,746,418)
- ------------------------------------------------------------------------------------------
Class C 3,656,493 209,527
- ------------------------------------------------------------------------------------------
Advisor Class* 4,771,906 (17,338,191)
==========================================================================================
Net increase in net assets 11,946,594 18,957,485
==========================================================================================
NET ASSETS:
Beginning of year 184,973,907 166,016,422
==========================================================================================
End of year $196,920,501 $184,973,907
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $151,709,567 $104,692,946
- ------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (48,605) --
- ------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities
and foreign currencies 21,125,724 40,244,803
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 24,133,815 40,036,158
==========================================================================================
$196,920,501 $184,973,907
__________________________________________________________________________________________
==========================================================================================
* Advisor Class shares were converted to Class A shares effective as of the
close of business on February 11, 2000.
See Notes to Financial Statements.
9
210
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Consumer Products and Services Fund (the "Fund") is a separate series
of AIM Investment Funds (the "Trust"). The Trust is organized as a Delaware
business trust and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end series management investment company
consisting of nine separate series portfolios, each having an unlimited number
of shares of beneficial interest. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. The Fund
formerly offered Advisor Class shares; however, as of the close of business on
February 11, 2000 the Advisor Class shares were converted to Class A shares.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a contingent deferred sales charge. Advisor Class shares
were sold without a sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objective is long-term growth of capital. The Fund
invests substantially all of its investable assets in Global Consumer Products
and Services Portfolio (the "Portfolio"). The Portfolio is organized as a
Delaware business trust which is registered under the 1940 Act as an open-end
management investment company.
The Portfolio has investment objectives, policies and limitations
substantially identical to those of the Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
October 31, 2000, all of the shares of beneficial interest of the Portfolio were
owned by either the Fund or an affiliated INVESCO entity.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund and the Portfolio in the preparation of
its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price as of the close of
the customary trading session on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the New
York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On October 31, 2000, undistributed net investment income was increased by
$2,145,479, undistributed net realized gains decreased by $11,145,479 and
paid in capital increased by $9,000,000 as a result of book/tax differences
due to utilization of a portion of the proceeds from redemptions as
distributions for federal income tax purposes, foreign currency transactions
and net operating loss reclassifications. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
10
211
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Portfolio
does not separately account for the portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Portfolio may enter into a foreign currency contract to attempt to
minimize the risk to the Portfolio from adverse changes in the relationship
between currencies. The Portfolio may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Portfolio could be exposed to risk if counterparties to the contracts are
unable to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Put Options -- The Portfolio may purchase put options. By purchasing a put
option, the Portfolio obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Portfolio pays an option premium. The option's underlying
instrument may be a security or a futures contract. Put options may be used
by the Portfolio to hedge securities it owns by locking in a minimum price at
which the Portfolio can sell. If security prices fall, the put option could
be exercised to offset all or a portion of the Portfolio's resulting losses.
At the same time, because the maximum the Portfolio has at risk is the cost
of the option, purchasing put options does not eliminate the potential for
the Portfolio to profit from an increase in the value of the securities
hedged.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% of the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively. During the year
ended October 31, 2000, AIM reimbursed expenses of $6,151.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund and the Portfolio. For the year ended October
31, 2000, AIM was paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended October 31, 2000, AFS was
paid $267,569 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $431,352,
$1,213,920 and $18,599, respectively, as compensation under the Plans.
AIM Distributors received commissions of $70,319 from sales of the Class A
shares of the Fund during the year ended October 31, 2000. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2000,
AIM Distributors received $1,969 in contingent deferred sales charges imposed on
redemptions of Fund shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $2,784 and reductions in custodian
fees of $5,982 under expense offset arrangements which resulted in a reduction
of the Fund's total expenses of $8,766.
11
212
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly and the borrower fails to return the securities.
At October 31, 2000, securities with an aggregate value of $5,500,404 were on
loan to brokers. The loans were secured by cash collateral of $5,610,412
received by the Portfolio. For the year ended October 31, 2000, the Portfolio
received fees of $66,393 for securities lending.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Portfolio during the year ended October 31, 2000 was
$498,299,484 and $505,066,435, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of
investment securities $28,244,600
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (4,198,111)
=========================================================
Net unrealized appreciation of investment
securities $24,046,489
_________________________________________________________
=========================================================
Cost of investments for tax purposes is
$162,650,382.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999
were as follows:
2000 1999
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
Sold:
Class A 759,405 $ 22,447,775 487,583 $ 12,807,548
- ---------------------------------------------------------------------------------------------------------------------
Class B 668,315 19,040,288 423,749 10,940,298
- ---------------------------------------------------------------------------------------------------------------------
Class C* 141,025 3,973,222 9,183 251,095
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class** 538 6,033,762 21,722 582,165
=====================================================================================================================
Issued as reinvestment of dividends:
Class A 464,329 12,875,835 59,498 1,416,648
- ---------------------------------------------------------------------------------------------------------------------
Class B 710,588 19,064,223 91,284 2,126,010
- ---------------------------------------------------------------------------------------------------------------------
Class C* 1,333 35,784 -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class** 7,418 212,234 14,024 340,931
=====================================================================================================================
Conversion of Advisor Class shares to Class A shares***
Class A 44,925 1,356,742 -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class (43,513) (1,356,742) -- --
=====================================================================================================================
Reacquired:
Class A (584,323) (23,331,464) (855,317) (22,687,172)
- ---------------------------------------------------------------------------------------------------------------------
Class B (764,349) (21,865,177) (1,075,236) (27,812,726)
- ---------------------------------------------------------------------------------------------------------------------
Class C* (12,455) (352,513) (1,437) (41,568)
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class** (3,660) (117,348) (638,988) (18,261,287)
=====================================================================================================================
1,389,576 $ 38,016,621 (1,463,935) $(40,338,058)
_____________________________________________________________________________________________________________________
=====================================================================================================================
* Class C shares commenced sales on March 1, 1999.
** Advisor Class share activity for the period November 1, 1999 through
February 11, 2000 (date of conversion).
*** Effective as of the close of business February 11, 2000, pursuant to
approval by the Board of Trustees on November 3, 1999, all outstanding
shares of Advisor Class were converted to Class A shares of the fund.
12
213
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $30.79 $ 22.16 $ 22.19 $ 20.98 $ 14.59
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.22) (0.19) (0.19) (0.15) (0.22)
- -------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.96 9.38 2.05 2.27 7.13
===================================================================================================================
Total from investment operations 1.74 9.19 1.86 2.12 6.91
===================================================================================================================
Less distributions from net realized gains (5.67) (0.56) (1.89) (0.91) (0.52)
===================================================================================================================
Net asset value, end of period $26.86 $ 30.79 $ 22.16 $ 22.19 $ 20.98
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 5.07% 42.20% 8.66% 10.55% 48.82%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,692 $73,695 $59,880 $62,637 $76,900
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.82%(c) 1.91% 1.93% 1.84% 2.24%
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.82%(c) 1.91% 1.95% 1.99% 2.34%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.76)%(c) (0.70)% (0.83)% (0.87)% (1.24)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 259% 160% 221% 392% 169%
___________________________________________________________________________________________________________________
===================================================================================================================
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $86,270,364.
CLASS B
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
2000(a) 1999 1998 1997 1996
-------- -------- ------- ------- -------
Net asset value, beginning of period $ 29.99 $ 21.70 $ 21.86 $ 20.79 $ 14.53
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.36) (0.31) (0.30) (0.24) (0.31)
- -------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.92 9.16 2.03 2.22 7.09
===================================================================================================================
Total from investment operations 1.56 8.85 1.73 1.98 6.78
===================================================================================================================
Less distributions from net realized gains (5.67) (0.56) (1.89) (0.91) (0.52)
===================================================================================================================
Net asset value, end of period $ 25.88 $ 29.99 $ 21.70 $ 21.86 $ 20.79
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 4.53% 41.52% 8.16% 9.95% 48.11%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $110,664 $109,808 $91,613 $93,978 $87,904
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.32%(c) 2.41% 2.43% 2.34% 2.74%
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 2.41% 2.45% 2.49% 2.84%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (1.20)% (1.33)% (1.37)% (1.74)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 259% 160% 221% 392% 169%
___________________________________________________________________________________________________________________
===================================================================================================================
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $121,391,977.
13
214
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
---------------- --------------
Net asset value, beginning of period $29.99 $24.70
- --------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.35) (0.22)
- --------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.92 5.51
==================================================================================================
Total from investment operations 1.57 5.29
==================================================================================================
Less distributions from net realized gains (5.67) --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $25.89 $29.99
__________________________________________________________________________________________________
==================================================================================================
Total return(b) 4.56% 21.42%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,564 $ 232
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.32%(c) 2.41%(d)
- --------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 2.41%(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (1.20)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 259% 160%
__________________________________________________________________________________________________
==================================================================================================
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $1,859,895.
(d) Annualized.
14
215
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Consumer Products and
Services Fund and Board of Trustees of AIM Investment
Funds
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Global Consumer Products and Services Fund at October
31, 2000, and the results of its operations, the changes
in its net assets and the financial highlights for the
periods indicated, in conformity with accounting
principles generally accepted in the United States of
America. These financial statements and financial
highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with auditing standards generally accepted in
the Unites States of America which require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made
by management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at October 31, 2000
by correspondence with the custodian and brokers, provide
a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 18, 2000
15
216
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
Senior Managing Partner, Chairman and President Suite 100
Plantagenet Capital Houston, TX 77046
Management, LLC (an investment Dana R. Sutton
partnership); Chief Executive Officer, Vice President and Treasurer INVESTMENT MANAGER
Plantagenet Holdings, Ltd.
(an investment banking firm) Melville B. Cox A I M Advisors, Inc.
Vice President 11 Greenway Plaza
Frank S. Bayley Suite 100
Partner, law firm of Gary T. Crum Houston, TX 77046
Baker & McKenzie Vice President
TRANSFER AGENT
Robert H. Graham Carol F. Relihan
President and Chief Executive Officer, Vice President and Secretary A I M Fund Services, Inc.
A I M Management Group Inc. P.O. Box 4739
Mary J. Benson Houston, TX 77210-4739
Ruth H. Quigley Assistant Vice President and
Private Investor Assistant Treasurer CUSTODIAN
Sheri Morris State Street Bank and Trust Company
Assistant Vice President and 225 Franklin Street
Assistant Treasurer Boston, MA 02110
Nancy L. Martin COUNSEL TO THE FUND
Assistant Secretary
Kirkpatrick & Lockhart LLP
Ofelia M. Mayo 1800 Massachusetts Avenue, N.W.
Assistant Secretary Washington, D.C. 20036-1800
Kathleen J. Pflueger COUNSEL TO THE TRUSTEES
Assistant Secretary
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
October 31, 2000, 2.41% is eligible for the dividends received deduction for
corporations. The Fund distributed long-term capital gains of $22,141,838 for
the Fund's tax year ended October 31, 2000 of which 100% is 20% rate gain.
16
217
-------------------------------------
THE AMOUNT OF INVESTMENT
RISK YOU UNDERTAKE
DEPENDS ON SEVERAL FAC-
TORS: YOUR FINANCIAL OBJEC-
TIVES, YOUR RISK TOLERANCE
AND YOUR TIME HORIZON.
-------------------------------------
THE AIM FUNDS RISK SPECTRUM
On the back cover of this fund report, you'll find the funds in the AIM family
divided into the following categories: sector, international/global, domestic,
taxable and tax-free. You'll also notice that the funds in each category are
listed from more aggressive to more conservative.
Within each category of this risk spectrum, we assessed each fund on the
basis of three factors: its holdings, volatility patterns and diversification.
From that assessment, we assigned a degree of risk to each fund and ordered them
accordingly.
Mutual funds typically invest in stocks, bonds or money market instruments,
each with varying levels of potential risk and reward. Generally, the riskier
the investment, the greater the potential reward.
o Stock funds usually offer the most upside potential, but they also carry the
greatest risk. Funds that invest in large, well-established companies
generally have lower risk/reward potential than funds that invest in small,
fast-growing companies.
o Funds that invest in a broad range of industries are considered more
diversified and less risky--and potentially less rewarding--than funds that
invest in a single sector, such as technology.
o Funds that invest in international markets tend to have higher risk/reward
potential than those that invest solely in domestic securities.
o Bond funds are generally considered safer and therefore potentially less
rewarding than stock funds. Funds that invest in U.S. Treasury securities
typically have lower risk/reward potential than funds that invest in
higher-yielding junk bonds.
o Money market funds, while considered extremely safe, typically produce lower
returns than stock and bond funds. Moreover, it is possible that a money
market fund's returns will not keep pace with inflation.
The amount of investment risk you undertake depends on several factors: your
financial objectives, your risk tolerance and your time horizon. Are you saving
for your later years or are you investing to buy a large item, like a car or a
house, soon? Are you a young adult early in your work life, or are you
approaching retirement?
If your investment plan has a rather long time horizon, you may be able to
invest more aggressively because you could have time to recoup should you
experience losses. If your needs are more immediate, you may need to be more
conservative to meet your goal.
Because these factors change over time, it's a good idea to reassess your
portfolio periodically to make sure it still meets your needs. Your financial
advisor can help you figure out if your portfolio is right where it should be or
if it could use some fine-tuning.
In assessing your investments, remember to keep diversification in mind.
Such a strategy, where you spread your investments over several types of mutual
funds, may help mitigate volatility and/or risk in your portfolio because not
all investments behave the same way at the same time.
AIM has a large selection of mutual funds to choose from. See your financial
advisor for insight into which ones would best fit in your portfolio.
218
THE AIM FAMILY OF FUNDS--Registered Trademark--
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry since
MORE AGGRESSIVE MORE AGGRESSIVE 1976 and managed approximately $183 billion
in assets for more than eight million
AIM Small Cap Opportunities(1) AIM Latin American Growth shareholders, including individual investors,
AIM Mid Cap Opportunities(2) AIM Developing Markets corporate clients and Financial institutions,
AIM Large Cap Opportunities(3) AIM European Small Company as of September 30, 2000.
AIM Emerging Growth AIM Asian Growth The AIM Family of Funds--Registered
AIM Small Cap Growth(4) AIM Japan Growth Trademark-- is distributed nationwide, and
AIM Aggressive Growth AIM International Emerging Growth AIM today is the eighth-largest mutual fund
AIM Mid Cap Growth AIM European Development complex in the United States in assets under
AIM Small Cap Equity AIM Euroland Growth management, according to Strategic Insight,
AIM Capital Development AIM Global Aggressive Growth an independent mutual fund monitor.
AIM Constellation AIM International Equity AIM is a subsidiary of AMVESCAP PLC, one
AIM Dent Demographic Trends AIM Advisor International Value of the world's largest independent financial
AIM Select Growth AIM Global Trends services companies with $414 billion in
AIM Large Cap Growth AIM Global Growth assets under management as of September 30,
AIM Weingarten 2000.
AIM Mid Cap Equity MORE CONSERVATIVE
AIM Value II
AIM Charter SECTOR EQUITY FUNDS
AIM Value
AIM Blue Chip MORE AGGRESSIVE
AIM Basic Value
AIM Large Cap Basic Value AIM New Technology
AIM Balanced AIM Global Telecommunications and Technology
AIM Advisor Flex AIM Global Resources
AIM Global Financial Services
MORE CONSERVATIVE AIM Global Health Care
AIM Global Consumer Products and Services
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
FIXED-INCOME FUNDS
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and should
not be compared with other investments. There is no guarantee that any one AIM
fund will be less volatile than any other. (1) AIM Small Cap Opportunities Fund
closed to new investors Nov. 4, 1999. (2) AIM Mid Cap Opportunities Fund closed
to new investors March 21, 2000. (3) AIM Large Cap Opportunities Fund closed to
new investors Sept. 29, 2000. (4) AIM Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (5) AIM Floating Rate Fund was restructured to offer
multiple share classes April 3, 2000. Existing shares were converted to Class B
shares, and Class C shares commenced offering.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Jan. 20, 2001, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
--Registered Trademark--
[INVEST WITH DISCIPLINE]
--Registered Trademark--
A I M Distributors, Inc. GCPS-AR-1
219
APPENDIX III
AIM GLOBAL TRENDS FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 2000
(UNAUDITED)
SHARES MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM AIM GLOBAL AIM GLOBAL AIM AIM GLOBAL
CONSUMER GLOBAL TRENDS FUND CONSUMER GLOBAL TRENDS FUND
PRODUCTS AND TRENDS PRO FORMA PRODUCTS AND TRENDS PRO FORMA
SERVICES FUND FUND COMBINING SERVICES FUND FUND COMBINING
DOMESTIC COMMON STOCKS - 50.48%
AEROSPACE/DEFENSE - 1.14%
34,500 7,900 42,400 Boeing Co. (The) $ 2,277,000 $ 521,400 $ 2,798,400
- ------------------------------------------------------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 1.12%
27,300 6,300 33,600 Northern Trust Corp. 2,226,656 513,844 2,740,500
- ------------------------------------------------------------------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 2.34%
54,300 12,600 66,900 Pepsi Bottling Group, Inc., (The) 2,168,606 503,212 2,671,818
- ------------------------------------------------------------------------------------------------------------------------------
50,000 12,000 62,000 PepsiCo, Inc. 2,478,125 594,750 3,072,875
- ------------------------------------------------------------------------------------------------------------------------------
4,646,731 1,097,962 5,744,693
- ------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY - 0.43%
13,800 3,100 16,900 Albany Molecular Research, Inc.(a) 850,425 191,037 1,041,462
- ------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.39%
30,500 7,000 37,500 Corning Inc. 1,610,781 369,687 1,980,468
- ------------------------------------------------------------------------------------------------------------------------------
15,000 3,400 18,400 L-3 Communications Holdings, Inc.(a) 1,155,000 261,800 1,416,800
- ------------------------------------------------------------------------------------------------------------------------------
2,765,781 631,487 3,397,268
- ------------------------------------------------------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 3.07%
24,200 5,600 29,800 Brocade Communications Systems, Inc.(a) 2,221,863 514,150 2,736,013
- ------------------------------------------------------------------------------------------------------------------------------
58,400 13,600 72,000 EMC Corp.(a) 3,883,600 904,400 4,788,000
- ------------------------------------------------------------------------------------------------------------------------------
6,105,463 1,418,550 7,524,013
- ------------------------------------------------------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 3.91%
23,300 5,300 28,600 Adobe Systems Inc. 1,355,769 308,394 1,664,163
- ------------------------------------------------------------------------------------------------------------------------------
17,500 3,900 21,400 Ariba, Inc.(a) 940,625 209,625 1,150,250
- ------------------------------------------------------------------------------------------------------------------------------
26,200 5,900 32,100 BEA Systems, Inc.(a) 1,763,587 397,144 2,160,731
- ------------------------------------------------------------------------------------------------------------------------------
34,300 7,700 42,000 i2 Technologies, Inc.(a) 1,865,062 418,687 2,283,749
- ------------------------------------------------------------------------------------------------------------------------------
21,700 4,800 26,500 VERITAS Software Corp.(a) 1,898,750 420,000 2,318,750
- ------------------------------------------------------------------------------------------------------------------------------
7,823,793 1,753,850 9,577,643
- ------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.45%
55,300 -- 55,300 Garmin Ltd. 1,092,175 -- 1,092,175
- ------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 0.80%
31,200 7,200 38,400 Analog Devices, Inc.(a) 1,597,050 368,550 1,965,600
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.16%
45,066 10,533 55,599 Citigroup Inc. 2,301,183 537,841 2,839,024
- ------------------------------------------------------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.64%
26,500 6,000 32,500 International Game Technology(a) 1,272,000 288,000 1,560,000
- ------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 0.64%
33,500 7,600 41,100 IVAX Corp.(a) 1,283,050 291,080 1,574,130
- ------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 1.33%
20,700 4,700 25,400 Andrx Group(a) 1,198,012 272,012 1,470,024
- ------------------------------------------------------------------------------------------------------------------------------
11,000 2,500 13,500 Forest Laboratories, Inc.(a) 1,461,625 332,187 1,793,812
- ------------------------------------------------------------------------------------------------------------------------------
2,659,637 604,199 3,263,836
- ------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 1.78%
76,900 17,700 94,600 Pfizer Inc. 3,537,400 814,200 4,351,600
- ------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.30%
36,400 8,300 44,700 HCA-Healthcare Co. (The) 1,601,964 365,283 1,967,247
- ------------------------------------------------------------------------------------------------------------------------------
22,400 5,000 27,400 Tenet Healthcare Corp.(a) 995,400 222,187 1,217,587
- ------------------------------------------------------------------------------------------------------------------------------
2,597,364 587,470 3,184,834
- ------------------------------------------------------------------------------------------------------------------------------
220
SHARES MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM AIM GLOBAL AIM GLOBAL AIM AIM GLOBAL
CONSUMER GLOBAL TRENDS FUND CONSUMER GLOBAL TRENDS FUND
PRODUCTS AND TRENDS PRO FORMA PRODUCTS AND TRENDS PRO FORMA
SERVICES FUND FUND COMBINING SERVICES FUND FUND COMBINING
HEALTH CARE (MANAGED CARE) - 3.31%
106,400 25,600 132,000 UnitedHealth Group Inc. 6,530,300 1,571,200 8,101,500
- ------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 2.39%
34,800 7,800 42,600 Alza Corp.(a) 1,479,000 331,500 1,810,500
- ------------------------------------------------------------------------------------------------------------------------------
10,300 2,400 12,700 Laboratory Corp. of America Holdings(a) 1,812,800 422,400 2,235,200
- ------------------------------------------------------------------------------------------------------------------------------
10,400 2,300 12,700 Quest Diagnostics Inc.(a) 1,476,800 326,600 1,803,400
- ------------------------------------------------------------------------------------------------------------------------------
4,768,600 1,080,500 5,849,100
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 1.77%
22,800 5,200 28,000 Lehman Brothers Holdings Inc. 1,541,850 351,650 1,893,500
- ------------------------------------------------------------------------------------------------------------------------------
29,400 6,600 36,000 Merrill Lynch & Co., Inc. 2,004,712 450,038 2,454,750
- ------------------------------------------------------------------------------------------------------------------------------
3,546,562 801,688 4,348,250
- ------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.90%
38,000 8,600 46,600 Honeywell International Inc. 1,797,875 406,888 2,204,763
- ------------------------------------------------------------------------------------------------------------------------------
NATURAL GAS - 3.73%
102,400 24,400 126,800 Dynegy Inc.-Class A 5,740,800 1,367,925 7,108,725
- ------------------------------------------------------------------------------------------------------------------------------
23,200 5,300 28,500 El Paso Energy Corp. 1,661,700 379,613 2,041,313
- ------------------------------------------------------------------------------------------------------------------------------
7,402,500 1,747,538 9,150,038
- ------------------------------------------------------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 7.36%
38,200 9,200 47,400 BJ Services Co.(a) 2,631,025 633,650 3,264,675
- ------------------------------------------------------------------------------------------------------------------------------
81,300 18,900 100,200 ENSCO International Inc. 2,769,281 643,781 3,413,062
- ------------------------------------------------------------------------------------------------------------------------------
54,600 12,600 67,200 Global Marine, Inc.(a) 1,549,275 357,525 1,906,800
- ------------------------------------------------------------------------------------------------------------------------------
81,700 19,600 101,300 Marine Drilling Cos., Inc.(a) 2,185,475 524,300 2,709,775
- ------------------------------------------------------------------------------------------------------------------------------
35,100 8,100 43,200 Nabors Industries, Inc.(a) 2,076,165 479,115 2,555,280
- ------------------------------------------------------------------------------------------------------------------------------
39,900 9,300 49,200 Patterson Energy, Inc.(a) 1,486,275 346,425 1,832,700
- ------------------------------------------------------------------------------------------------------------------------------
6,200 1,400 7,600 Schlumberger Ltd. 495,613 111,913 607,526
- ------------------------------------------------------------------------------------------------------------------------------
19,000 4,400 23,400 Smith International, Inc.(a) 1,416,688 328,075 1,744,763
- ------------------------------------------------------------------------------------------------------------------------------
14,609,797 3,424,784 18,034,581
- ------------------------------------------------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 1.27%
35,444 8,326 43,770 Anadarko Petroleum Corp. 2,519,360 591,812 3,111,172
- ------------------------------------------------------------------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.64%
34,400 8,000 42,400 Valero Energy Corp. 1,279,250 297,500 1,576,750
- ------------------------------------------------------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.49%
65,800 15,200 81,000 Calpine Corp.(a) 2,965,113 684,950 3,650,063
- ------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.72%
34,000 7,900 41,900 Brinker International, Inc.(a) 1,436,500 333,775 1,770,275
- ------------------------------------------------------------------------------------------------------------------------------
RETAIL (DRUG STORES) - 1.06%
50,800 11,400 62,200 Walgreen Co. 2,124,075 476,663 2,600,738
- ------------------------------------------------------------------------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.49%
21,500 4,800 26,300 Talbots, Inc. (The) 980,938 219,000 1,199,938
- ------------------------------------------------------------------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 2.58%
22,000 5,000 27,000 Downey Financial Corp. 1,210,000 275,000 1,485,000
- ------------------------------------------------------------------------------------------------------------------------------
27,400 6,200 33,600 Golden West Financial Corp. 1,849,500 418,500 2,268,000
- ------------------------------------------------------------------------------------------------------------------------------
39,300 9,000 48,300 Washington Mutual, Inc. 2,085,356 477,563 2,562,919
- ------------------------------------------------------------------------------------------------------------------------------
5,144,856 1,171,063 6,315,919
- ------------------------------------------------------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.27%
24,300 5,400 29,700 DST Systems, Inc.(a) 1,628,100 361,800 1,989,900
- ------------------------------------------------------------------------------------------------------------------------------
18,600 4,300 22,900 Learning Tree International, Inc.(a) 920,700 212,850 1,133,550
- ------------------------------------------------------------------------------------------------------------------------------
2,548,800 574,650 3,123,450
- ------------------------------------------------------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $103,950,840) 100,690,234 23,001,481 123,691,715
- ------------------------------------------------------------------------------------------------------------------------------
221
SHARES MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM AIM GLOBAL AIM GLOBAL AIM AIM GLOBAL
CONSUMER GLOBAL TRENDS FUND CONSUMER GLOBAL TRENDS FUND
PRODUCTS AND TRENDS PRO FORMA PRODUCTS AND TRENDS PRO FORMA
SERVICES FUND FUND COMBINING SERVICES FUND FUND COMBINING
FOREIGN STOCKS & OTHER EQUITY INTERESTS
- 46.38%
AUSTRALIA - 1.14%
Australia & New Zealand Banking Group Ltd.
284,700 64,900 349,600 (Banks-Major Regional) 2,277,689 519,220 2,796,909
- ------------------------------------------------------------------------------------------------------------------------------
CANADA - 2.75%
Anderson Exploration Ltd. (Oil-Domestic
132,300 31,800 164,100 Integrated)(a) 3,003,010 721,812 3,724,822
- ------------------------------------------------------------------------------------------------------------------------------
143,700 33,400 177,100 Bombardier Inc.-Class B (Aerospace/Defense) 2,217,622 515,439 2,733,061
- ------------------------------------------------------------------------------------------------------------------------------
Dynetek Industries Ltd.
(Manufacturing-Diversified)
76,100 32,400 108,500 (Acquired 09/08/00; Cost $164,473)(a)(b) 197,847 84,234 282,081
- ------------------------------------------------------------------------------------------------------------------------------
5,418,479 1,321,485 6,739,964
- ------------------------------------------------------------------------------------------------------------------------------
DENMARK - 2.44%
93,000 21,000 114,000 Danske Bank A.S. (Banks-Major Regional) 1,674,441 378,100 2,052,541
- ------------------------------------------------------------------------------------------------------------------------------
Novo Nordisk A.S.-Class B (Health
11,200 2,600 13,800 Care-Drugs-Generic & Other) 2,009,481 466,487 2,475,968
- ------------------------------------------------------------------------------------------------------------------------------
11,200 2,600 13,800 Novozymes A.S. - Class B (Biotechnology)(a) 224,216 52,050 276,266
- ------------------------------------------------------------------------------------------------------------------------------
Vestas Wind Systems A.S.
17,700 4,000 21,700 (Manufacturing-Specialized) 958,281 216,560 1,174,841
- ------------------------------------------------------------------------------------------------------------------------------
4,866,419 1,113,197 5,979,616
- ------------------------------------------------------------------------------------------------------------------------------
FRANCE - 8.83%
Alcatel Optronics S.A. (Communications
11,000 -- 11,000 Equipment)(a) 485,592 -- 485,592
- ------------------------------------------------------------------------------------------------------------------------------
Altran Technologies S.A. (Services-Commercial
4,500 1,000 5,500 & Consumer) 1,018,400 226,311 1,244,711
- ------------------------------------------------------------------------------------------------------------------------------
Assurances Generales de France
27,200 6,600 33,800 (Insurance-Multi-Line) 1,890,120 458,632 2,348,752
- ------------------------------------------------------------------------------------------------------------------------------
35,700 8,200 43,900 Aventis S.A. (Chemicals-Diversified)(a) 3,134,502 719,970 3,854,472
- ------------------------------------------------------------------------------------------------------------------------------
5,460 -- 5,460 BNP Paribas (Banks-Major Regional) 37,275 -- 37,275
- ------------------------------------------------------------------------------------------------------------------------------
Bouygues Offshore S.A. (Oil & Gas-Drilling
29,800 5,744 35,544 & Equipment) 1,357,209 261,604 1,618,813
- ------------------------------------------------------------------------------------------------------------------------------
Hermes International
6,900 1,600 8,500 (Manufacturing-Diversified) 1,357,209 261,604 1,618,813
- ------------------------------------------------------------------------------------------------------------------------------
32,200 7,400 39,600 Remy Cointreau S.A. (Beverages-Alcoholic) 1,360,684 312,704 1,673,388
- ------------------------------------------------------------------------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health
43,400 10,000 53,400 Care-Drugs-Generic & Other) 2,893,589 666,725 3,560,314
- ------------------------------------------------------------------------------------------------------------------------------
Societe Television Francaise 1
30,000 7,000 37,000 (Broadcasting-Television, Radio & Cable) 1,619,861 377,968 1,997,829
- ------------------------------------------------------------------------------------------------------------------------------
TotalFinaElf S.A. (Oil-International
13,600 3,300 16,900 Integrated) 2,022,939 490,860 2,513,799
- ------------------------------------------------------------------------------------------------------------------------------
3,300 700 4,000 Zodiac S.A. (Manufacturing-Diversified) 911,066 193,256 1,104,322
- ------------------------------------------------------------------------------------------------------------------------------
17,708,985 3,934,754 21,643,739
- ------------------------------------------------------------------------------------------------------------------------------
GERMANY - 6.04%
Altana A.G. (Health Care-Drugs-Generic
17,400 4,000 21,400 & Other) 2,746,665 631,418 3,378,083
- ------------------------------------------------------------------------------------------------------------------------------
34,000 7,800 41,800 Bayerisch Motoren Werke A.G. (Automobiles)(a) 1,111,084 254,896 1,365,980
- ------------------------------------------------------------------------------------------------------------------------------
11,400 2,600 14,000 Beiersdorf A.G. (Personal Care)(a) 1,182,922 269,789 1,452,711 1
- ------------------------------------------------------------------------------------------------------------------------------
Ergo Versicherungs Gruppe A.G. (Insurance
10,100 2,300 12,400 Brokers) 1,688,224 384,447 2,072,671
- ------------------------------------------------------------------------------------------------------------------------------
3,900 850 4,750 Hugo Boss A.G.-Pfd (Manufacturing-Specialized) 1,043,754 227,485 1,271,239
- ------------------------------------------------------------------------------------------------------------------------------
Muenchener Rueckversicherungs-Gesellschaft A.G.
6,000 1,400 7,400 (Insurance Brokers)(a) 2,141,034 499,575 2,640,609
- ------------------------------------------------------------------------------------------------------------------------------
16,300 3,700 20,000 Siemens A.G. (Manufacturing-Diversified) 2,131,432 483,822 2,615,254
- ------------------------------------------------------------------------------------------------------------------------------
12,045,115 2,751,432 14,796,547
- ------------------------------------------------------------------------------------------------------------------------------
IRELAND - 1.10%
Elan Corp. PLC -ADR (Health Care-Drugs-Generic
46,400 11,100 57,500 & Other)(a) 2,172,100 519,619 2,691,719
- ------------------------------------------------------------------------------------------------------------------------------
ISRAEL - 0.94%
Teva Pharmaceutical Industries Ltd. -ADR
25,500 5,900 31,400 (Health Care-Drugs-Generic & Other) 1,867,875 432,175 2,300,050
- ------------------------------------------------------------------------------------------------------------------------------
ITALY - 3.59%
Bulgari S.p.A. (Consumer-Jewelry, Novelties
103,700 23,600 127,300 & Gifts)(a) 1,275,671 290,317 1,565,988
- ------------------------------------------------------------------------------------------------------------------------------
Credito Italiano S.p.A. (Banks-Major
379,400 86,100 465,500 Regional)(a) 1,984,455 450,347 2,434,802
- ------------------------------------------------------------------------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A. (Oil &
368,000 85,000 453,000 Gas-Refining & Marketing)(a) 2,349,879 542,771 2,892,650
- ------------------------------------------------------------------------------------------------------------------------------
Riunione Adriatica di Sicurta S.p.A.
100,000 22,600 122,600 (Insurance Brokers) 1,559,762 352,506 1,912,268
- ------------------------------------------------------------------------------------------------------------------------------
7,169,767 1,635,941 8,805,708
- ------------------------------------------------------------------------------------------------------------------------------
JAPAN - 1.40%
Furukawa Electric Co., Ltd. (The)
160,000 37,000 197,000 (Metal Fabricators) 2,791,674 645,575 3,437,249
- ------------------------------------------------------------------------------------------------------------------------------
222
SHARES MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM AIM GLOBAL AIM GLOBAL AIM AIM GLOBAL
CONSUMER GLOBAL TRENDS FUND CONSUMER GLOBAL TRENDS FUND
PRODUCTS AND TRENDS PRO FORMA PRODUCTS AND TRENDS PRO FORMA
SERVICES FUND FUND COMBINING SERVICES FUND FUND COMBINING
NETHERLANDS - 6.10%
103,200 23,200 126,400 Elsevier N.V. (Specialty Printing)(a) 1,517,610 341,168 1,858,778
- ------------------------------------------------------------------------------------------------------------------------------
35,700 8,200 43,900 Heineken N.V. (Beverages-Alcoholic) 2,160,627 496,278 2,656,905
- ------------------------------------------------------------------------------------------------------------------------------
31,800 7,300 39,100 ING Groep N.V. (Insurance Brokers) 2,540,641 583,229 3,123,870
- ------------------------------------------------------------------------------------------------------------------------------
68,100 15,400 83,500 Koninklijke Ahold N.V. (Retail-Food Chains)(a) 2,197,298 496,893 2,694,191
- ------------------------------------------------------------------------------------------------------------------------------
28,700 6,500 35,200 Koninklijke Numico N.V. (Foods) 1,444,559 327,165 1,771,724
- ------------------------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. (Oil-International
37,600 8,700 46,300 Integrated) 2,304,218 533,157 2,837,375
- ------------------------------------------------------------------------------------------------------------------------------
12,164,953 2,777,890 14,942,843
- ------------------------------------------------------------------------------------------------------------------------------
NORWAY - 1.55%
49,600 11,200 60,800 Norsk Hydro A.S.A. (Chemicals-Diversified)(a) 2,095,862 473,259 2,569,121
- ------------------------------------------------------------------------------------------------------------------------------
Tomra Systems A.S.A.
51,200 11,600 62,800 (Manufacturing-Specialized) 991,832 224,712 1,216,544
- ------------------------------------------------------------------------------------------------------------------------------
3,087,694 697,971 3,785,665
- ------------------------------------------------------------------------------------------------------------------------------
SPAIN - 0.47%
Grupo Dragados, S.A. (Construction-Cement
86,700 19,700 106,400 & Aggregates) 944,421 214,592 1,159,013
- ------------------------------------------------------------------------------------------------------------------------------
SWEDEN - 0.65%
329,500 75,000 404,500 Swedish Match A.B. (Tobacco) 1,285,717 292,652 1,578,369
- ------------------------------------------------------------------------------------------------------------------------------
SWITZERLAND - 4.77%
1,040 240 1,280 Nestle S.A. (Foods)(a) 2,425,918 559,827 2,985,745
- ------------------------------------------------------------------------------------------------------------------------------
2,904 695 3,599 Novartis A.G. (Health Care-Diversified) 5,134,193 1,228,741 6,362,934
- ------------------------------------------------------------------------------------------------------------------------------
Serono S.A.-Class B (Health Care-Drugs-Generic
1,935 446 2,381 & Other) 1,862,758 429,349 2,292,107
- ------------------------------------------------------------------------------------------------------------------------------
726 173 899 Syngenta A.G. (Chemicals-Specialty)(a) 38,977 9,288 48,265
- ------------------------------------------------------------------------------------------------------------------------------
9,461,846 2,227,205 11,689,051
- ------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM - 4.61%
Aggreko PLC (Services-Facilities &
187,700 43,300 231,000 Environmental) 1,159,158 267,403 1,426,561
- ------------------------------------------------------------------------------------------------------------------------------
163,500 36,600 200,100 Allied Domecq PLC (Beverages-Alcoholic) 1,080,608 241,898 1,322,506
- ------------------------------------------------------------------------------------------------------------------------------
195,400 45,000 240,400 Bunzl PLC (Paper & Forest Products) 1,197,945 275,883 1,473,828
- ------------------------------------------------------------------------------------------------------------------------------
Centrica PLC (Oil & Gas-Exploration
552,400 125,200 677,600 & Production) 2,141,415 485,346 2,626,761
- ------------------------------------------------------------------------------------------------------------------------------
158,000 36,100 194,100 Spirent PLC (Communications Equipment) 1,441,170 329,281 1,770,451
- ------------------------------------------------------------------------------------------------------------------------------
533,800 122,900 656,700 Tesco PLC (Retail-Food Chains) 2,177,066 501,239 2,678,305
- ------------------------------------------------------------------------------------------------------------------------------
9,197,362 2,101,050 11,298,412
- ------------------------------------------------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity
Interests (Cost $99,947,167) 92,460,096 21,184,758 113,644,854
- ------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS - 4.33%
4,688,148 611,210 5,299,358 STIC Liquid Assets Portfolio(c) 4,688,148 611,210 5,299,358
- ------------------------------------------------------------------------------------------------------------------------------
4,688,148 611,210 5,299,358 STIC Prime Portfolio(c) 4,688,148 611,210 5,299,358
- ------------------------------------------------------------------------------------------------------------------------------
Total Money Market Funds (Cost $10,598,716) 9,376,296 1,222,420 10,598,716
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 101.19% (Cost
$214,496,723) 202,526,626 45,408,659 247,935,285
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (1.19%) (2,323,422) (590,075) (2,913,497)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.00% $ 200,203,204 $44,818,584 $245,021,788
- ------------------------------------------------------------------------------------------------------------------------------
Investment Abbreviations:
ADR American Depositary Receipt
Ltd. Limited
Pfd. Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 12/31/00 represented
0.12% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Accompanying Notes to Pro Forma Financial Statements.
223
AIM GLOBAL TRENDS FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES
FOR THE YEAR ENDED DECEMBER 31, 2000
(Unaudited)
AIM GLOBAL AIM AIM GLOBAL
CONSUMER GLOBAL TRENDS FUND
PRODUCTS AND TRENDS PRO FORMA
SERVICES FUND FUND ADJUSTMENTS COMBINING
ASSETS:
Investments, at market value $ 202,526,626 $45,408,659 $ -- $247,935,285
(cost $ 39,191,169 - Global Trends)
(cost $175,305,554 - Global Consumer Products and Services)
(cost $214,496,723 - Pro Forma combining)
- ------------------------------------------------------------------------------------------------------------------------
Foreign currencies, at value 26,368 6,294 -- 32,662
(cost $131 - Global Trends)
(cost $0 - Global Consumer Products and Services)
(cost $131 - Pro Forma combining)
- ------------------------------------------------------------------------------------------------------------------------
Receivables for:
Investments sold 1,899,105 547,375 -- 2,446,480
- ------------------------------------------------------------------------------------------------------------------------
Fund shares sold 212,762 60,150 -- 272,912
- ------------------------------------------------------------------------------------------------------------------------
Dividends and interest 347,321 41,659 -- 388,980
- ------------------------------------------------------------------------------------------------------------------------
Other assets 12,034 10,596 -- 22,630
========================================================================================================================
Total assets 205,024,216 46,074,733 -- 251,098,949
========================================================================================================================
LIABILITIES:
Payables for:
Investments purchased 4,142,415 935,398 -- 5,077,813
- ------------------------------------------------------------------------------------------------------------------------
Fund shares reacquired 254,807 140,912 -- 395,719
- ------------------------------------------------------------------------------------------------------------------------
Accrued advisory fees 138,204 27,726 -- 165,930
- ------------------------------------------------------------------------------------------------------------------------
Accrued administrative services fees 4,517 4,235 -- 8,752
- ------------------------------------------------------------------------------------------------------------------------
Accrued distribution fees 153,530 91,958 -- 245,488
- ------------------------------------------------------------------------------------------------------------------------
Accrued transfer agent fees 48,895 12,314 -- 61,209
- ------------------------------------------------------------------------------------------------------------------------
Accrued trustees' fees 3,514 -- -- 3,514
- ------------------------------------------------------------------------------------------------------------------------
Accrued operating expenses 75,130 43,606 -- 118,736
========================================================================================================================
Total liabilities 4,821,012 1,256,149 -- 6,077,161
========================================================================================================================
Net assets applicable to shares outstanding $ 200,203,204 $44,818,584 $ -- $245,021,788
========================================================================================================================
NET ASSETS:
Class A $ 85,735,142 $20,750,956 $ -- $106,486,098
========================================================================================================================
Class B $ 110,504,247 $22,278,511 $ -- $132,782,758
========================================================================================================================
Class C $ 3,963,815 $ 1,789,117 $ -- $ 5,752,932
========================================================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE (GLOBAL TRENDS);
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE (GLOBAL CONSUMER PRODUCTS AND SERVICES):
Class A 3,472,907 1,556,298 6,432,564 7,988,862
========================================================================================================================
Class B 4,671,992 1,698,209 8,421,693 10,119,902
========================================================================================================================
Class C 167,522 136,437 302,332 438,769
========================================================================================================================
Class A:
Net asset value per share $ 24.69 $ 13.33 $ -- $ 13.33
- ------------------------------------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $13.33 divided by 95.25% - Global Trends)
(Net asset value of $24.69 divided by 95.25% - Consumer Products
and Services) $ 25.92 $ 13.99 $ -- $ 13.99
========================================================================================================================
Class B:
Net asset value and offering price per share $ 23.65 $ 13.12 $ -- $ 13.12
========================================================================================================================
Class C:
Net asset value and offering price per share $ 23.66 $ 13.11 $ -- $ 13.11
========================================================================================================================
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL STATEMENTS.
224
AIM GLOBAL TRENDS FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
AIM GLOBAL AIM AIM GLOBAL
CONSUMER GLOBAL TRENDS FUND
PRODUCTS AND TRENDS PRO FORMA
SERVICES FUND FUND ADJUSTMENTS COMBINING
INVESTMENT INCOME:
Dividends $ 1,296,291 $ 262,703 $ -- $ 1,558,994
(net of foreign withholding tax of $23,362 - Global Trends)
(net of foreign withholding tax of $147,827 - Global Consumer
Products and Services)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 600,130 88,909 -- 689,039
- -----------------------------------------------------------------------------------------------------------------------------
Interest 19,079 4,356 -- 23,435
- -----------------------------------------------------------------------------------------------------------------------------
Security lending income 59,989 -- -- 59,989
=============================================================================================================================
Total investment income 1,975,489 355,968 -- 2,331,457
=============================================================================================================================
EXPENSES:
Advisory fees 2,024,331 476,994 14,276 2,515,601
- -----------------------------------------------------------------------------------------------------------------------------
Administrative services fees 50,000 50,000 (28,398) 71,602
- -----------------------------------------------------------------------------------------------------------------------------
Custodian fees 94,429 41,879 -- 136,308
- -----------------------------------------------------------------------------------------------------------------------------
Distribution fees -- Class A 433,710 106,433 -- 540,143
- -----------------------------------------------------------------------------------------------------------------------------
Distribution fees -- Class B 1,197,632 263,363 -- 1,460,995
- -----------------------------------------------------------------------------------------------------------------------------
Distribution fees -- Class C 24,298 11,910 -- 36,208
- -----------------------------------------------------------------------------------------------------------------------------
Professional service fees 84,392 55,117 -- 139,509
- -----------------------------------------------------------------------------------------------------------------------------
Transfer agent fees 15,153 104,890 -- 120,043
- -----------------------------------------------------------------------------------------------------------------------------
Trustees' fees 397,733 10,182 -- 407,915
- -----------------------------------------------------------------------------------------------------------------------------
Other 86,677 62,015 -- 148,692
=============================================================================================================================
Total expenses 4,408,355 1,182,783 (14,122) 5,577,016
=============================================================================================================================
Less: Fees waived and reimbursed by advisor (6,151) (66,219) 72,370 --
- -----------------------------------------------------------------------------------------------------------------------------
Expenses paid indirectly (8,735) (1,018) -- (9,753)
=============================================================================================================================
Net expenses 4,393,469 1,115,546 58,248 5,567,263
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2,417,980) (759,578) (58,248) (3,235,806)
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 13,991,892 235,846 -- 14,227,738
- -----------------------------------------------------------------------------------------------------------------------------
Foreign currencies (438,940) (186,435) -- (625,375)
=============================================================================================================================
13,552,952 49,411 -- 13,602,363
=============================================================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (32,609,505) (3,480,394) -- (36,089,899)
- -----------------------------------------------------------------------------------------------------------------------------
Foreign currencies (82,545) (5,172) -- (87,717)
=============================================================================================================================
(32,692,050) (3,485,566) -- (36,177,616)
=============================================================================================================================
Net gain (loss) from investment securities and foreign
currencies (19,139,098) (3,436,155) -- (22,575,253)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (21,557,078) $(4,195,733) $ (58,248) $(25,811,059)
=============================================================================================================================
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL STATEMENTS.
225
AIM GLOBAL TRENDS FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 2000
(UNAUDITED)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between AIM Global Trends Fund and AIM Investment Funds, Inc. and the
consummation of the transactions contemplated therein to be accounted for as a
tax-free reorganization of investment companies. The Agreement and Plan of
Reorganization would be accomplished by an exchange of shares of AIM Global
Trends Fund for the net assets of AIM Global Consumer Products and Services Fund
and the distribution of AIM Global Trends Fund shares to AIM Global Consumer
Products and Services Fund shareholders. If the Agreement and Plan of
Reorganization were to have taken place at December 31, 2000, AIM Global
Consumer Products and Services Fund Class A shareholders would have received
6,432,564 shares of AIM Global Trends Fund - Class A shares, AIM Global Consumer
Products and Services Fund Class B shareholders would have received 8,421,693
shares of AIM Global Trends Fund - Class B shares, AIM Global Consumer Products
and Services Fund Class C shareholders would have received 302,332 shares of AIM
Global Trends Fund - Class C shares.
Note 2 - Pro Forma Adjustments
Pro forma adjustments have been made to reflect the contractual expenses of the
combined entities.
226
PART C. OTHER INFORMATION
Item 15. Indemnification
Article VIII of the Registrant's Agreement and Declaration of Trust, as
amended, provides for indemnification of certain persons acting on behalf of the
Registrant. Article VIII, Section 8.1 provides that a Trustee, when acting in
such capacity, shall not be personally liable to any person for any act,
omission, or obligation of the Registrant or any Trustee; provided, however,
that nothing contained in the Registrant's Agreement and Declaration of Trust or
in the Delaware Business Trust Act shall protect any Trustee against any
liability to the Registrant or the Shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of the office of
Trustee. Article VII, Section 3 of the Registrant's Amended and Restated By-Laws
also provides that every person who is, or has been, a Trustee or Officer of the
Registrant to the fullest extent permitted by the Delaware Business Trust Act,
the Registrant's Amended and Restated By-Laws and other applicable law.
AIM Advisors, Inc. ("AIM"), the Registrant and other investment
companies managed by AIM their respective officers, trustees, directors and
employees (the "Insured Parties") are insured under a joint Mutual Fund and
Investment Advisory Professional and Directors and Officers Liability Policy,
issued by ICI Mutual Insurance Company, with a $35,000,000 limit of coverage.
Section 13 of the Master Investment Advisory Agreement between the
Registrant and AIM provides that AIM shall not be subject to liability to the
Registrant or to the Fund or to any Shareholder of the Fund for any act or
omission in the course of, or connected with, rendering services pursuant to the
Master Investment Advisory Agreement. The Master Investment Advisory Agreement
also provides that AIM shall not be subject to liability for any losses that may
be sustained in the purchase, holding or sale of any security, except losses
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of AIM or any of its officers, director or employees.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy, as expressed in the Act and be governed by final
adjudication of such issue.
Item 16. Exhibits
(1) (a) Agreement and Declaration of Trust of Registrant dated May 7,
1998, was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 4 on June 1, 1998, and is hereby incorporated by
reference.
(b) First Amendment to Agreement and Declaration of Trust of
Registrant was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 7 on February 12, 1999, and is hereby incorporated
by reference.
(c) Second Amendment, dated February 11, 2000, to the Agreement and
Declaration of Trust, dated May 7, 1998, was filed electronically
as an Exhibit to Post-Effective Amendment No. 12 on April 26, 2001
and is hereby incorporated by reference.
(d) Amendment No. 3, dated May 24, 2000, to the Agreement and
Declaration of Trust, dated May 7, 1998, was filed electronically
as an Exhibit to Post-Effective Amendment No. 12 on April 26, 2001
and is hereby incorporated by reference.
1
227
(e) Amendment No. 4, dated December 5, 2000, to the Agreement and
Declaration of Trust, dated May 7, 1998, was filed electronically
as an Exhibit to Post-Effective Amendment No. 12 on April 26, 2001
and is hereby incorporated by reference.
(2) (a) Amended and Restated By-Laws of Registrant dated December 10,
1998, were filed as an Exhibit to Post-Effective Amendment No. 8
on April 6, 1999, and are hereby incorporated by reference.
(b) First Amendment, adopted June 15, 1999, to the Amended and
Restated By-Laws, dated December 10, 1998, was filed as an Exhibit
to Post-Effective Amendment No. 12 on April 26, 2001 and is hereby
incorporated by reference.
(3) Voting Trust Agreements - None.
(4) A copy of the form of Agreement and Plan of Reorganization between the
Registrant and AIM Investment Funds is attached as Appendix I to the
Combined Proxy Statement and Prospectus that is a part of this
Registration.
(5) Articles II, VI, VII, VIII and IX of the Agreement and Declaration of
Trust and Articles IV, V, VI, VII and VIII of the Amended and Restated
By-Laws defining the rights of holders of shares were filed
electronically as Exhibits to Post-Effective Amendment No. 4 on June 1,
1998 and Post-Effective Amendment No. 8 on April 6, 1999, respectively,
and are hereby incorporated by reference.
(6) (a) Master Investment Advisory Agreement dated August 27, 1999 between
Registrant and A I M Advisors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on April 28, 2000.
(b) Master Administrative Services Agreement dated August 27, 1999
between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 11 on
April 28, 2000.
(c) (1) Foreign Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9, 1998,
was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 8 on April 6, 1999, and is hereby incorporated by reference.
(2) Amendment No. 1, dated September 28, 1998, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6,
1999, and is hereby incorporated by reference.
(3) Amendment No. 2, dated December 14, 1998, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6,
1999, and is hereby incorporated by reference.
(4) Amendment No. 3, dated December 22, 1998, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6,
1999 and is hereby incorporated by reference.
(5) Amendment No. 4, dated January 26, 1999, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6,
1999, and is hereby incorporated by reference.
(6) Amendment No. 5, dated March 1, 1999, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, was filed
2
228
as an Exhibit to Registrant's Post-Effective Amendment No. 8 on
April 6, 1999, and is hereby incorporated by reference.
(7) Amendment No. 6, dated March 18, 1999, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between Registrant
and A I M Advisors, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 11 on April 28, 2000.
(8) Amendment No. 7, dated November 15, 1999, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between Registrant
and A I M Advisors, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 11 on April 28, 2000.
(7) (a) (1) First Amended and Restated Distribution Agreement, dated July
1, 2000, between Registrant and A I M Distributors, Inc. with
respect to Class A and Class C shares was filed electronically as
an Exhibit to Post-Effective Amendment No. 12 on April 26, 2001,
and is hereby incorporated by reference.
(2) First Amended and Restated Master Distribution Agreement,
dated December 31, 2000, between Registrant and A I M
Distributors, Inc. with respect to Class B shares was filed
electronically as an Exhibit to Post-Effective Amendment No. 12 on
April 26, 2001, and is hereby incorporated by reference.
(3) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February 12, 1999, and is hereby
incorporated by reference.
(4) Form of Select Dealer Agreement for Investment Companies
Managed by A I M Advisors, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 12 on April 26, 2001, and is hereby
incorporated by reference.
(5) Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on February 12, 1999,
and is hereby incorporated by reference.
(8) Agreements Concerning Officers and Director/Trustee Benefits -
None.
(9) (a) (1) Master Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company, was filed as
an Exhibit to Post-Effective Amendment No. 12 on April 26, 2001,
and is hereby incorporated by reference.
(2) Amendment, dated May 1, 2000, to the Custodian Contract, dated
May 1, 2000, between Registrant and State Street Bank and Trust
Company, was filed as an Exhibit to Post-Effective Amendment No.
12 on April 26, 2001, and is hereby incorporated by reference.
(b) (1) Subcustodian Agreement, dated September 9, 1994, among
Registrant, Texas Commerce Bank, N.A., State Street Bank and Trust
Company and A I M Fund Services, was filed as an Exhibit to
Post-Effective Amendment No. 12 on April 26, 2001, and is hereby
incorporated by reference.
(2) Amendment No. 1, dated October 2, 1998, to the Subcustodian
Agreement, dated September 9, 1994, among Registrant, Chase Bank
of Texas N.A. (formerly Texas Commerce Bank), State Street Bank
and Trust Company and A I M Fund Services, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 12 on April 26, 2001, and
is hereby incorporated by reference.
(10) (a) Second Amended and Restated Distribution Plan, dated as of July 1,
2000, with respect to Class A and Class C shares, was filed as an
Exhibit to Post-Effective Amendment No. 12 on April 26, 2001, and
is hereby incorporated by reference.
3
229
(b) First Amended and Restated Master Distribution Plan, dated as of
December 31, 2000, with respect to Class B shares, was filed as an
Exhibit to Post-Effective Amendment No. 12 on April 26, 2001, and
is hereby incorporated by reference.
(c) (1) Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 8 on April 6, 1999,
and is hereby incorporated by reference.
(2) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 8 on April 6, 1999, and is hereby incorporated by
reference.
(3) Form of Variable Group Annuity Contract Holder Service
Agreement, was filed electronically as an Exhibit to
Post-Effective Amendment No. 12 on April 26, 2001, and is hereby
incorporated by reference.
(4) Form of Service Agreement for Bank Trust Department and For
Broker to be used in connection with Registrant's Master
Distribution Plan, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and
is hereby incorporated by reference.
(5) Form of Agency Pricing Agreement to be used in connection with
Registrant's Master Distribution Plan, was filed electronically as
an Exhibit to Registrant's Post-Effective Amendment No. 8 on April
6, 1999, and is hereby incorporated by reference.
(6) Form of Shareholder Service Agreement for Shares of the Mutual
Funds, was filed electronically as an Exhibit to Post-Effective
Amendment No. 12 on April 26, 2001, and is hereby incorporated by
reference.
(d) Multiple Class Plan of AIM Investment Funds, AIM Growth Series and
Registrant, effective February 11, 2000, was filed as an Exhibit
to Post-Effective Amendment No. 12 on April 26, 2001, and is
hereby incorporated by reference.
(11) (a) Opinion of Counsel and Consent of Kirkpatrick & Lockhart LLP is
filed herewith electronically.
(b) Opinion and Consent of Potter Anderson & Coroon is filed herewith
electronically.
(12) Opinion of Counsel of Ballard Spahr Andrews & Ingersoll, LLP with respect
to tax matters will be filed as part of a Post-Effective Amendment to
this Registration Statement.
(13) (a) (1) Transfer Agency and Service Agreement dated September 8, 1998
between Registrant and A I M Fund Services, Inc., was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 7 on February
12, 1999, and is hereby incorporated by reference.
(2) Amendment No. 1 dated July 1, 1999 to the Transfer Agency and
Service Agreement between Registrant and A I M Fund Services, Inc.
dated September 8, 1998, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11, on April 28, 2000,
and is hereby incorporated by reference.
(3) Amendment No. 2 dated July 1, 1999 to the Transfer Agency and
Service Agreement between Registrant and A I M Fund Services, Inc.
dated September 8, 1998, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11, on April 28, 2000,
and is hereby incorporated by reference.
(4) Amendment No. 3 dated February 11, 2000 to the Transfer Agency
and Service Agreement between Registrant and A I M Fund Services,
Inc. dated September 8, 1998, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No. 11, on April
28, 2000, and is hereby incorporated by reference.
4
230
(5) Amendment No. 4, dated July 1, 2000, to the Transfer Agency
and Service Agreement between Registrant and A I M Fund Services,
Inc., was filed electronically as an Exhibit to Post-Effective
Amendment No. 12 on April 26, 2001, and is hereby incorporated by
reference.
(b) (1) Remote Access and Related Services Agreement, dated as of
December 23, 1994, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on August 26, 1998, and is hereby
incorporated by reference.
(2) Amendment No. 1, dated October 4, 1995, to Remote Access and
Related Services Agreement, dated as of December 23, 1994, was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 6
on August 26, 1998, and is hereby incorporated by reference.
(3) Addendum No. 2, dated October 12, 1995, to Remote Access and
Related Services Agreement, dated as of December 23, 1994, was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 6
on August 26, 1998, and is hereby incorporated by reference.
(4) Amendment No. 3, dated February 1, 1997, to Remote Access and
Related Services Agreement, dated December 23, 1994, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
(5) Exhibit 1, effective as of August 4, 1997, to Remote Access
and Related Services Agreement, dated December 23, 1994, was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
(6) Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on August 26, 1998, and is hereby
incorporated by reference.
(7) Amendment No. 4, dated June 30, 1998, to Remote Access and
Related Services Agreement, dated December 23, 1994, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 12, 1999, and is hereby incorporated by reference.
(8) Amendment No. 5, dated July 1, 1998, to Remote Access and
Related Services Agreement, dated December 23, 1994, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 12, 1999, and is hereby incorporated by reference.
(9) Amendment No. 6, dated August 30, 1999, to Remote Access and
Related Services Agreement, dated December 23, 1994, was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 11, on April 28, 2000, and is hereby incorporated by
reference.
(10) Amendment No. 7, dated February 29, 2000, to Remote Access
and Related Services Agreement, dated December 23, 1994, was filed
electronically as an Exhibit to Post-Effective Amendment No. 12,
on April 26, 2001, and is hereby incorporated by reference.
(11) Amendment No. 8, dated June 26, 2000, to Remote Access and
Related Services Agreement, dated December 23, 1994, was filed
electronically as an Exhibit to Post-Effective Amendment No. 12,
on April 26, 2001, and is hereby incorporated by reference.
(12) Amendment No. 9, dated June 26, 2000, Restated and Amended
Amendment No. 6 to Remote Access and Related Services Agreement,
dated December 23, 1994, was filed electronically as an Exhibit to
Post-Effective Amendment No. 12, on April 26, 2001, and is hereby
incorporated by reference.
(13) Amendment No. 10, dated July 28, 2000, to Remote Access and
Related Services Agreement, dated December 23, 1994, was filed
electronically as an Exhibit to Post-Effective Amendment No. 12,
on April 26, 2001, and is hereby incorporated by reference.
5
231
(14) Amendment, dated August 22, 2000, to Amendment No. 9, dated
June 26, 2000, to Remote Access and Related Services Agreement,
dated December 23, 1994, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 12, on April 26, 2001,
and is hereby incorporated by reference.
(14) Consent of PricewaterhouseCoopers LLP is filed herewith electronically.
(15) Omitted Financial Statements - None.
(16) Powers of Attorney - None.
(17) Form of Proxy related to the Special Meeting of Shareholders of AIM
Investment Funds is filed electronically herewith.
Item 17. Undertakings
The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act [17 CRF
203.145c], the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
The undersigned registrant undertakes to file an opinion of counsel
supporting the tax matters and consequences to shareholders discussed in the
prospectus in a post-effective amendment to this registration statement.
6
232
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form N-14 to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Houston, State of Texas, on the 11th day of May, 2001.
AIM SERIES TRUST
Registrant
By: /s/ Robert H. Graham
--------------------------
Robert H. Graham
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
President, Trustee and
Chairman of the Board
/s/ Robert H. Graham (Principal Executive Officer) May 11, 2001
- --------------------------------------------------
Robert H. Graham
/s/ C. Derek Anderson Trustee May 11, 2001
- --------------------------------------------------
C. Derek Anderson
/s/ Frank S. Bayley Trustee May 11, 2001
- --------------------------------------------------
Frank S. Bayley
/s/ Ruth H. Quigley Trustee May 11, 2001
- --------------------------------------------------
Ruth H. Quigley
Vice President and Treasurer
/s/ Dana R. Sutton (Principal Financial Officer) May 11, 2001
- --------------------------------------------------
Dana R. Sutton
7
233
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------
11 (a) Opinion of Counsel and Consent of Kirkpatrick & Lockhart LLP
as to securities registered
11 (b) Opinion and Consent of Potter Anderson & Coroon LLP
14 Consent of PricewaterhouseCoopers LLP
17 Form of Proxy
8