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AIM Small Cap Equity Fund to Close

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Dec. 10, 2003 — The AIM Small Cap Equity Fund/A (SMEAX) will close to new investors this month and will lower its marketing and distribution fee on certain shares while it is closed.

The fund will stop accepting new investors on December 19, AIM Funds said in a regulatory filing today. During the closure, the marketing and distribution, or 12b-1 fee, on class A shares will be cut to 0.25% from 0.35%. The fees, which are used to cover sales and marketing expenses, will remain the same on class B, C and R shares.

The filing did not say why the fee on the class A shares is being lowered. A company spokesman could not immediately be reached for comment.

Standard & Poor’s earlier this year uncovered numerous domestic mutual funds that continued to charge 12b-1 fees after being closed to new investors, even though there was no longer a need to market the funds. In a random sampling of fund companies imposing the fees on closed funds, Standard & Poor’s found that most considered the fee necessary because the funds remained open to current shareholders.

The Small Cap Equity Fund’s assets have grown to the point where it has become “increasingly difficult” to find investments that “satisfy the fund’s investment objective and guidelines,” AIM said in the filing.

Paul Rasplicka, the lead portfolio manager of the fund, said last Friday that it would be closed when its assets, which then totaled $496 million, reached $500 million.

The fund returned 40.5% this year through November, while its peer small-cap value funds gained 37.3%.