<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
_______________________________________________________________________________
AIM EQUITY FUNDS, INC.
(For its Series Portfolios:
AIM Charter Fund
AIM Constellation Fund
AIM Weingarten Fund)
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
_______________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________________
5) Total fee paid:
_______________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_______________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________________
3) Filing Party:
_______________________________________________________________________________
4) Date Filed:
_______________________________________________________________________________
<PAGE> 2
THE AIM FAMILY OF FUNDS--Registered Trademark--
11 Greenway Plaza, Suite 1919
Houston, TX 77046
November 27, 1996
Dear Shareholder:
As you may know, A I M Management Group Inc. ("AIM Management"), the parent
company of A I M Advisors, Inc. ("AIM"), the investment adviser to the AIM
Family of Funds--Registered Trademark--, has entered into an agreement under
which AIM Management will merge with a subsidiary of INVESCO plc ("INVESCO"). As
a result of this merger, it is necessary for the shareholders of each of the AIM
Funds to approve a new investment advisory agreement (and in some cases, a new
subadvisory agreement).
The following important facts about the transaction are outlined below:
- The merger has no effect on the number of shares you own or the value of
those shares.
- The advisory fees and expenses charged to your Fund will not change as a
result of this merger.
- The investment objectives of the Fund will remain the same and key
employees of AIM will continue to manage your Funds as they have in the
past.
- The merger will not change the quality of the investment management and
shareholder services that you have received over the years.
Shareholders are also being asked to approve Directors/Trustees, to approve
certain proposed changes in fundamental policies and to ratify the selection of
independent accountants. After careful consideration, the Board of
Directors/Trustees of your Fund has unanimously approved these proposals and
recommends that you read the enclosed materials carefully and then vote FOR all
proposals.
Since all of the AIM Funds are required to conduct shareholder meetings, you
will receive at least one statement and a proxy card for each Fund you own.
Please vote each proxy card you receive.
Your vote is important. Please take a moment now to sign and return your proxy
cards 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, Shareholder Communications Corporation, reminding you to vote
your shares.
Thank you for your cooperation and continued support.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 3
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
ENCLOSED YOU WILL FIND ONE OR MORE PROXY CARDS RELATING TO EACH OF THE
FUNDS FOR WHICH YOU ARE ENTITLED TO VOTE. PLEASE INDICATE YOUR VOTING
INSTRUCTIONS ON EACH OF THE ENCLOSED PROXY CARDS, DATE AND SIGN THEM, AND RETURN
THEM IN THE ENVELOPE PROVIDED. IF YOU SIGN, DATE AND RETURN A PROXY CARD BUT
GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE NOMINEES FOR
TRUSTEE OR DIRECTOR NAMED IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL OTHER
PROPOSALS INDICATED ON THE CARDS. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO
THE FUNDS OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR
PROXY CARDS PROMPTLY. UNLESS PROXY CARDS ARE SIGNED BY THE APPROPRIATE PERSONS
AS INDICATED IN THE INSTRUCTIONS BELOW, THEY WILL NOT BE VOTED.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. for
example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- ------------------------------------------------------------ ------------------------------
<S> <C>
Trust Accounts
(1) ABC Trust Account.................................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78................ Jane B. Doe
Partnership Accounts
(1) The XYZ Partnership................................ Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership............... Jane B. Smith, General Partner
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGMA/UTMA......................................... John B. Smith
(2) Estate of John B. Smith............................ John B. Smith, Jr., Executor
(1) ABC Corp. ......................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp. ......................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer.................. John Doe
(4) ABC Corp. Profit Sharing Plan...................... John Doe, Trustee
</TABLE>
<PAGE> 4
AIM EQUITY FUNDS, INC.
AIM Charter Fund
AIM Constellation Fund
AIM Weingarten Fund
11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
------------------------------
NOTICE OF JOINT ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 7, 1997
------------------------------
TO THE SHAREHOLDERS:
A joint annual meeting of shareholders of AIM Equity Funds, Inc. ("AEF")
will be held on Friday, February 7, 1997 at 2:00 p.m. local time at 11 Greenway
Plaza, Suite 1919, Houston, Texas, with respect to each of the series portfolios
listed above (collectively referred to as the "Funds"), for the following
purposes:
(1) To elect nine Directors, each of whom will serve until his successor is
elected and qualified.
(2) For each of the Funds, to approve a new Investment Advisory Agreement
with A I M Advisors, Inc.
(3) For each of the Funds, to approve a new Sub-Advisory Agreement between
A I M Advisors, Inc. and A I M Capital Management, Inc.
(4) For each of the Funds, to eliminate the fundamental investment policy
restricting investments in other investment companies and to amend
certain related fundamental investment policies.
(5) For AIM Charter Fund and AIM Weingarten Fund, to approve a proposed
change to the fundamental investment policy on investments in puts,
calls, straddles and spreads.
(6) For AIM Charter Fund, to eliminate the fundamental investment policy
regarding investing in companies with less than five years of
continuous operation.
(7) For each of the Funds, to ratify the selection of KPMG Peat Marwick LLP
as independent accountants for the fiscal years ending in 1997.
(8) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on December 3, 1996 are
entitled to vote at the annual meeting and any adjournments. If you attend the
annual meeting, you may vote your shares in person. If you expect to attend the
annual meeting in person, please notify the Funds by calling 1-800- - . If
you do not expect to attend the annual meeting, please fill in, date, sign and
return the proxy card in the enclosed envelope which requires no postage if
mailed in the United States.
It is important that you return your signed proxy card promptly so that a
quorum may be assured.
December 20, 1996
Charles T. Bauer
Chairman of the Board of Directors
- ---------------
GROUP B
<PAGE> 5
AIM EQUITY FUNDS, INC.
AIM Charter Fund
AIM Constellation Fund
AIM Weingarten Fund
11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
------------------------------
JOINT PROXY STATEMENT
------------------------------
JOINT ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 7, 1997
------------------------------
The accompanying proxy is solicited by the Board of Directors of AIM Equity
Funds, Inc. ("AEF" or the "Company") on behalf of the series portfolios listed
above (collectively referred to as the "Funds"), in connection with the joint
annual meeting of shareholders of the Funds to be held at the offices of A I M
Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 1919, Houston, Texas at 2:00
p.m. local time on February 7, 1997 (the "Annual Meeting"). A shareholder can
revoke the proxy prior to its use by appearing at the Annual Meeting and voting
in person, by giving written notice of such revocation to the Secretary of AEF,
or by returning a subsequently dated proxy. If you expect to attend the Annual
Meeting in person, please notify the Funds by calling 1-800- - .
The following table summarizes each proposal to be presented at the Annual
Meeting and the Funds to be solicited pursuant to this joint proxy statement
with respect to such proposal:
<TABLE>
<CAPTION>
PROPOSAL AFFECTED COMPANY/FUNDS
- ---------------------------------------------------- ------------------------------
<S> <C> <C>
1. Election of Directors AEF
2. Approval of New Advisory Agreement All Funds
3. Approval of New Sub-Advisory Agreement All Funds
4. Elimination of Fundamental Investment Policy All Funds
Restricting Investments in Other Investment
Companies and Amendment of Certain Related
Fundamental Investment Policies
5. Amendment to Fundamental Investment Policy AIM Charter Fund and AIM
on Investments in Puts, Calls, Straddles and Weingarten Fund
Spreads
6. Elimination of Fundamental Investment Policy AIM Charter Fund
on Investing in Companies with Less Than
Five Years of Continuous Operation
7. Ratification of KPMG Peat Marwick LLP as All Funds
Independent Accountants
</TABLE>
Upon the request of any shareholder, each of the Funds will furnish,
without charge, a copy of such Fund's annual report for its most recent fiscal
year. All such requests should be directed to AIM at 1-800-347-4246.
<PAGE> 6
VOTING
Shareholders of record at the close of business on December 3, 1996 (the
"Record Date") will be entitled to one vote per share on all business of the
Annual Meeting. AEF had shares of its Common Stock outstanding on the Record
Date. The number of shares outstanding on the Record Date for each series
portfolio of AEF is set forth in Annex A. It is expected that this joint proxy
statement (the "proxy statement") and the accompanying proxy will be first sent
to shareholders on or about December 20, 1996.
The affirmative vote of a plurality of votes cast is necessary to elect the
Board of Directors (i.e., the nominees receiving the most votes will be elected)
(Proposal 1). The favorable vote of the holders of a "majority of the
outstanding voting securities" of each Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") is required to approve each
Fund's new Investment Advisory Agreement (Proposal 2), and new Sub-Advisory
Agreement (Proposal 3), and to approve the elimination of, and changes to, each
Fund's fundamental investment policies (Proposals 4, 5 and 6). The 1940 Act
defines a "majority of the outstanding voting securities" of a Fund to mean the
lesser of (a) the vote of holders of 67% or more of the shares of Common Stock
of the Fund present in person or by proxy at the Annual Meeting, if the holders
of more than 50% of the outstanding voting securities of the Fund are present in
person or by proxy, or (b) the vote of the holders of more than 50% of the
outstanding Common Stock of the Fund. An affirmative vote of a majority of votes
cast is necessary to ratify the selection of the independent accountant for each
Fund (Proposal 7).
The Board of Directors of AEF has named Charles T. Bauer, Chairman, Robert
H. Graham, President, and Carol F. Relihan, Secretary, of AEF, as proxies.
Unless specific instructions are given to the contrary in the accompanying
proxy, the proxies will vote FOR the election of each Director named in the
proxy statement, FOR the approval of the new Investment Advisory Agreement for
each of the Funds, FOR the approval of the new Sub-Advisory Agreement for each
of the Funds, FOR the proposal to eliminate each applicable Fund's fundamental
investment policy restricting investments in other investment companies and to
amend certain related fundamental investment policies, FOR the proposal to
change AIM Charter Fund's and AIM Weingarten Fund's fundamental investment
policy on investments in puts, calls, straddles and spreads, FOR the proposal to
eliminate AIM Charter Fund's fundamental investment policy on investments in
companies with less than five years of continuous operations, and FOR the
ratification of the selection of KPMG Peat Marwick LLP as independent
accountants for the Funds. Abstentions and broker non-votes (i.e., proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other person entitled to vote shares on a
particular matter with respect to which the broker or nominee does not have
discretionary power) with respect to any proposal will be counted for purposes
of determining whether a quorum is present at the Annual Meeting. Abstentions
and broker non-votes do not count as votes cast but have the same effect as
casting a vote against proposals that require the vote of a majority of the
shares present at the Annual Meeting, provided a quorum exists. A quorum will be
deemed present with respect to a Fund if the holders of more than 50% of the
outstanding voting securities of such Fund are present in person or voting by
proxy.
The Board of Directors of AEF currently knows of no other matters to be
presented at the Annual Meeting. If any other matters properly come before the
Annual Meeting, the proxies will vote in accordance with their best judgment.
The proxies may propose to adjourn the meeting to permit
2
<PAGE> 7
further solicitation of proxies or for other purposes. Any such adjournment will
require the affirmative vote of a majority of the votes cast.
PROPOSAL 1 --
ELECTION OF DIRECTORS
For election of directors at the Annual Meeting, the Board of Directors of
AEF has approved the nomination of Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, John F. Kroeger, Robert H. Graham, Lewis F. Pennock,
Ian W. Robinson, and Louis S. Sklar, each of whom is currently a Director of
AEF, each to serve as Director until his successor is elected and qualified. All
of the nominees presently serve as Directors, Trustees or officers of the ten
open-end management investment companies advised by AIM (all such investment
companies and their series portfolios, if any, are referred to collectively as
the "AIM Funds").
The proxies will vote for the election of the nominees named below unless
authority to vote for any or all of the nominees is withheld in the proxy. A
nominee must receive affirmative votes from a plurality of the votes cast at a
meeting at which a quorum is present to be elected. Each of the nominees has
indicated that he is willing to serve as a Director. 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 Directors who are not "interested persons" of AEF, as defined in
the 1940 Act, may recommend.
The following table sets forth certain information concerning the
Directors:
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) DIRECTOR SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ----------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Charles T. Bauer (77)* 05/20/88 (1) Director, Chairman and Chief Executive
Officer, A I M Management Group Inc.; and
Chairman of the Board of Directors, A I M
Advisors, Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc. and
Fund Management Company. (2) Director/Trustee of
the AIM Funds.
Bruce L. Crockett (52) 10/04/93 (1) Formerly, Director, President and Chief
Executive Officer COMSAT Corporation (includes
COMSAT World Systems, COMSAT Mobile
Communications, COMSAT Video Enterprises, COMSAT
RSI and COMSAT International Ventures); President
and Chief Operating Officer, COMSAT Corporation;
President, World Systems Division, COMSAT
Corporation and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed
above is an international communication,
information and entertainment-distribution
services company).
(2) Director/Trustee of the AIM Funds.
</TABLE>
- ---------------
* Mr. Bauer is an "interested person" of the Company, 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 A I M
Management Group Inc., which owns all of the outstanding stock of AIM.
3
<PAGE> 8
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) DIRECTOR SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ----------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Owen Daly II (72) 05/24/88 (1) Formerly, Director, CF&I Steel Corp.,
Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation. (2)
Director/Trustee of the AIM Funds; and Director,
Cortland Trust Inc. (investment company).
Carl Frischling (59)** 05/24/88 (1) Partner, Kramer, Levin, Naftalis & Frankel
(law firm). Formerly, Partner, Reid & Priest (law
firm); and prior thereto, Partner, Spengler
Carlson Gubar Brodsky & Frischling (law firm).
(2) Director/Trustee of the AIM Funds.
Robert H. Graham (49)*** 05/10/94 (1) Director, President and Chief Operating
Officer, A I M Management Group Inc.; Director
and President, A I M Advisors, Inc.; and Director
and Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company. (2)
Director/Trustee of the AIM Funds.
John F. Kroeger (72) 05/24/88 (1) Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
(2) Director/Trustee of the AIM Funds; and
Director, Flag Investors International Fund,
Inc., Flag Investors Emerging Growth Fund, Inc.,
Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total
Return U.S. Treasury Fund, Inc., Flag Investors
Intermediate Term Income Fund, Inc., Managed
Municipal Fund, Inc., Flag Investors Value
Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax- Free Income Fund, Inc., Flag
Investors Real Estate Securities Fund, Inc., Alex
Brown Cash Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment
companies).
Lewis F. Pennock (54) 05/24/88 (1) Attorney in private practice in Houston,
Texas.
(2) Director/Trustee of the AIM Funds.
</TABLE>
- ---------------
** Mr. Frischling is an "interested person" of the Company, as defined in the
1940 Act, primarily because of payments received by his law firm for
services to the Funds.
*** Mr. Graham is an "interested person" of the Company, 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 A I M
Management Group Inc., which owns all of the outstanding stock of AIM.
4
<PAGE> 9
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) DIRECTOR SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ----------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Ian W. Robinson (73) 10/04/93 (1) Formerly, Executive Vice President and Chief
Financial Officer, Bell Atlantic Management
Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone Company.
(2) Director/Trustee of the AIM Funds.
Louis S. Sklar (56) 09/27/89 (1) Executive Vice President, Development and
Operations, Hines Interests Limited Partnership
(real estate development). (2) Director/Trustee
of the AIM Funds.
</TABLE>
------------------------------
The Company does not hold regular annual meetings at which Directors are
elected.
During the year ending December 31, 1996, AEF's Board of Directors met
eight times. AEF has three standing committees of the Board of Directors: the
Audit Committee, the Investments Committee and the Nominating and Compensation
Committee. During the year ending December 31, 1996, the Audit Committee met
four times, the Investments Committee met four times, and the Nominating and
Compensation Committee met two times. During such year, AEF's Directors attended
at least 75% of the aggregate of the number of meetings of the Board of
Directors and all committees.
The members of the Audit Committee of the Company are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting
with the Fund's auditors to review audit procedures and results and to consider
any matters arising from an audit to be brought to the attention of the
Directors as a whole with respect to each Fund's fund accounting or its internal
accounting controls, or for considering such other matters as the Board of
Directors may determine. None of the members of the Audit Committee is an
"interested person" of AEF, as defined by the 1940 Act.
The members of the Investments Committee of the Company are Messrs. Bauer,
Crockett, Daly (Chairman), Kroeger and Pennock. The Investments Committee is
responsible for reviewing portfolio compliance, brokerage allocation, portfolio
investment pricing issues, interim dividend and distribution issues, or
considering such other matters as the Board of Directors may from time to time
determine. Mr. Bauer is an "interested person" of AEF, as defined by the 1940
Act.
The members of the Nominating and Compensation Committee of the Company are
Messrs. Crockett, Daly, Kroeger, Pennock (Chairman), and Sklar. The Nominating
and Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons,
reviewing from time to time the compensation payable to the Directors who are
not "interested persons" of AEF, as defined by the 1940 Act, or considering such
other matters as the Board of Directors may from time to time determine. The
Nominating and Compensation Committee does not consider nominees for Director
recommended by shareholders.
5
<PAGE> 10
None of the members of the Nominating and Compensation Committee is an
"interested person" of AEF, as defined by the 1940 Act.
COMPENSATION OF DIRECTORS
Each Director is reimbursed for expenses incurred in attending each meeting
of the Board of Directors or any committee thereof. Each Director who is not
also an officer of AEF is compensated for his services according to a fee
schedule which recognizes the fact that such Director also serves as a director
or trustee of other AIM Funds. Each such Director receives a fee, allocated
among the AIM Funds, which consists of an annual retainer component and a
meeting fee component.
Set forth below is information regarding compensation paid or accrued
estimated for the calendar year ending December 31, 1996 for each Director of
the Company:
<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS ACCRUED COMPENSATION
COMPENSATION BY ALL AIM FROM ALL AIM
DIRECTOR FROM AEF(1) FUNDS(2) FUNDS(3)
-------------------------------------- ----------- ---------------- ------------
<S> <C> <C> <C>
Charles T. Bauer...................... -0- -0- -0-
Bruce L. Crockett..................... $18,347 $ 38,621 $ 67,000
Owen Daly, II......................... 18,276 82,607 67,000
Carl Frischling....................... 18,347 56,683 67,000
Robert H. Graham...................... -0- -0- -0-
John F. Kroeger....................... 17,777 83,654 65,000
Lewis F. Pennock...................... 18,026 33,702 66,000
Ian W. Robinson....................... 18,347 64,973 67,000
Louis S. Sklar........................ 18,069 47,593 65,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Directors of AEF estimated
for the year ending December 31, 1996, including interest earned thereon, is
$75,752.
(2) During the year ending December 31, 1996, the total amount of expenses
allocated to the Company in respect of such retirement benefits is $163,136
for AEF.
(3) Each Director serves as a Director or Trustee of a total of ten AIM Funds.
Data reflect estimated total compensation earned during the calendar year
ending December 31, 1996.
------------------------------
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Retirement Plan"), each Director who is an "Eligible
Director" (as defined in the Retirement Plan) may be entitled to certain
benefits upon retirement from the Board of Directors. Pursuant to the Retirement
Plan, the normal retirement date is the date on which the Eligible Director has
attained age 65 and has completed at least five years of continuous service with
one or more of the AIM Funds. Each Eligible Director is entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the AIM Funds for such Eligible Director during the
twelve-month period immediately preceding the Eligible Director's retirement
(including amounts deferred under a separate agreement between the AIM Funds and
the Eligible Director) for the number of such Eligible
6
<PAGE> 11
Director's years of service (not in excess of ten years of service) completed
with respect to any of the AIM Funds. If an Eligible Director dies after
attaining the normal retirement date but before receipt of any benefits under
the Retirement Plan commences, the Eligible Director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased Eligible Director for no more than ten years beginning the first
day of the calendar quarter following the date of the Eligible Director's death.
Payments under the Retirement Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits payable
to an Eligible Director upon retirement assuming various compensation and years
of service classifications. The estimated credited years of service for Messrs.
Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 9, 10, 19,
19, 15, 9, and 7, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
PAID BY ALL AIM FUNDS
NUMBER OF YEARS OF -------------------------------
SERVICE WITH THE AIM FUNDS $55,000 $60,000 $65,000
- -------------------------- ------- ------- -------
<S> <C> <C> <C>
10......................................... $41,250 $45,000 $48,750
9.......................................... 37,125 40,500 43,875
8.......................................... 33,000 36,000 39,000
7.......................................... 28,875 31,500 34,125
6.......................................... 24,750 27,000 29,250
5.......................................... 20,625 22,500 24,375
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "Deferring Directors") have each executed a Deferred
Compensation Agreement (collectively, the "DC Agreements"). Pursuant to the DC
Agreements, the Deferring Directors may elect to defer receipt of up to 100% of
their compensation payable by the Funds, and such amounts are placed into a
deferral account. Currently, the Deferring Directors may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the Deferring Directors' deferral accounts will be
paid in cash generally in equal quarterly installments over a period of ten
years beginning on the date the Deferring Director's retirement benefits
commence under the Retirement Plan. The Company's Board of Directors, in their
sole discretion, may accelerate or extend the distribution of such deferral
accounts after a Deferring Director's termination of service as a Director of
the Company. If a Deferring Director dies prior to the distribution of amounts
in his deferral account, the balance of the deferral account will be distributed
to his designated beneficiary in a single lump sum payment as soon as
practicable after such Deferring Director's death. The DC Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the Deferring Directors have the status of unsecured creditors of the
Funds and of each other AIM Fund from which they are deferring compensation.
7
<PAGE> 12
PROPOSAL 2 --
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
INTRODUCTION
Shareholders are being asked to approve a new Investment Advisory Agreement
(the "New Advisory Agreement") that, except as discussed below with respect to
the licensing of the "AIM" name, has no material changes in its terms and
conditions, no changes in fees, and no material changes in the way the Funds are
managed, advised or operated.
AIM has served as investment advisor to each of the Funds from the date set
forth in Annex B and currently serves pursuant to an advisory agreement (the
"Current Advisory Agreement") executed on the date set forth in Annex B. On May
14, 1996, the Board of Directors of AEF, including a majority of the directors
who are not interested persons of the Company or AIM (the "Independent
Directors"), voted to continue the Current Advisory Agreement for an additional
year until June 30, 1997.
The Funds are seeking to obtain shareholder approval of the New Advisory
Agreements because of the technical requirements of the 1940 Act that apply to
the merger (the "Merger") described below under "Merger of AIM Management and
INVESCO." Because the Merger will result in a transfer of more than 25% of the
outstanding voting shares of A I M Management Group Inc. ("AIM Management"), the
direct parent of AIM, an "assignment" of the Current Advisory Agreement will
occur under the 1940 Act. The Current Advisory Agreement provides that it will
terminate automatically upon its assignment, as required by the 1940 Act. As
discussed below, the Merger will not cause any change in the operation of AIM's
business.
At a meeting held on December 10, 1996, the Board of Directors of AEF,
including a majority of the Independent Directors, approved, subject to
shareholder approval, the New Advisory Agreement. A copy of a form of the New
Advisory Agreement is attached hereto as Annex C. In approving the New Advisory
Agreement, the Boards of Directors took into account the terms of the Merger.
Except as discussed below with respect to the licensing of the "AIM" name, the
provisions of the Current Advisory Agreement and the New Advisory Agreement are
substantially identical. A description of such agreement is provided below under
"Terms of the Advisory Agreements." Such description is only a summary and is
qualified by reference to the attached Annex C.
If the conditions to the Merger are not met or waived or if the merger
agreement between AIM Management and INVESCO is terminated, the Merger will not
be consummated, and the Current Advisory Agreement will remain in effect. If the
New Advisory Agreement is approved, and the Merger is thereafter consummated,
the New Advisory Agreement will be executed and become effective on the Closing
Date, as defined below. In the event that the New Advisory Agreement is not
approved with respect to any Fund and the Merger is consummated, the Board of
Directors will determine what action to take, in any event subject to the
approval of shareholders of each Fund.
MERGER OF AIM MANAGEMENT AND INVESCO
On November 4, 1996, AIM Management (the parent of AIM) entered into an
agreement and plan of merger (the "Merger Agreement") with INVESCO plc
("INVESCO"). The Merger Agreement provides for the merger of AIM Management into
INVESCO Group Services, Inc. ("IGS"), a
8
<PAGE> 13
wholly-owned U.S. subsidiary of INVESCO, or into another wholly-owned U.S.
subsidiary of INVESCO (in either case, "INVESCO Sub").
INVESCO is an English holding company whose shares are publicly traded on
the London Stock Exchange. American Depository Receipts evidencing such shares
are traded on the New York Stock Exchange. INVESCO and its subsidiaries are an
independent investment management group with a major presence in the
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific. INVESCO's North American subsidiaries
manage individualized investment portfolios of equity, fixed income and real
estate securities for institutional clients through five business units. Each
unit utilizes a particular investment style in managing assets, and most of
these units also serve as advisor or sub-advisor to one or more of INVESCO's
U.S. mutual funds. INVESCO's European region serves both institutional and
individual investors through six major business units with facilities in the
United Kingdom, the Channel Islands, Luxembourg and France. INVESCO has also
established relationships with substantial financial organizations in Italy, the
Netherlands, Spain and Portugal. INVESCO's Pacific region manages assets of
clients based in Asia and Australia on a local, regional or global basis. It
also manages investments in the region for INVESCO clients based outside the
region. At September 30, 1996, INVESCO's assets under management were in excess
of $90 billion.
Following the Merger INVESCO will be renamed AMVESCO plc ("AMVESCO").
AMVESCO will consist of two major complementary businesses, one comprising
principally its United States institutional and international businesses, and
the other comprising principally its United States retail mutual fund and
defined contribution plan businesses. Each of these businesses will be directed
by a separate management committee. Charles Brady, the Chairman of INVESCO, will
head the management committee for AMVESCO's U.S. institutional and international
businesses. Robert H. Graham, President and Chief Operating Officer of AIM
Management, will become President and Chief Executive Officer of AIM
Management's successor and will head the management committee directing
AMVESCO's United States retail businesses. Charles T. Bauer, currently Chairman
and Chief Executive Officer of AIM Management, will become Vice-Chairman of
AMVESCO and Chairman of AIM Management's successor. AIM Management and INVESCO
believe that their businesses are highly complementary and that the expected
benefits resulting from the Merger include broader product range, expanded
distribution capability, increased globalization, greater capacity in defined
contribution plans, and increased financial strength and independence.
AIM has advised the AIM Funds that the Merger is not expected to have a
material effect on the operations of the AIM Funds or on their shareholders. No
material change in investment philosophy, policies or strategies is currently
envisioned. Following the Merger, AIM will continue to be an indirect
wholly-owned subsidiary of the successor to AIM Management. The Merger Agreement
does not, by its terms, contemplate any changes, other than changes in the
ordinary course of business, in the management or operation of AIM relating to
the AIM Funds, the personnel managing the AIM Funds or other services provided
to and business activities of the AIM Funds. The Merger also is not expected to
result in material changes in the business, corporate structure or composition
of the senior management or personnel of AIM. Based on the foregoing, AIM does
not anticipate that the Merger will cause a reduction in the quality of services
provided to the AIM Funds, or have any adverse effect on AIM's ability to
fulfill its respective obligations under the New Advisory Agreements, or to
operate its businesses in a manner consistent with its current practices.
9
<PAGE> 14
Under the Merger Agreement, each of INVESCO and INVESCO Sub has covenanted
and agreed that it will comply, and use all reasonable efforts to cause
compliance on behalf of its affiliates, with the provisions of Section 15(f) of
the 1940 Act. Section 15(f) provides, in pertinent part, that an investment
adviser and its affiliates may receive any amount of benefit in connection with
a sale of securities of, or a sale of any other interest in, such investment
adviser that results in an "assignment" of an investment advisory contract as
long as two conditions are met. First, no "unfair burden" may be imposed on the
investment company as a result of the Merger. The term "unfair burden," as
defined in the 1940 Act, includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or predecessor or
successor investment adviser) or any interested person of any such adviser
receives or is entitled to receive any compensation directly or indirectly from
the investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with
the purchase or sale of securities or other property to, from, or on behalf of
the investment company (other than fees for bona fide principal underwriting
services). No such compensation arrangements are contemplated in connection
with the Merger.
The second condition is that, for a period of three years after the
transaction occurs, at least 75% of the members of the board of directors of the
investment company advised by such adviser are not "interested persons" (as
defined in the 1940 Act) of the new or the old investment adviser. The Board
that you are being asked to elect in Proposal No. 1 meets this 75% requirement.
[BOARDS OF DIRECTORS/TRUSTEES EVALUATION
At meetings with the Boards of Directors/Trustees of the AIM Funds
beginning in September, 1996, representatives of AIM Management began discussing
with the Boards the possibility of a merger between AIM Management and INVESCO.
At a meeting in person held on November 19, 1996, representatives of AIM
Management and INVESCO discussed with the Boards of Directors/Trustees of the
AIM Funds, the specific terms of the Merger Agreement. The Boards of
Directors/Trustees of the AIM Funds then appointed a special committee (the
"Special Committee"), consisting of the Directors/Trustees of the AIM Funds who
are not interested persons of AIM or INVESCO, to review the proposed Merger,
consider its potential impact on the AIM Funds and their shareholders, and make
recommendations to the Boards of Directors/Trustees of the AIM Funds with
respect to the approval of the New Advisory Agreements in view of the proposed
Merger. Directors/Trustees of the AIM Funds who are members of the Special
Committee are Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and
Sklar. The Special Committee met with their legal counsel ("Special Counsel"),
who assisted them in their deliberations concerning approval of the New Advisory
Agreements.
The Special Committee met separately with Special Counsel on November 8,
1996, November 19, 1996 and December 2, 1996 to consider and review the
directors'/trustees' fiduciary obligations and the nature and extent of
additional information to be requested by them to evaluate the New Advisory
Agreements and the potential impact of the Merger on the AIM Funds and their
shareholders. Between November 8, 1996 and December 10, 1996, the Special
Committee and Special Counsel requested and received additional information from
AIM Management, INVESCO and their counsel, and held telephone conferences,
regarding the proposed Merger and its potential impact on the AIM Funds and
their shareholders. On December 10, 1996, the Special Committee and Special
Counsel met separately with representatives of AIM Management and INVESCO to
review various aspects of the
10
<PAGE> 15
proposed Merger, and review additional information regarding INVESCO and the
future plans for AIM Management and AIM.
In connection with its review, the Special Committee possessed or obtained
substantial information regarding: the management, the financial position and
the business of INVESCO and its subsidiaries; the history of INVESCO's and its
subsidiaries' business and operations; the performance of the investment
companies and private accounts advised by INVESCO and subsidiaries; the impact
of the Merger on the AIM Funds and their shareholders; future plans of AMVESCO
with respect to AIM and the AIM Funds; performance and financial information
about each of the AIM Funds; and information about other funds and their fees
and expenses.
The Special Committee also received information regarding the terms of the
Merger and comprehensive financial information, including: INVESCO's plans for
financing the Merger; the impact of the financing on AIM Management and AIM;
INVESCO's plans for the compensation of executives and investment and other
staff of AIM Management and AIM; information concerning employment contracts
with senior management of AIM Management and AIM; and INVESCO's access to
capital markets to meet the capital needs of AIM Management and its
subsidiaries.
In connection with its deliberations, the Special Committee obtained
assurances from INVESCO that: AMVESCO did not intend to change executive
management or staff of AIM Management or AIM (other than appointing Robert H.
Graham Chief Executive Officer of the successor to AIM Management), and has
entered into employment agreements with key personnel; AMVESCO will consult with
the Boards of Directors/Trustees of the AIM Funds prior to making material
changes to AIM that could adversely affect the ability of AIM or its
subsidiaries to render services to the AIM Funds; neither AMVESCO nor its
affiliates will impose an "unfair burden" within the meaning of Section 15(f) of
the 1940 Act for a period of two years following the consummation of the Merger;
AMVESCO has not planned any major changes to the operations and capabilities of
AIM or its subsidiaries, except those intended to enhance the capabilities of
those entities to provide better or more efficient services to the AIM Funds.
The Special Committee also evaluated each New Advisory Agreement. The
Special Committee assured itself that each New Advisory Agreement for each AIM
Fund, including the terms relating to the services to be provided and the fees
and expenses payable by such AIM Fund, is on substantially the same terms as the
Current Advisory Agreement for each AIM Fund, except to the extent described
below with respect to the licensing of the "AIM" name.
Based on the Special Committee's review and analysis of the material
provided and the commitments received, the Special Committee unanimously
recommended to the Boards of Directors/Trustees of the AIM Funds that the New
Advisory Agreements be approved.
At the Boards of Directors/Trustees meetings of the AIM Funds held on
December 10 and 11, 1996, the Boards received presentations by INVESCO and AIM.
The Directors/Trustees were supplied with the information given to the Special
Committee in advance of the meeting. The Special Committee discussed with the
Boards of Directors/Trustees the materials it reviewed, the issues it studied
and the reasons for its recommendation. Based upon the foregoing, the Board of
Directors/Trustees of each AIM Fund unanimously approved the New Advisory
Agreement related to that AIM Fund and recommended approval by the
shareholders.]
11
<PAGE> 16
ADDITIONAL TERMS OF THE MERGER AGREEMENT
AIM Management will merge into INVESCO Sub for consideration valued at
November 4, 1996 at approximately $1.6 billion, plus the amount of AIM
Management net income from September 1, 1996 through the date on which the
Merger is consummated (the "Closing Date"), minus dividends paid during such
period and subject to adjustments for certain balance sheet items and
transaction expenses. The consideration will include 290 million new Ordinary
Shares (including Ordinary Shares issuable in respect of vested and unvested AIM
Management options) of INVESCO valued at November 4, 1996 at approximately $1.1
billion. The balance of the consideration will be paid in cash.
The directors of AIM Management's successor will be Charles T. Bauer,
Robert H. Graham, Gary T. Crum and Michael J. Cemo, all of whom are currently
officers and directors of AIM. Although Charles T. Bauer will remain chairman of
AIM Management's successor, Robert H. Graham will become President and Chief
Executive Officer of such successor. Mr. Graham currently serves as AIM
Management's President and Chief Operating Officer.
Upon consummation of the Merger, the AIM Management shareholders will own
approximately 45% of INVESCO's total outstanding capital stock on a fully
diluted basis. INVESCO's shareholders approved the Merger at a meeting on
November 27, 1996, and on December 4, 1996 approved changing INVESCO's name upon
consummation of the Merger. The name of AIM will not change.
The closing is presently expected to occur on [February 28, 1997,] subject
to the satisfaction of conditions to closing that include, among other things:
(a) INVESCO having consummated one or more financings and having received net
proceeds of not less than $500 million; (b) the respective aggregate annualized
asset management fees of INVESCO and AIM Management (based on assets under
management, excluding the effects of market movements) in respect of which
consents to the Merger have been obtained being equal to or greater than 87.5%
of all such fees at October 31, 1996; (c) INVESCO and AIM Management having
received certain consents from regulators, lenders and/or other third parties;
(d) AIM Management not having received from the holder or holders of more than
2% of the outstanding AIM Management shares notices that they intend to exercise
dissenters' rights; (e) a Voting Agreement, Standstill Agreement, Transfer
Restriction Agreements, Transfer Administration Agreement, the Registration
Rights Agreement, Indemnification Agreement and employment agreements with
certain AIM Management employees having been executed and delivered; (f) AIM
Management having received an opinion from its U.S. counsel that the Merger will
be treated as a tax-free reorganization; and (g) shareholder resolution to
appoint to INVESCO's Board of Directors six AIM Management designees and a Board
resolution to appoint the seventh AIM Management designee having been passed and
not revoked.
The Merger Agreement may be terminated at any time prior to the Closing
Date (a) by written agreement of INVESCO and AIM Management, (b) by written
notice by AIM Management or INVESCO to the other after June 1, 1997 or (c) under
other circumstances set forth in the Merger Agreement. In certain circumstances
occurring on or before September 30, 1997, a termination fee will be payable by
the party in respect of which such circumstances have occurred.
In connection with the Merger, the following agreements, each to be
effective upon the closing of the Merger, have been or will be executed:
Employment Agreements. Following the Merger, the current officers of
AIM Management will be the officers of the successor to AIM Management and
the directors of the successor to AIM
12
<PAGE> 17
Management will be four of the current directors of AIM Management. Senior
management and key employees of AIM Management have entered into employment
agreements which will commence when the Merger is consummated and will
continue for initial terms ranging from one year to four years. All of the
employment agreements contain covenants not to compete extending for at
least one year after termination of employment. Approximately thirty
current employees of AIM Management have entered into such employment
agreements with INVESCO.
Voting Agreement. Certain AIM Management shareholders and their
spouses, the current directors of INVESCO and proposed directors of INVESCO
have agreed to vote as directors and as shareholders to ensure that: (a)
the INVESCO Board will have fifteen members, consisting of four executive
directors and three non-executive directors designated by INVESCO's current
senior management, four executive directors and three non-executive
directors designated by AIM Management's current senior management and a
Chairman; (b) the initial Chairman will be Charles W. Brady (INVESCO's
current Chairman) and the initial Vice Chairman will be Charles T. Bauer
(AIM Management's current Chairman); (c) the parties will vote at any
INVESCO shareholder meeting on resolutions (other than those in respect of
the election of directors) supported by two-thirds of the Board in the same
proportion as votes are cast by unaffiliated shareholders. The Voting
Agreement will terminate on the earlier of the fourth anniversary of the
Closing Date and the date on which a resolution proposed by an
INVESCO-designated Board member is approved by the INVESCO Board despite
being voted against by each AIM Management-designated Board member present
at such Board meeting.
Standstill Agreement and Transfer Restriction Agreements. Certain AIM
Management shareholders and their spouses and certain other significant
shareholders of INVESCO have agreed under certain circumstances for a
maximum of five years not to engage in a number of specified activities
that might result in a change of the ownership or control positions of
INVESCO existing as of the Closing Date. AIM Management shareholders and
INVESCO's current chairman will be restricted in their ability to transfer
their shares of INVESCO for a period of up to five years.
TERMS OF THE ADVISORY AGREEMENTS
Although the Current Advisory Agreement has not terminated and the New
Advisory Agreement has not become effective, such Agreements (collectively, the
"Advisory Agreements") are described below as if they were both in effect.
Under the Advisory Agreements, AIM furnishes investment information and
advice and makes recommendations with respect to the purchase and sale of
investments based upon each Fund's investment policies. AIM has sole
responsibility for the investment decisions of each Fund, subject to the control
of the Board of Directors. The Advisory Agreements provide that, subject to the
approval of the Board of Directors and the shareholders of the applicable Fund,
AIM may delegate certain of its duties to a sub-advisor, provided that AIM shall
continue to supervise the performance of any such sub-advisor.
The Advisory Agreements provide that all of the ordinary business expenses
incurred in the operations of each of the Funds and the offering of each of
their shares shall be paid by each such Fund. These expenses include brokerage
commissions, taxes, legal, accounting, auditing or governmental fees, custodian,
transfer agent and shareholder service agent costs.
13
<PAGE> 18
The New Advisory Agreement also provides that the Company shall be entitled
to use the name "AIM" with respect to a Fund only so long as AIM serves as
investment manager or advisor to such Fund. Although the Current Advisory
Agreement presently has a similar provision, the provision in the New Advisory
Agreement will read as follows:
License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only
so long as A I M Advisors, Inc. serves as investment manager or advisor to
the Company with respect to such series of shares.
Information with regard to the fees payable under each of the Advisory
Agreements and the aggregate advisory fees paid to AIM in each Fund's most
recently completed fiscal year is as set forth in Annex F.
Each Advisory Agreement may be terminated with respect to a Fund on 60
days' written notice without penalty by (i) the applicable Fund, (ii) the action
of the shareholders of the Company, (iii) the Board of Directors of the Company,
or (iv) AIM. Each Advisory Agreement will terminate automatically in the event
of any assignment, as defined by the 1940 Act. The Advisory Agreements continue
from year to year with respect to a Fund so long as their continuance is
specifically approved at least annually either (i) by the Board of Directors of
the Company or (ii) by the vote of a majority of such Fund's outstanding voting
securities, as defined by the 1940 Act, provided that in either event the
continuance is also approved by the vote of a majority of the Directors of the
Company who are not interested persons of the Company or of AIM, cast in person
at a meeting called for the purpose of voting on such approval.
The Advisory Agreements provide that, upon the request of the Company's
Board of Directors, AIM may perform certain additional services on behalf of the
Funds. The Board of Directors has approved, and AEF has entered into, Master
Administrative Services Agreements with AIM, pursuant to which AIM has agreed to
provide or arrange for the provision of certain accounting and other
administrative services to the Funds, including the services of a principal
financial officer of the Funds and related staff. As compensation to AIM for its
services under the Master Administrative Services Agreements, the Funds
reimburse AIM for expenses incurred by AIM or its affiliates in connection with
such services.
ADDITIONAL SERVICES PROVIDED BY AIM AND ITS AFFILIATES
As noted above, AIM provides administrative services to each of the Funds.
In addition, A I M Distributors, Inc. ("AIM Distributors"), a wholly-owned
subsidiary of AIM, serves as the principal underwriter for each of the retail
classes of the Funds. Shares of the Funds are generally sold with an initial
sales charge ("Class A Shares"), or with respect to some of the Funds, subject
to a contingent deferred sales charge ("Class B Shares"). Such sales charges are
paid by investors. Each of the Funds has also adopted a distribution plan under
Rule 12b-1 of the 1940 Act (a "Plan") with respect to each of its retail
classes, pursuant to which the Fund compensates AIM Distributors from a portion
of the Fund's average daily net assets attributable to each class of shares in
connection with the distribution of the respective class of shares and in
connection with the provision of ongoing services to shareholders of each class.
AIM Distributors reallows a portion of the Rule 12b-1 fees that it receives to
the brokers, dealers, agents and other service providers with whom it has
entered into agreements and who offer shares of the Fund for sale or provide
customers or clients certain continuing personal services.
14
<PAGE> 19
Each Fund categorizes the first 0.25% per year of the Rule 12b-1 fees that
it pays to AIM Distributors attributable to the Class A Shares of the respective
Fund as a service fee for ongoing personal services. Any amount it may pay to
AIM Distributors in excess of such amount is characterized as an asset-based
sales charge.
AIM Distributors is authorized to advance to institutions through whom
Class B Shares are sold a sales commission under schedules established by AIM
Distributors. AIM Distributors (or its assignee or transferee) receives 0.75%
(of the total 1.00% payable under the distribution plan applicable to Class B
Shares) of each Fund's average daily net assets attributable to those Class B
Shares sold through the sales efforts of AIM Distributors. The remaining 0.25%
of each Funds' average daily net assets attributable to Class B Shares is paid
to brokers, dealers, agents and other service providers as a service fee for
ongoing personal services.
The amounts payable by a Fund under the Plans need not be directly related
to the expenses actually incurred by AlM Distributors on behalf of each Fund.
Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Funds will not be obligated to
pay more than that fee, and if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee.
A I M Fund Services, Inc. ("AIM Services"), a wholly-owned subsidiary of
AIM, serves as transfer agent to each of the retail classes of the Funds.
Fund Management Company ("Fund Management"), a wholly-owned subsidiary of
AIM, serves as the principal underwriter for each of the institutional classes
of the Funds which are sold primarily to institutional investors ("institutional
classes"). A I M Institutional Fund Services, Inc. ("AIM Institutional"), a
wholly-owned subsidiary of AIM, serves as transfer agent to each of the
institutional classes of the Funds.
Information with regard to the amount of fees paid by each Fund to AIM and
its affiliates for services provided other than under the Current Advisory
Agreement in each Fund's most recently completed fiscal year is set forth in
Annex D.
The agreements pursuant to which AIM provides administrative services to
the Funds, and pursuant to which Fund Management and AIM Distributors serve as
principal underwriter to the Funds will terminate as a result of the Merger. The
Board of Directors of the Company has approved new agreements, which are
substantially identical to the existing administrative services and distribution
agreements, to take effect upon consummation of the Merger. Under the 1940 Act,
such agreements do not require the approval of shareholders before they become
effective. The agreements pursuant to which AIM Institutional and AIM Services
provide transfer agency services will not terminate as a result of the Merger.
INFORMATION CONCERNING AIM
AIM serves as the investment advisor to each of the Funds. AIM was
organized in 1976 and, together with its affiliates, advises 38 investment
company portfolios constituting the AIM Funds and sub-advises one investment
company portfolio. As of December 3, 1996, the total assets of the AIM Funds
were approximately $ . AIM is a wholly-owned subsidiary of AIM
Management. Certain of the Directors and officers of AIM are also Directors and
executive officers of the Company, and their names, principal occupations and
affiliations are shown in the table under
15
<PAGE> 20
Proposal 1 and under "Executive Officers" in Annex E. Information regarding the
AIM Funds, including their total net assets and the fees received by AIM from
such AIM Funds for its services, is set forth in Annex F. The address of AIM,
all of the directors of AIM, AIM Distributors, AIM Services, Fund Management,
AIM Institutional and AIM Management, is 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the approval of
the New Investment Advisory Agreement.
PROPOSAL 3 --
APPROVAL OF SUB-ADVISORY AGREEMENT
Shareholders of the Funds are being asked to approve a new Sub-Advisory
Agreement (the "New Sub-Advisory Agreement") between AIM and its sub-advisor,
A I M Capital Management, Inc. ("AIM Capital"). The New Sub-Advisory Agreement
has no changes in its terms and conditions, no changes in fees, and no changes
in the way the Funds are managed, advised or operated.
AIM Capital serves as sub-advisor to each of the Funds pursuant to a
sub-advisory agreement dated October 18, 1993 (the "Current Sub-Advisory
Agreement") and has been sub-advisor to the Funds since September 30, 1988. On
May 14, 1996, the Board of Directors of AEF, including a majority of the
directors who are not interested persons of the Funds or AIM, voted to continue
the Current Sub-Advisory Agreement for an additional year until June 30, 1997.
Information with regard to the Directors and executive officers of AIM Capital
is set forth in Annex G.
The Funds are seeking shareholder approval of the New Sub-Advisory
Agreement because of the technical requirements of the 1940 Act that apply to
the Merger described above in Proposal 2. Because the Merger will result in a
transfer of more than 25% of the outstanding voting shares of AIM Management,
AIM Capital's ultimate parent, an "assignment" of the Current Sub-Advisory
Agreement will occur under the 1940 Act. The Current Sub-Advisory Agreement
provides that it will terminate automatically upon its assignment, as required
by the 1940 Act. Shareholders are therefore being asked to approve the New
Sub-Advisory Agreement. The Merger will not cause any change in the operation of
AIM Capital's business.
At a meeting held on December 10, 1996, the Board of Directors of AEF,
including a majority of the Independent Directors, approved, subject to
shareholder approval, the New Sub-Advisory Agreement. A copy of the form of the
New Sub-Advisory Agreement is attached hereto as Annex H. In approving the New
Sub-Advisory Agreement, the Board of Directors of AEF took into account the
Merger described above under "Merger of AIM Management and INVESCO." The
provisions of the Current Sub-Advisory Agreement and the New Sub-Advisory
Agreement are identical. A description of such agreement is provided below under
"Terms of the Sub-Advisory Agreement." Such description is only a summary and is
qualified by reference to the attached Annex H.
If the conditions to the Merger are not met or waived or if the Merger
Agreement is terminated, the Merger will not be consummated, and the Current
Sub-Advisory Agreement will remain in effect. If the New Sub-Advisory Agreement
is approved, and the Merger is thereafter consummated, the New Sub-Advisory
Agreement will be executed and become effective on the Closing Date. In the
event that
16
<PAGE> 21
any of the New Sub-Advisory Agreement is not approved and the Merger is
consummated, the Board will determine what action to take, in any event subject
to the approval of shareholders of each Fund.
TERMS OF THE SUB-ADVISORY AGREEMENT
Although the Current Sub-Advisory Agreement has not terminated and the New
Sub-Advisory Agreement is not yet in effect, the agreements (collectively, the
"Sub-Advisory Agreements") are described below as if they were both in effect.
Under the Sub-Advisory Agreements, AIM Capital provides investment research
and advisory services to the Funds under the supervision of AIM and subject to
the approval and direction of the Board of Directors of AEF. As compensation for
AIM Capital's services under the Sub-Advisory Agreements, AIM pays to AIM
Capital with respect to a Fund an annual fee equal to 50% of the fee received by
AIM from the such Funds pursuant to the Advisory Agreement between such Fund and
AIM. For AEF's most recent fiscal year, AIM Capital received aggregate fees in
the amount of $8,264,945 for services to AIM Charter Fund, $28,807,206 for
services to AIM Constellation Fund, and $14,980,189 for services to AIM
Weingarten Fund.
Each Sub-Advisory Agreement may be terminated without penalty by (i) the
applicable Fund, (ii) the action of shareholders of the applicable Fund, (iii)
the Board of Directors of the applicable Fund, or (iv) AIM, or AIM Capital, on
60 days' written notice. The notice provision may be waived by either party.
Each Sub-Advisory Agreement will terminate automatically in the event of any
assignment, as defined by the 1940 Act. The Sub-Advisory Agreements continue
from year to year with respect to a Fund so long as their continuance is
specifically approved at least annually either (i) by the Board of Directors of
AEF or (ii) by the vote of a majority of such Fund's outstanding voting
securities, as defined by the 1940 Act, provided that in either event the
continuance is also approved by the vote of a majority of the Directors of AEF
who are not interested persons of AEF or of AIM, cast in person at a meeting
called for the purpose of voting on such approval.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the approval of
the New Sub-Advisory Agreement.
17
<PAGE> 22
PROPOSAL 4 --
ELIMINATION OF THE FUNDAMENTAL INVESTMENT POLICY
RESTRICTING INVESTMENTS IN OTHER INVESTMENT COMPANIES AND
AMENDMENT OF CERTAIN RELATED FUNDAMENTAL INVESTMENT POLICIES
The Board of Directors of AEF propose the elimination and/or modification
of certain fundamental investment policies that restrict each Fund's ability to
invest in other investment companies. The specific changes proposed are
described below.
Section 12 of the 1940 Act generally prohibits each Fund from (i) owning
more than 3% of the total outstanding voting stock of any other investment
company; (ii) investing more than 5% of its total assets in the securities of
any one other investment company; and (iii) investing more than 10% of its total
assets (in the aggregate) in the securities of other investment companies.
The Board of Directors may authorize AIM and the Company to seek exemptive
relief from the Securities and Exchange Commission ("SEC") to permit the Funds
to purchase securities of other investment companies in excess of the
limitations imposed by Section 12 of the 1940 Act (exemptive orders granted with
respect to such Funds are referred to herein collectively as the "Exemptive
Orders"). The investment companies in which the Funds may invest pursuant to the
Exemptive Orders are referred to herein collectively as the "Exemptive Order
Funds."
The Company and AIM may seek Exemptive Orders because they believe each
Fund can effectively invest in certain other types of securities through pooled
investment vehicles such as the Exemptive Order Funds. By pooling their
investments in such securities, the Funds may have the ability to invest in a
wider range of issuers, industries and markets, thereby seeking to decrease
volatility and risk while at the same time providing greater liquidity than a
Fund would have available to it investing in such securities by itself. Pooling
investments may also allow the Funds to increase the efficiency of portfolio
management by permitting each Fund's portfolio manager to concentrate on those
investments that constitute the bulk of the Fund's assets and not spend a
disproportionate amount of time on specialized areas. The Funds may seek
Exemptive Orders to permit, among other things, investments by the Funds for
cash management purposes in money market funds advised by AIM, implementation of
a master/feeder fund structure or investments in a separate small capitalization
or initial public offering fund.
If the proposed elimination of the Funds' restrictions on investments in
other investment companies is approved, each Fund may invest in securities of an
Exemptive Order Fund only to the extent consistent with the respective Fund's
investment objectives and policies as set forth from time to time in its
registration statements.
In connection with obtaining Exemptive Orders, AIM may agree to waive fees
applicable to the Funds to the extent that the assets of the Funds are invested
in Exemptive Order Funds and collect fees from the Exemptive Order Funds. Other
expenses incurred by the Exemptive Order Funds (such as audit and custodial
fees) will be borne by them, and thus indirectly by the Funds. AIM believes that
these indirect expenses will be offset by the benefits to the Funds of pooling
their investments.
The Funds currently have fundamental investment restrictions that prohibit
them from purchasing securities issued by other investment companies. In order
to take full advantage of the exemptive relief that may be granted by the SEC
and to invest in shares of the Exemptive Order Funds in excess
18
<PAGE> 23
of the percentage limitations imposed by Section 12, each such Fund is seeking
shareholder approval to eliminate this investment restriction.
The Funds currently have other fundamental investment restrictions that may
prohibit each such Fund from taking full advantage of the Exemptive Orders.
These fundamental restrictions may include one or more of the following:
1. Diversification. AIM Charter Fund is prohibited from investing more than
5% of its assets in securities of a single issuer or holding more than
10% of the outstanding voting securities of an issuer, except that the
Fund may invest up to 25% of all assets without regard to such
restrictions.
2. Control. The Funds are prohibited from making investments for the
purpose of exercising control or participation in management. The 1940
Act deems a person to have presumptive control over another person if it
beneficially owns more than 25% of the other person's voting securities.
From time to time, a Fund may (i) desire to invest more than 25% of their
assets in one or more Exemptive Order Funds or (ii) own more than 25% of the
voting securities of one or more Exemptive Order Funds.
The foregoing restrictions may be worded differently from Fund to Fund, but
the substance of the restrictions is as set forth above. Additional information
regarding a Fund's fundamental investment restrictions may be obtained without
cost by telephoning AIM at 1-800-347-4246 and requesting a copy of the Fund's
Statement of Additional Information.
In order to take full advantage of the Exemptive Orders, each Fund subject
to one or more of the foregoing investment restrictions seeks shareholder
approval to amend such restrictions by adding the following exception to each
restriction:
..., except that the [name of the applicable Fund] may purchase
securities of other investment companies to the extent permitted by
applicable law or exemptive order.
The elimination of the fundamental investment policy restricting
investments in other investment companies and the amendments to the related
fundamental investment policies would become effective March 1, 1997, if
approved by shareholders at the Annual Meeting. These changes are not related to
the Merger described in Proposal 2. Shareholders are being asked to consider
such amendments at this time because the Company does not regularly hold annual
shareholder meetings. AIM believes that submitting this proposal together with
Proposal 2 may reduce the expenses incurred by each Fund in connection with
soliciting approval of this proposal because the Company will not be required to
hold a separate meeting.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the proposal to
eliminate the fundamental investment policy restricting investments in other
investment companies and to amend certain related fundamental investment
policies.
19
<PAGE> 24
PROPOSAL 5 --
CHANGE TO FUNDAMENTAL INVESTMENT POLICIES ON PUTS, CALLS, STRADDLES AND SPREADS
The Board of Directors proposes to change AIM Charter Fund's and AIM
Weingarten Fund's fundamental investment policy regarding the writing, purchase
and sale of puts, calls, straddles and spreads. Despite the change in policy,
each Fund presently intends to engage only in the writing of covered call
options and covered put options.
OLD POLICY: AIM Charter Fund's current fundamental investment policy
provides that it will not:
write, purchase or sell puts, calls, straddles, spreads or combinations
thereof, or deal in commodities or oil, gas, or other mineral exploration
or development programs.
PROPOSED CHANGE: The Board of Directors proposes to modify this investment
policy to provide that AIM Charter Fund will not:
buy or sell physical commodities, or deal in oil, gas, or other mineral
exploration or development programs.
OLD POLICY: AIM Weingarten Fund's current fundamental investment policy
provides that it will not:
invest in commodities or commodity contracts or in puts or calls except as
set forth [in its Statement of Additional Information] under "Investment
Objectives and Policies -- Options."
PROPOSED CHANGE: The Board of Directors proposes to modify this investment
policy to provide AIM Weingarten Fund will not:
buy or sell physical commodities.
Writing Covered Call Options. The Funds will not use leverage in their
covered call option strategies. Such investments will be made for hedging
purposes only. Writing a call option obligates a Fund to sell or deliver the
option's underlying security in return for a strike price upon exercise of the
option. By writing a call option, a Fund receives an option premium from the
purchaser of the call option. The Funds are primarily interested in having the
ability to write (sell) call options which are "covered" at the time of sale and
remain covered as long as a Fund is obligated as a writer (seller) of the
option. A call is "covered" if a Fund owns or has the right to acquire the
underlying security which is subject to the call. The purpose of such
transactions is to hedge against changes in the market value of a Fund's
portfolio securities caused by fluctuating interest rates, fluctuating currency
exchange rates and changing market conditions, and to close out or offset
existing positions in options or futures contracts. The Funds will not engage in
such transactions for speculative purposes. By writing covered call options, a
Fund gives up the opportunity, while the option is in effect, to profit from any
price increase in the underlying security above the option exercise price. In
addition, a Fund's ability to sell the underlying security will be limited while
the option is in effect unless the Fund effects a closing purchase transaction.
Each Fund will adopt a non-fundamental investment policy that limits the writing
of covered call options to no more than 25% of the value of each Fund's net
assets.
Writing Covered Put Options. The Funds will not use leverage in their
covered put option strategies. Such investments will be made for hedging
purposes only. When a Fund writes a put option, it takes the opposite side of
the transaction from the option's purchaser. In return for receipt of the
20
<PAGE> 25
premium, a Fund assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
The Fund "covers" its position by segregating cash or other liquid assets in an
amount sufficient to cover the strike price in the event the option is
exercised. A Fund may seek to terminate its position in a put option it writes
before exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for an option a Fund has written,
however, the Fund must continue to be prepared to pay the strike price while the
option is outstanding, regardless of price changes, and must continue to set
aside assets to cover its position. Each Fund will adopt a non-fundamental
investment policy that limits the writing of covered put options to no more than
25% of the value of each Fund's net assets.
Risks of Options Transactions. Options are subject to certain risks,
including the risk of imperfect correlation between the option and a Fund's
other investments and the risk that there might not be a liquid secondary market
for the option. In general, options whose strike prices are close to their
underlying instruments' current value will have the highest trading volume,
while options whose strike prices are further away may be less liquid. The
liquidity of options may also be affected if options exchanges impose trading
halts, particularly when markets are volatile.
Asset Coverage for Options Positions. The Funds will hold securities or
other options positions whose values are expected to offset its obligations
under the hedge strategies. The Funds will not enter into an option position
that exposes the Fund to an obligation to another party unless it owns either
(i) an offsetting position in securities or other options or futures contracts
or (ii) cash, receivables and other liquid securities with a value sufficient to
cover its potential obligations. The Funds will comply with guidelines
established by the SEC with respect to coverage of options strategies by mutual
funds, and if the guidelines so require will set aside cash and liquid
securities in a segregated account with its custodian bank in the amount
prescribed. Securities held in a segregated account cannot be sold while the
option strategy is outstanding, unless they are replaced with similar
securities. As a result, there is a possibility that segregation of a large
percentage of a Fund's assets could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.
NON-FUNDAMENTAL POLICIES PROHIBITING CERTAIN TRANSACTIONS
The Funds do not presently intend to engage in the writing, sale or
purchase of uncovered puts, uncovered calls, straddles, spreads or combinations
thereof. Each Fund will adopt a non-fundamental policy prohibiting such
transactions. However, because this policy will be non-fundamental, it may be
changed by AEF's Board of Directors without shareholder approval. The Board of
Directors is proposing to change the Funds' current fundamental policy in order
to provide the Funds with the flexibility to engage in such transactions at some
future date if, in the opinion of the Board of Directors and AIM, such
transactions would be beneficial to the Funds and their shareholders.
Purchasing Put Options. By purchasing a put option, a 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, a Fund pays an option premium. The
option's underlying instrument may be a security, or a futures contract. Put
options may be used by a 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.
21
<PAGE> 26
Purchasing Call Options. The purchaser of a call option obtains the right
to purchase the underlying instrument at the option's strike price. By
purchasing a call option, a Fund would attempt to participate in potential price
increases of the underlying instrument but with risk limited to the cost of the
option if security prices fell. At the same time, the Fund can expect to suffer
a loss if security prices do not rise sufficiently to offset the cost of the
option.
Writing Uncovered Put Options. If a Fund writes an uncovered put option, it
will not set aside cash or other liquid assets in an amount sufficient to cover
its strike price. As a result, if the option is exercised the Fund may be
required to dispose of certain of its portfolio securities in order to generate
the cash necessary to pay the strike price. Depending on market conditions, the
Fund may be forced to sell such portfolio securities on unfavorable terms, and
the resulting losses may offset any benefit to the Fund from the premium
received for writing the put option.
Writing Uncovered Call Options. Writing a call option obligates a Fund to
sell or deliver the option's underlying instrument, in return for the strike
price, upon exercise of the option. A call option would be uncovered if a Fund
did not own the underlying instrument at the time the call option was written.
Because the Fund would have to be prepared to deliver the underlying instrument
in return for the strike price, even if its current value is greater, the Fund
risks having to obtain the underlying instrument at a higher market price when
writing uncovered call options.
Combined Option Positions. A Fund may purchase and write options in
combination with each other to adjust the risk and return characteristics of the
overall position. For example, a Fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. This technique, called a "straddle", enables a Fund to offset the cost
of purchasing a put option with the premium received from writing the call
option. However, by selling the call option, the Fund gives up the ability for
potentially unlimited profit from the put option. Another possible combined
position would involve writing a call option at one strike price and buying a
call option at a lower price, in order to reduce the risk of the written call
option in the event of a substantial price increase. This technique is called a
"spread". Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and close
out.
The change to the fundamental investment policy regarding investments in
puts, calls, straddles and spreads would become effective March 1, 1997, if
approved by shareholders at the Annual Meeting. This change is not related to
the Merger described in Proposal 2. Shareholders are being asked to consider
such change at this time because the Funds do not regularly hold annual
shareholder meetings. AIM believes that submitting this proposal together with
Proposal 2 may reduce the expenses incurred by each Fund in connection with
soliciting approval of this proposal because the Funds will not be required to
hold a separate meeting.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the proposal to
change the fundamental investment policy regarding investments in puts, calls,
straddles and spreads.
22
<PAGE> 27
PROPOSAL 6 --
ELIMINATION OF FUNDAMENTAL INVESTMENT POLICY ON INVESTMENTS IN COMPANIES WITH
LESS THAN FIVE YEARS OF CONTINUOUS OPERATION
The Board of Directors proposes to eliminate the fundamental investment
policy that AIM Charter Fund may not:
invest any of its assets in securities of companies having a record of less
than five years of continuous operation, including operations of their
predecessors.
Companies which, together with their predecessors, have been in business
for less than three to five years are often referred to as "unseasoned issuers."
The Fund wishes to purchase securities of unseasoned issuers because such
securities may provide opportunities for growth of capital consistent with the
Fund's primary investment objective. Greater risks are associated with
investments in securities of unseasoned issuers than in the securities of more
established companies because unseasoned issuers have only a brief operating
history and may have more limited markets and financial resources. As a result,
securities of unseasoned issuers tend to be more volatile than securities of
more established companies. The Board of Directors and AIM nonetheless believe
that the potential benefits to shareholders of permitting the Fund to invest in
unseasoned issuers outweighs the marginal increase in risk that the Fund would
incur in making such investments. In addition, elimination of this policy will
permit the Fund to invest in Exemptive Order Funds, as described in Proposal 4,
if such Exemptive Order Funds have been operating for less than five years.
The elimination of the fundamental investment policy on investments in
companies with less than five years of continuous operation would become
effective March 1, 1997, if approved by shareholders at the Annual Meeting. This
change is not related to the Merger described in Proposal 2. Shareholders are
being asked to consider such amendment at this time because the Funds do not
regularly hold annual shareholder meetings. AIM believes that submitting this
proposal together with Proposal 2 may reduce the expenses incurred by each Fund
in connection with soliciting approval of this proposal because the Funds will
not be required to hold a separate meeting.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the elimination
of AIM Charter Fund's fundamental investment policy on investment in companies
with less than five years of continuous operation.
PROPOSAL 7 --
RATIFICATION OF SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS
The Board of Directors of AEF, including a majority of the Independent
Directors, has selected KPMG Peat Marwick LLP as independent accountants for the
fiscal year ending in 1997 to examine and verify the accounts and securities of
the Funds, and to report thereon to the Board and its shareholders. This
selection will be submitted for ratification at the Annual Meeting. A
representative of such firm is expected to be present at the meeting.
23
<PAGE> 28
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR ratification of
the selection of KPMG Peat Marwick LLP as the independent accountants.
GENERAL INFORMATION
EXECUTIVE OFFICERS OF THE COMPANY
Information regarding the executive officers of the Company is set forth in
Annex E.
SECURITY OWNERSHIP OF MANAGEMENT AND 5% HOLDERS
Information regarding ownership of each of the Fund's shares by Directors
and executive officers and 5% holders of each class of such Fund is set forth in
Annex I.
PROXY SOLICITATION
The Company has engaged the services of Shareholder Communications
Corporation ("SCC") to assist them in the solicitation of proxies for the Annual
Meeting. The cost of soliciting proxies will be borne in part by AIM, and in
part by the Funds. It is estimated that the cost of SCC's services will be
approximately [$25,000]. The Company expects to solicit proxies principally by
mail, but the Company or SCC may also solicit proxies by telephone, facsimile or
personal interview. The Funds may also pay persons holding stock in their names,
or those of their nominees, for their expenses in sending proxies and proxy
materials to beneficial owners or principals.
SHAREHOLDER PROPOSALS
As a general matter, the Company does not hold regular annual meetings of
shareholders. Any shareholder who wishes to submit proposals for consideration
at a shareholders' meeting should send such proposal to the Company at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a shareholders' meeting, proposals must be received a
reasonable time before a solicitation is made.
OTHER BUSINESS
The management knows of no business to be presented to the Annual Meeting
other than the matters set forth in this proxy statement.
By order of the Board of Directors,
Charles T. Bauer
Chairman of the Board of Directors
December 20, 1996
24
<PAGE> 29
ANNEX A
NUMBER OF SHARES OUTSTANDING ON DECEMBER 3, 1996
FOR EACH SERIES OF AEF
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND DECEMBER 3, 1996
- --------------------------------------------------------------------------- ----------------
<S> <C>
AIM Aggressive Growth Fund.................................................
AIM Blue Chip Fund.........................................................
AIM Capital Development Fund...............................................
AIM Charter Fund...........................................................
AIM Constellation Fund.....................................................
AIM Weingarten Fund........................................................
----------------
TOTAL -- AIM EQUITY FUNDS, INC.............................................
================
</TABLE>
25
<PAGE> 30
ANNEX B
DATES OF ADVISORY AGREEMENT
<TABLE>
<CAPTION>
DATE SINCE
DATE LAST AIM HAS
SUBMITTED TO SERVED AS
A VOTE OF INVESTMENT
NAME OF COMPANY AND FUND INVESTMENT ADVISORY AGREEMENT SHAREHOLDERS* ADVISOR
- ------------------------------- --------------------------------------- ------------- -------------
<S> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Charter Fund Master Investment Advisory Agreement, September 27, September 30,
dated October 18, 1993, as amended by 1993 1988
Amendment No. 1, dated November 14,
1994, as amended by Amendment No. 2,
dated March 12, 1996
AIM Weingarten Fund Master Investment Advisory Agreement, September 27, September 30,
dated October 18, 1993, as amended by 1993 1988
Amendment No. 1, dated November 14,
1994, as amended by Amendment No. 2,
dated March 12, 1996
AIM Constellation Fund Master Investment Advisory Agreement, September 27, September 30,
dated October 18, 1993, as amended by 1993 1988
Amendment No. 1, dated November 14,
1994, as amended by Amendment No. 2,
dated March 12, 1996
</TABLE>
- ------------------------------
* The Current Advisory Agreement dated October 18, 1993 was last submitted to a
vote of shareholders in 1993 as a result of a reorganization of several AIM
Funds and the recapitalization of A I M Management Group Inc.
26
<PAGE> 31
ANNEX C
[NAME OF COMPANY]
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this .... day of ........ .., 1997, by and between
[Name of Company], a Maryland Corporation (the "Company"), with respect to its
series of shares shown on the Appendix A attached hereto, as the same may be
amended from time to time, and A I M Advisors, Inc., a Delaware corporation (the
"Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company, consisting of one or more series of investment portfolios;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Company's charter authorizes the Board of Directors of the
Company to classify or reclassify authorized but unissued shares of the Company,
and as of the date of this Agreement, the Company's Board of Directors has
authorized the issuance of [ ] series of shares representing interests in
[ ] investment portfolios (such portfolios and any other portfolios
hereafter added to the Company being referred to individually herein as a "Fund"
and collectively herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Directors. The Advisor shall give
the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the assets of the Funds or the activities in which such issuers engage,
or with respect to securities which the Advisor considers desirable for
inclusion in the Funds' assets;
27
<PAGE> 32
(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Company's
Board of Directors; and
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Company's Board of Directors;
and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.
3. Delegation of Responsibilities. Subject to the approval of the Board of
Directors and the shareholders of the Funds, the Advisor may delegate to a
sub-advisor certain of its duties enumerated in Section 2 hereof, provided that
the Advisor shall continue to supervise the performance of any such sub-advisor.
4. Control by Board of Directors. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Directors of the Company.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time under the Securities Act of 1933
and the 1940 Act;
(c) the provisions of the corporate charter of the Company, as the
same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
6. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Funds, broker-dealer selection, and negotiation
of brokerage commission rates. The Advisor's primary consideration in effecting
a security transaction will be to obtain execution at the most favorable price.
In selecting a broker-dealer to execute each particular transaction, the Advisor
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and the difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Funds on
a continuing basis. Accordingly, the price to the Funds in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Directors may from
time to time determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer that provides
brokerage and research services to the Advisor an amount of
28
<PAGE> 33
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
a particular Fund, other Funds of the Company, and to other clients of the
Advisor as to which the Advisor exercises investment discretion. The Advisor is
further authorized to allocate the orders placed by it on behalf of the Funds to
such brokers and dealers who also provide research or statistical material, or
other services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocations regularly to the Board
of Directors of the Company indicating the brokers to whom such allocations have
been made and the basis therefor. In making decisions regarding broker-dealer
relationships, the Advisor may take into consideration the recommendations of
any sub-advisor appointed to provide investment research or advisory services in
connection with the Funds, and may take into consideration any research services
provided to such sub-advisor by broker-dealers.
7. Compensation. The Company shall pay the Advisor as compensation for
services rendered to a Fund hereunder an annual fee, payable monthly, based upon
the average daily net assets of such Fund as the same is set forth in Appendix A
attached hereto. Such compensation shall be paid solely from the assets of such
Fund. The average daily net asset value of the Funds shall be determined in the
manner set forth in the corporate charter and registration statement of the
Company, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board of
Directors, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and the
Company's Board of Directors based on a finding by the Board of Directors that
the provision of such services by the Advisor is in the best interests of the
Company and its shareholders. Payment or assumption by the Advisor of any Fund
expense that the Advisor is not otherwise required to pay or assume under this
Agreement shall not relieve the Advisor of any of its obligations to the Funds
nor obligate the Advisor to pay or assume any similar Fund expense on any
subsequent occasions. Such services may include, but are not limited to:
(a) the services of a principal financial officer of the Company
(including applicable office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and records
of the Company and the Funds, including the review and calculation of daily
net asset value and the preparation of tax returns; and the services
(including applicable office space, facilities and equipment) of any of the
personnel operating under the direction of such principal financial
officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by the
Advisor; changing account designations or changing addresses; assisting in
the purchase or redemption of shares; supervising the operations of the
custodian, transfer agent(s) or dividend disbursing agent(s) for the Funds;
or otherwise providing services to shareholders of the Funds; and
29
<PAGE> 34
(c) such other administrative services as may be furnished from time
to time by the Advisor to the Company or the Funds at the request of the
Company's Board of Directors.
9. Expenses of the Funds. All of the ordinary business expenses incurred in
the operations of the Funds and the offering of their shares shall be borne by
the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the
Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
10. Expense Limitation. If, for any fiscal year, the total of all ordinary
business expenses of the Funds, including all investment advisory fees, but
excluding brokerage commissions and fees, taxes, interest and extraordinary
expenses, such as litigation, would exceed the applicable expense limitations
imposed by state securities regulations in any state in which the Funds' shares
are qualified for sale, as such limitations may be raised or lowered from time
to time, the aggregate of all such investment advisory fees shall be reduced by
the amount of such excess. The amount of any such reduction to be borne by the
Advisor shall be deducted from the monthly investment advisory fee otherwise
payable to the Advisor during such fiscal year. If required pursuant to such
state securities regulations, the Advisor will, not later than the last day of
the first month of the next succeeding fiscal year, reimburse the Funds for any
such annual operating expenses (after reduction of all investment advisory fees
in excess of such limitation). For the purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the current fiscal year which shall
have elapsed prior to the date hereof and shall include the portion of the then
current fiscal year which shall have elapsed at the date of termination of this
Agreement. The application of expense limitations shall be applied to each Fund
of the Company separately unless the laws or regulations of any state shall
require that the expense limitations be imposed with respect to the Company as a
whole.
11. Non-Exclusivity. The services of the Advisor to the Company and the
Funds are not to be deemed to be exclusive, and the Advisor shall be free to
render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It is
understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
12. Term and Approval. This Agreement shall become effective with respect
to a Fund if approved by the shareholders of such Fund, and if so approved, this
Agreement shall thereafter continue in force and effect until ,
1999, and may be continued from year to year thereafter, provided that the
continuation of the Agreement is specifically approved at least annually;
30
<PAGE> 35
(a) (i) by the Company's Board of Directors or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as defined in
Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such purpose.
13. Termination. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Company's Board of Directors or by vote of a majority of the
outstanding voting securities of the applicable Fund or by the Advisor, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act.
14. Liability of Advisor and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company shall be and that of the Advisor shall be Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046.
16. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Acts. In
addition, where the effect of a requirement of the 1940 Act or the Advisers Act
reflected in any provision of the Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Subject to the
foregoing, this Agreement shall be governed by and construed in accordance with
the laws (without reference to conflicts of law provisions) of the State of
Texas.
17. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
31
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
<TABLE>
<S> <C>
[NAME OF COMPANY]
Attest: (a Maryland corporation)
- -------------------------------------------- By: ------------------------------------------
Secretary President
(SEAL) A I M ADVISORS, INC.
Attest:
- -------------------------------------------- By: ------------------------------------------
Secretary President
(SEAL)
</TABLE>
32
<PAGE> 37
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
[NAME OF COMPANY]
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fee shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
[FUNDS]
<TABLE>
<CAPTION>
ANNUAL
NET ASSETS RATE
---------- ------
<S> <C>
[Fees will be those set forth in Annex F]
</TABLE>
33
<PAGE> 38
ANNEX D
FEES PAID TO AFFILIATES
<TABLE>
<CAPTION>
AIM
(ADMINISTRATIVE AIM FUND AIM AIM
FUND AGREEMENT) DISTRIBUTORS* MANAGEMENT INSTITUTIONAL SERVICES
- ------------------------------------- --------------- ------------ ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Charter Fund................... $ 114,489 $12,521,939 $ -0- $ 2,105 $2,264,602
AIM Constellation Fund............. 212,800 47,347,006 -0- 16,972 8,671,663
AIM Weingarten Fund................ 132,643 18,020,400 -0- 4,292 4,391,818
</TABLE>
- ---------------
* The net amount received from sales commissions and Rule 12b-1 fees, not
including amounts paid to brokers, dealers, agents and other service
providers.
34
<PAGE> 39
ANNEX E
EXECUTIVE OFFICERS
EXECUTIVE OFFICERS OF AEF
Officers of AEF serve at the pleasure of the Board and until their
successors are elected and qualified. Set forth below is certain information
regarding the executive officers of AEF.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE
NAME AGE POSITION WITH AEF DURING PAST FIVE YEARS
- ------------------------- --- ----------------------------- ---------------------------------------
<S> <C> <C> <C>
Charles T. Bauer 77 Chairman See Director table under Proposal 1.
Robert H. Graham 49 President See Director table under Proposal 1.
John J. Arthur* 52 Senior Vice President and Senior Vice President and Treasurer,
Treasurer AIM Advisors, Inc. ("AIM"); and Vice
President and Treasurer, A I M
Management Group Inc. ("AIM
Management"), A I M Capital Management,
Inc. ("AIM Capital"), A I M
Distributors, Inc. ("AIM
Distributors"), A I M Fund Services,
Inc. ("AIM Services"), A I M
Institutional Fund Services, Inc.,
("AIM Institutional"), and Fund
Management Company ("Fund Management").
Gary T. Crum 49 Senior Vice President Director and President, AIM Capital;
Director and Senior Vice President, AIM
Management, and AIM; and Director, AIM
Distributors.
Scott G. Lucas 37 Senior Vice President Director and Senior Vice President, AIM
Capital; and Vice President, AIM
Management and AIM.
Jonathan C. Schoolar 35 Senior Vice President Director and Senior Vice President, AIM
Capital; and Vice President, AIM.
Carol F. Relihan* 42 Senior Vice President and Senior Vice President, General Counsel
Secretary and Secretary, AIM; Vice President,
General Counsel and Secretary, AIM
Management; Vice President and General
Counsel, Fund Management; and Vice
President, AIM Capital, AIM
Distributors, AIM Services, and AIM
Institutional.
Dana R. Sutton 37 Vice President and Assistant Vice President and Fund Controller,
Treasurer AIM; and Assistant Vice President and
Assistant Treasurer, Fund Management.
Melville B. Cox 53 Vice President Vice President and Chief Compliance
Officer, AIM, AIM Capital, AIM
Distributors, AIM Services, AIM
Institutional and Fund Management.
Formerly, Vice President, Charles
Schwab & Co., Inc.; Assistant
Secretary, Charles Schwab Family of
Funds and Schwab Investments; Chief
Compliance Officer, Charles Schwab
Investment Management, Inc.; and Vice
President, Integrated Resources Life
Insurance Co. and Capital Life
Insurance Co.
</TABLE>
- ------------------------------
* Mr. Arthur and Ms. Relihan are married to each other.
35
<PAGE> 40
ANNEX F
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth 0.80% of the first $150
million.
0.625% of the excess over
$150 million. $ 2,750,563,943 $16,492,564 0
AIM Blue Chip Fund 0.75% of the first $350
million.
0.625% of the excess over
$350 million. $ 128,548,354 $ 256,773 ** $ 26,433
AIM Capital Development Fund 0.75% of the first $350
million.
0.625% of the excess over
$350 million. $ 273,687,609 $ 280,248 *** $ 144,946
AIM Charter Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $150 million.
0.625% of the excess over
$150 million. $ 3,192,471,415 $16,529,891 $ 156,975
AIM Constellation Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $150 million.
0.625% of the excess over
$150 million. $11,548,540,962 $57,614,412 $1,869,383
AIM Weingarten Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $350 million.
0.625% of the excess over
$350 million. $ 5,305,435,087 $29,960,379 $1,458,804
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C>
* AIM reimbursed expenses with respect to the following funds: AIM Municipal Bond Fund, $13,200; AIM Global
Growth Fund, $11,719; AIM Global Income Fund, $18,300; AIM V.I. Global Utilities Fund, $13,800; Liquid Assets
Portfolio, $116,930; Prime Portfolio, $61,100; Treasury Portfolio, $113,500; Treasury TaxAdvantage Portfolio,
$25,600; and Cash Reserve Portfolio, $20,000.
** For the period 06/03/96 through 10/31/96
*** For the period 06/17/96 through 10/31/96
</TABLE>
36
<PAGE> 41
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM FUNDS GROUP
AIM Balanced Fund 0.75% of the first $150
million.
0.50% of the excess over
$150 million. $ 164,874,356 $ 666,619 $ 24,176
AIM Global Utilities Fund 0.60% of the first $200
million.
0.50% over $200 million up
to $500 million.
0.40% over $500 million up
to $1 billion.
0.30% of the excess over
$1 billion. $ 241,317,685 $ 1,256,220 0
AIM Growth Fund 0.80% of the first $150
million.
0.625% of excess over $150
million. $ 306,250,064 $ 1,715,406 0
AIM High Yield Fund 0.625% of the first $200
million.
0.55% over $200 million to
$500 million.
0.50% over $500 million to
$1 billion.
0.45% of the excess over
$1 billion. $ 1,444,032,572 $ 5,717,303 0
AIM Income Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 295,583,696 $ 1,176,249 0
AIM Intermediate Government Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 237,617,705 $ 996,681 0
</TABLE>
37
<PAGE> 42
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM Money Market Fund 0.55% of the first $1
billion.
0.50% of the excess over
$1 billion. $ 584,793,680 $ 2,589,822 0
AIM Municipal Bond Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 306,280,329 $ 1,356,225 0
AIM Value Fund 0.80% of the first $150
million.
0.625% of excess over $150
million. $ 6,269,483,246 $24,829,687 $ 502,799
AIM INTERNATIONAL FUNDS, INC.
AIM Global Aggressive Growth Fund 0.90% of the first $1
billion.
0.85% of the excess over
$1 billion. $ 1,726,533,976 $ 8,751,918 0
AIM Global Growth Fund 0.85% of the first $1
billion.
0.80% of the excess over
$1 billion. $ 236,819,172 $ 1,162,771 0
AIM Global Income Fund 0.70% of the first $1
billion.
0.65% of the excess over
$1 billion. $ 38,713,770 $ 0 $ 182,596
AIM International Equity Fund 0.95% of the first $1
billion.
0.90% of the excess over
$1 billion. $ 1,476,749,468 $10,085,495 $ 299,147
AIM INVESTMENT SECURITIES FUNDS
Limited Maturity Treasury Portfolio 0.20% of the first $500
million.
0.175% of the excess over
$500 million. $ 502,515,805 $ 933,207 0
</TABLE>
38
<PAGE> 43
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM SUMMIT FUND, INC. 1.00% of the first $10
million.
0.75% over $10 million to
$150 million.
0.625% over $150 million. $ 1,261,008,244 $ 7,360,028**** 0
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund 0.35%. $ 30,014,343 $ 101,649 0
AIM Tax-Exempt Bond Fund of Connecticut 0.50%. $ 39,355,441 $ 0 $ 198,182
Intermediate Portfolio 0.30% of the first $500
million.
0.25% over $500 million to
$1 billion.
0.20% of the excess over
$1 billion. $ 83,066,447 $ 232,893 0
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 212,152,423 $ 882,870 0
AIM V.I. Diversified Income Fund 0.60% of the first $250
million.
0.55% of the excess over
$250 million. $ 44,630,145 $ 193,008 0
AIM V.I. Global Utilities Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 8,393,967 0 $ 32,703
</TABLE>
- ---------------
**** Of the $7,360,028 paid to AIM, $2,442,907 was paid to TradeStreet pursuant
to a sub-advisory agreement.
39
<PAGE> 44
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM V.I. Government Securities Fund 0.50% of the first $250
million.
0.45% of the excess over
$250 million. $ 19,545,391 $ 71,080 0
AIM V.I. Growth Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 102,600,112 $ 434,620 0
AIM V.I. Growth and Income Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 38,567,212 $ 46,017 $ 67,802
AIM V.I. International Equity Fund 0.75% of the first $250
million.
0.70% of the excess over
$250 million. $ 82,256,855 $ 457,559 0
AIM V.I. Money Market Fund 0.40% of the first $250
million.
0.35% of the excess over
$250 million. $ 65,505,754 $ 168,901 0
AIM V.I. Value Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 257,211,787 $ 1,078,007 0
SHORT-TERM INVESTMENTS CO.
Liquid Assets Portfolio 0.15%. $ 2,086,944,322 $ 125,264 $2,562,094
Prime Portfolio 0.20% of the first $100
million.
0.15% over $100 million up
to $200 million.
0.10% over $200 million up
to $300 million.
0.06% over $300 million up
to $1.5 billion.
0.05% over $1.5 billion. $ 6,151,948,355 $ 3,007,431 0
</TABLE>
40
<PAGE> 45
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio 0.15% of the first $300
million.
0.06% over $300 million up
to $1.5 billion.
0.05% of the excess over
$1.5 billion. $ 3,703,891,140 $ 2,227,788 0
Treasury TaxAdvantage Portfolio 0.20% of the first $250
million.
0.15% over $250 million up
to $500 million.
0.10% of the excess over
$500 million. $ 457,196,150 $ 675,795 $ 116,126
TAX-FREE INVESTMENTS CO.
Cash Reserve Portfolio 0.25% of the first $500
million.
0.20% of the excess over
$500 million. $ 1,044,178,428 $ 1,819,232 $ 690,397
</TABLE>
41
<PAGE> 46
ANNEX G
DIRECTORS AND EXECUTIVE OFFICERS OF AIM CAPITAL
The following table sets forth certain information regarding the Directors
and Executive Officers of AIM Capital.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE
NAME AGE POSITION WITH AIM CAPITAL DURING PAST FIVE YEARS
- ------------------------- ---- ----------------------------- --------------------------------------
<S> <C> <C> <C>
Charles T. Bauer 77 Director and Chairman See Director table under Proposal 1.
Gary T. Crum 49 Director and President Director and Senior Vice President,
AIM Management Group, Inc. ("AIM
Management"), and AIM Advisors, Inc.
("AIM"); and Director, AIM
Distributors, Inc. ("AIM
Distributors").
Robert H. Graham 49 Director and Senior Vice See Director table under Proposal 1.
President
Scott G. Lucas 37 Director and Senior Vice Vice President, AIM Management and
President AIM.
Jonathan C. Schoolar 35 Director and Senior Vice Vice President, AIM.
President
William H. Kleh 51 Director and Vice President Director and Senior Vice President,
AIM; Director, Fund Management Company
("Fund Management"), Senior Vice
President, AIM Management, Vice
President, AIM Distributors.
John J. Arthur 52 Vice President and Treasurer Senior Vice President and Treasurer,
AIM; and Vice President and Treasurer,
AIM Management, AIM Distributors,
A I M Fund Services, Inc. ("AIM
Services"), A I M Institutional Fund
Services, Inc., ("AIM Institutional"),
and Fund Management.
Melville B. Cox 53 Vice President and Chief Vice President and Chief Compliance
Compliance Officer Officer, AIM, AIM Distributors, AIM
Services, AIM Institutional and Fund
Management. Formerly, Vice President,
Charles Schwab & Co., Inc.; Assistant
Secretary, Charles Schwab Family of
Funds and Schwab Investments; Chief
Compliance Officer, Charles Schwab
Investment Management, Inc.; and Vice
President, Integrated Resources Life
Insurance Co. and Capital Life
Insurance Co.
Robert G. Alley 47 Senior Vice President Vice President, AIM. Formerly, Senior
Fixed Income Money Manager, Waddell
and Reed, Inc.
Stuart W. Coco 41 Senior Vice President Vice President, AIM.
Karen Dunn Kelley 36 Senior Vice President Vice President, AIM.
Ronald P. Stein 37 Senior Vice President Vice President, AIM. Formerly, Head of
Equity Trading, Bass Brothers.
</TABLE>
42
<PAGE> 47
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE
NAME AGE POSITION WITH AIM CAPITAL DURING PAST FIVE YEARS
- ------------------------- ---- ----------------------------- --------------------------------------
<S> <C> <C> <C>
Nancy L. Martin 39 Vice President, General Assistant Vice President, Assistant
Counsel, Assistant Secretary General Counsel, Assistant Secretary,
AIM; and Assistant General Counsel,
Assistant Secretary, AIM Management,
AIM Distributors, AIM Services, AIM
Institutional, Fund Management.
</TABLE>
43
<PAGE> 48
ANNEX H
AIM EQUITY FUNDS, INC.
(AIM CHARTER FUND)
(AIM CONSTELLATION FUND)
(AIM WEINGARTEN FUND)
MASTER SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of this day of , 1997, by and
between A I M Advisors, Inc., a Delaware corporation (the "Advisor") and A I M
Capital Management, Inc., a Texas corporation (the "Sub-Advisor").
RECITALS
WHEREAS, AIM Equity Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-end,
diversified management investment company, consisting of multiple series of
investment portfolios;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940 (the "Advisers Act"), as amended, as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Sub-Advisor is registered under the Advisers Act, as amended,
as an investment advisor and engages in the business of acting as an investment
advisor;
WHEREAS, the Company's charter authorizes the Board of Directors of the
Company to classify or reclassify authorized but unissued shares of the Company,
and as of the date of this Agreement, the Company's Board of Directors has
authorized the issuance of six series of shares representing interests in six
investment portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM
Capital Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM
Weingarten Fund (such series, together with any future series, are collectively
referred to herein as the "Portfolios");
WHEREAS, the Advisor has entered into a Master Investment Advisory
Agreement of even date herewith with the Company (the "Investment Advisory
Agreement"), pursuant to which the Advisor shall act as investment advisor with
respect to the Portfolios; and
WHEREAS, pursuant to Section 3 ("Delegation of Responsibilities") of the
Investment Advisory Agreement, the Advisor wishes to retain the Sub-Advisor for
purposes of rendering advisory services to the Advisor in connection with the
AIM Constellation Fund, AIM Weingarten Fund, and AIM Charter Fund (the "Funds"),
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment of Sub-Advisor. The Advisor hereby appoints the Sub-Advisor
to render investment research and advisory services to the Advisor with respect
to the Funds, under the supervision of the Advisor and subject to the approval
and direction of the Company's Board of Directors, and the Sub-Advisor hereby
accepts such appointment, all subject to the terms and conditions contained
herein.
44
<PAGE> 49
2. Investment Analysis. The duties of the Sub-Advisor shall include:
(a) obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the Funds or the activities in which such issuers engage, or with
respect to securities which the Sub-Advisor considers desirable for
inclusion in the Funds' investment portfolios;
(b) determining which issuers and securities shall be represented in
the Funds' investment portfolios and regularly reporting thereon to the
Advisor and, at the request of the Advisor, to the Company's Board of
Directors; and
(c) formulating and implementing continuing programs for the purchases
and sales of the securities of such issuers and regularly reporting thereon
to the Advisor and, at the request of the Advisor, to the Company's Board
of Directors.
3. Control by Board of Directors. Any investment program undertaken by the
Sub-Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Advisor with respect to the Funds, shall at all times be
subject to any directives of the Board of Directors of the Company.
4. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time, under the Securities Act of 1933
and the 1940 Act;
(c) the provisions of the corporate charter of the Company, as the
same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state or federal law.
5. Compensation. The Advisor shall pay to the Sub-Advisor, as compensation
for services rendered hereunder to a Fund, an annual fee, payable monthly, equal
to 50% of the fee received by the Advisor from the Company with respect to such
Fund pursuant to the Investment Advisory Agreement.
6. Expenses of the Funds. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of its shares shall be borne by
the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, auditing, or governmental fees, the cost of preparing
share certificates, custodian, transfer and shareholder service agent costs,
expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to directors and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Company on behalf
of the Funds in connection with membership in investment company organizations
and the cost of printing copies of the prospectuses and statements of additional
information distributed to the Funds' shareholders.
45
<PAGE> 50
7. Non-Exclusivity. The services of the Sub-Advisor to the Advisor with
respect to the Company and the Funds are not deemed to be exclusive, and the
Sub-Advisor shall be free to render investment advisory and administrative or
other services to others (including other investment companies) and to engage in
other activities. It is understood and agreed that officers and directors of the
Sub-Advisor may serve as officers or directors of the Advisor or of the Company,
and that officers or directors of the Advisor or of the Company may serve as
officers or directors of the Sub-Advisor to the extent permitted by law; and
that the officers and directors of the Sub-Advisor are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, directors or trustees of any
other firm or trust, including other investment advisory companies.
8. Term and Approval. This Agreement shall become effective with respect
to a Fund if approved by the shareholders of such Fund, and if so approved, this
Agreement shall thereafter continue in force and effect until , 1999, and
may be continued from year to year thereafter, provided that the continuation of
the Agreement is specifically approved at least annually:
(a)(i) by the Company's Board of Directors or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as defined
under Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such purpose.
9. Termination. This Agreement may be terminated as to any Fund at any
time, without the payment of any penalty, by vote of the Company's Board of
Directors or by vote of a majority of such Fund's outstanding voting securities,
or by the Advisor, or by the Sub-Advisor on sixty (60) days' written notice to
the other party and to the Company. The notice provided for herein may be waived
by either party. This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" for purposes of this paragraph having the
meaning defined in Section 2(a)(4) of the 1940 Act.
10. Liability of Sub-Advisor and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Sub-Advisor or any of its
officers, directors or employees, the Sub-Advisor shall not be subject to
liability to the Advisor for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
11. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to such address as may be
designated for the receipt of such notice, with a copy to the Company. Until
further notice, it is agreed that the address of the Company, that of the
Advisor and that of the Sub-Advisor shall be 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046.
12. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act or the Advisers Act shall be resolved
by reference to such term or provision of the 1940 Act or the Advisers Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Acts.
In addition, where the effect of a requirement of
46
<PAGE> 51
the 1940 Act or the Advisers Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective duly authorized officers as of the day
and year first written above.
A I M ADVISORS, INC.
Attest:
By:
- --------------------------------- -------------------------------------
Secretary President
(SEAL)
A I M CAPITAL MANAGEMENT, INC.
Attest:
By:
- --------------------------------- -------------------------------------
Secretary President
(SEAL)
47
<PAGE> 52
ANNEX I
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT -- AEF
The following table sets forth certain information regarding the ownership
of the shares of Common Stock of AEF by directors and executive officers of AEF.
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY PERCENT
NAME OF DIRECTOR/EXECUTIVE OFFICER FUND (CLASS) AS OF DECEMBER 3, 1996 OF CLASS
- --------------------------------------------- ------------- ---------------------- --------
<S> <C> <C> <C>
Charles T. Bauer.............................
Bruce L. Crockett............................
Owen Daly II.................................
Carl Frischling..............................
Robert H. Graham.............................
John F. Kroeger..............................
Lewis F. Pennock.............................
Ian W. Robinson..............................
Louis S. Sklar...............................
All Directors and Executive Officers.........
</TABLE>
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS
To the best knowledge of AEF, the names and addresses of the record holders
of 5% or more of the outstanding shares of AEF as of the Record Date, and the
amount of the outstanding shares held of record owned by such holders are set
forth below. AEF has no knowledge of shares held beneficially.
<TABLE>
<CAPTION>
NAME AND
ADDRESS OF SHARES OWNED OF RECORD
FUND (CLASS) RECORD OWNERS AS OF DECEMBER 3, 1996 PERCENT OF CLASS
- --------------------------------------- ------------- ---------------------- ----------------
<S> <C> <C> <C>
</TABLE>
48
<PAGE> 53
APPENDIX 1
AIM CHARTER FUND
A SERIES OF AIM EQUITY FUNDS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 7, 1997
The undersigned hereby appoints Charles T. Bauer, Robert H. Graham and Carol F.
Relihan, and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Annual Meeting of Shareholders of the Fund indicated above, a series of
AIM Equity Funds, Inc., on February 7, 1997 at 2 p.m. Central time, and at
any adjournment thereof, all of the shares of the Fund which the undersigned
would be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND
RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES NAMED ON THIS PROXY AND FOR APPROVAL OF THE OTHER PROPOSALS.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
ON THIS PROXY CARD. All joint owners should
sign. When signing as executor, administrator,
attorney, trustee or guardian or as custodian
for a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the partnership
name.
___________________________________________
Signature
___________________________________________
Signature (if held jointly)
Group B
___________________________________________
Date
<PAGE> 54
<TABLE>
<S> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS.
THE DIRECTORS RECOMMEND VOTING "FOR" ALL PROPOSALS.
TO VOTE, FILL IN BOX COMPLETELY
FOR ALL WITHHOLD AUTHORITY
1. ELECTION OF DIRECTORS -- TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, NOMINEES FOR ALL NOMINEES
STRIKE A LINE THROUGH THE NAME BELOW. / / / /
Nominees: Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Carl Frischling,
Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson
and Louis S. Sklar
FOR AGAINST ABSTAIN
2. Proposal to approve a new Master Investment Advisory Agreement for the Fund. / / / / / /
3. Proposal to approve a new Master Sub-Advisory Agreement for the Fund. / / / / / /
4. Proposal to eliminate fundamental investment policy restricting investments in / / / / / /
other investment companies and to amend certain related fundamental investment
policies.
5. Proposal to amend fundamental investment policy on investments in puts, calls, / / / / / /
straddles and spreads.
6. Proposal to eliminate fundamental investment policy on investing in companies / / / / / /
with less than five years of continuous operations.
7. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent / / / / / /
accountants for the Fund.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 55
AIM CONSTELLATION FUND
A SERIES OF AIM EQUITY FUNDS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 7, 1997
The undersigned hereby appoints Charles T. Bauer, Robert H. Graham and Carol F.
Relihan, and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Annual Meeting of Shareholders of the Fund indicated above, a series of
AIM Equity Funds, Inc., on February 7, 1997 at 2 p.m. Central time, and at
any adjournment thereof, all of the shares of the Fund which the undersigned
would be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND
RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES NAMED ON THIS PROXY AND FOR APPROVAL OF THE OTHER PROPOSALS.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
ON THIS PROXY CARD. All joint owners should
sign. When signing as executor, administrator,
attorney, trustee or guardian or as custodian
for a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the partnership
name.
___________________________________________
Signature
___________________________________________
Signature (if held jointly)
Group B
___________________________________________
Date
<PAGE> 56
<TABLE>
<S> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS.
THE DIRECTORS RECOMMEND VOTING "FOR" ALL APPLICABLE PROPOSALS.
TO VOTE, FILL IN BOX COMPLETELY
FOR ALL WITHHOLD AUTHORITY
1. ELECTION OF DIRECTORS -- TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, NOMINEES FOR ALL NOMINEES
STRIKE A LINE THROUGH THE NAME BELOW. / / / /
Nominees: Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Carl Frischling,
Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson
and Louis S. Sklar
FOR AGAINST ABSTAIN
2. Proposal to approve a new Master Investment Advisory Agreement for the Fund. / / / / / /
3. Proposal to approve a new Master Sub-Advisory Agreement for the Fund. / / / / / /
4. Proposal to eliminate fundamental investment policy restricting investments in / / / / / /
other investment companies and to amend certain related fundamental investment
policies.
5. Proposal to amend fundamental investment policy on investments in puts, calls,
straddles and spreads. (Applies only to AIM Charter Fund and AIM Weingarten Fund) / / / / / /
6. Proposal to eliminate fundamental investment policy on invsting in companies
with less than five years of continuous operations. (Applies only to
AIM Charter Fund) / / / / / /
7. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent / / / / / /
accountants for the Fund.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 57
AIM WEINGARTEN FUND
A SERIES OF AIM EQUITY FUNDS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 7, 1997
The undersigned hereby appoints Charles T. Bauer, Robert H. Graham and Carol F.
Relihan, and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Annual Meeting of Shareholders of the Fund indicated above, a series of
AIM Equity Funds, Inc., on February 7, 1997 at 2 p.m. Central time, and at
any adjournment thereof, all of the shares of the Fund which the undersigned
would be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND
RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES NAMED ON THIS PROXY AND FOR APPROVAL OF THE OTHER PROPOSALS.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
ON THIS PROXY CARD. All joint owners should
sign. When signing as executor, administrator,
attorney, trustee or guardian or as custodian
for a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the partnership
name.
___________________________________________
Signature
___________________________________________
Signature (if held jointly)
Group B
___________________________________________
Date
<PAGE> 58
<TABLE>
<S> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS.
THE DIRECTORS RECOMMEND VOTING "FOR" ALL APPLICABLE PROPOSALS.
TO VOTE, FILL IN BOX COMPLETELY
FOR ALL WITHHOLD AUTHORITY
1. ELECTION OF DIRECTORS -- TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, NOMINEES FOR ALL NOMINEES
STRIKE A LINE THROUGH THE NAME BELOW. / / / /
Nominees: Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Carl Frischling,
Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson
and Louis S. Sklar
FOR AGAINST ABSTAIN
2. Proposal to approve a new Master Investment Advisory Agreement for the Fund. / / / / / /
3. Proposal to approve a new Master Sub-Advisory Agreement for the Fund. / / / / / /
4. Proposal to eliminate fundamental investment policy restricting investments in / / / / / /
other investment companies and to amend certain related fundamental investment
policies.
5. Proposal to amend fundamental investment policy on investments in puts, calls, / / / / / /
straddles and spreads.
6. Proposal to eliminate fundamental investment policy on investing in companies / / / / / /
with less than five years of continuous operations. (Applies only to AIM
Charter Fund).
7. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent / / / / / /
accountants for the Fund.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
