<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
AIM EQUITY FUNDS, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
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(4) Date Filed:
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<PAGE> 2
AIM EQUITY FUNDS, INC.
AIM AGGRESSIVE GROWTH FUND
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM DENT DEMOGRAPHIC TRENDS FUND
AIM LARGE CAP BASIC VALUE FUND
AIM LARGE CAP GROWTH FUND
AIM MID CAP GROWTH FUND
AIM WEINGARTEN FUND
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
TO THE SHAREHOLDERS:
AIM Equity Funds, Inc. (the company) is holding a special meeting of
shareholders on Wednesday, May 3, 2000 at 3:00 p.m., Central time. The place of
the meeting is the company's offices at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
The company, a Maryland corporation, consists of the following series
portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic
Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large
Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund. This proxy
statement relates to all of these series portfolios except for AIM Emerging
Growth Fund (together, the funds).
The purposes of the meeting are as follows:
(1) To elect ten directors, each of whom will serve until his or her successor
is elected and qualified.
(2) To approve an Agreement and Plan of Reorganization which provides for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of AIM
Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund,
AIM Charter Fund, AIM Constellation Fund, AIM Large Cap Growth Fund and AIM
Weingarten Fund.
<PAGE> 3
(5) To approve changing the investment objectives of AIM Blue Chip Fund and AIM
Capital Development Fund so that they are non-fundamental.
(6) To approve changing the investment objective of AIM Aggressive Growth Fund
and making it non-fundamental.
(7) To ratify the selection of KPMG LLP as independent accountants for each of
the funds for the fiscal year ending in 2000.
(8) To transact such other business as may properly come before the meeting.
You may vote at the meeting if you are the record owner of shares of the
funds as of the close of business on February 18, 2000. If you attend the
meeting, you may vote your shares in person. If you expect to attend the meeting
in person, please notify the company by calling 1-800-952-3502. If you do not
expect to attend the 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. 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.
By order of the Board,
Carol F. Relihan
Secretary
March 9, 2000
2
<PAGE> 4
AIM EQUITY FUNDS, INC.
AIM AGGRESSIVE GROWTH FUND
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM DENT DEMOGRAPHIC TRENDS FUND
AIM LARGE CAP BASIC VALUE FUND
AIM LARGE CAP GROWTH FUND
AIM MID CAP GROWTH FUND
AIM WEINGARTEN FUND
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
Toll Free: (800) 454-0327
- --------------------------------------------------------------------------------
PROXY STATEMENT
DATED MARCH 9, 2000
- --------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
WHO IS ASKING FOR MY VOTE?
The Board of Directors (the Board) of AIM Equity Funds, Inc. (the company)
is sending you this proxy statement and the enclosed proxy card (or cards) on
behalf of the ten separate series portfolios of the company listed above
(together, the funds). The company has an eleventh series portfolio, AIM
Emerging Growth Fund, that had no outstanding shares on the record date. The
Board is soliciting your proxy to vote at the 2000 special meeting of
shareholders of the company (the meeting).
WHEN AND WHERE WILL THE MEETING BE HELD?
The meeting will be held at the company's offices, 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, at 3:00 p.m., Central time, on Wednesday, May 3,
2000. If you expect to attend the meeting in person, please notify the company
by calling 1-800-952-3502.
1
<PAGE> 5
WHAT PROPOSALS APPLY TO MY FUND?
The following table summarizes each proposal to be presented at the meeting
and the funds whose shareholders the Board is soliciting with respect to each
proposal:
<TABLE>
<CAPTION>
PROPOSAL AFFECTED FUNDS
-------- --------------
<S> <C>
1. Electing directors All funds
2. Approving an Agreement and Plan of All funds
Reorganization, under which the
company will reorganize as a Delaware
business trust
3. Approving a new advisory agreement All funds
with A I M Advisors, Inc.
4. Changing the funds' fundamental AIM Aggressive Growth Fund (Aggressive
investment restrictions Growth), AIM Blue Chip Fund (Blue Chip),
AIM Capital Development Fund (Capital
Development), AIM Charter Fund (Charter),
AIM Constellation Fund (Constellation),
AIM Large Cap Growth Fund (Large Cap
Growth) and AIM Weingarten Fund
(Weingarten)
5. Changing the investment objectives of Blue Chip and Capital Development
Blue Chip and Capital Development so
that they are non-fundamental
6. Changing the investment objective of Aggressive Growth
Aggressive Growth and making it non-
fundamental
7. Ratifying the Board's selection of All funds
independent accountants
8. Considering other matters All funds
</TABLE>
WHO IS ELIGIBLE TO VOTE?
The Board is sending this proxy statement, the attached notice of meeting
and the enclosed proxy card on or about March 9, 2000 to all shareholders
entitled to vote. Shareholders who owned shares of common stock of any class of
a fund at the close of business on February 18, 2000 (the record date) are
entitled to vote. The number of shares outstanding on the record date for each
class of each fund is in Appendix A. Each share of common stock of a fund that
you own entitles you to one vote on each proposal set forth in the table above
that applies to that fund (a fractional share has a fractional vote).
Only shareholders of the funds are voting on Proposals 1 through 9 because
there were no shareholders of AIM Emerging Growth Fund on the record date.
2
<PAGE> 6
WHAT ARE THE DIFFERENT WAYS I CAN VOTE?
Voting by Proxy
Whether you plan to attend the meeting or not, the Board urges you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the meeting and vote.
The Board has named Robert H. Graham and Gary T. Crum as proxies. If you
properly fill in your proxy card and send it to the company in time to vote,
your proxy will vote your shares as you have directed. If you sign the proxy
card but do not make specific choices, your proxy will vote your shares with
respect to Proposals 1 through 7 as recommended by the Board.
If any other matter is presented, your proxy will vote in accordance with
his or her best judgment. At the time this proxy statement was printed, the
Board knew of no matters that needed to be acted on at the meeting other than
those discussed in this proxy statement.
If you appoint a proxy, you may revoke it at any time before it is
exercised. You can do this by sending in another proxy with a later date or by
notifying the company's secretary in writing before the meeting that you have
revoked your proxy.
Voting in Person
If you do attend the meeting and wish to vote in person, you will be given
a ballot when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring a letter from the nominee
indicating that you are the beneficial owner of the shares on the record date
and authorizing you to vote.
Voting by Telephone
You may vote by telephone if you are contacted by Shareholder
Communications Corporation.
Voting on the Internet
Shareholders of Class A, Class B and Class C shares of the funds may also
vote their shares on the Internet at the funds' website at
http://www.aimfunds.com by following instructions that appear on the enclosed
proxy insert.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that shareholders vote FOR each of the proposals
described in this proxy statement.
3
<PAGE> 7
WHAT IS THE QUORUM REQUIREMENT?
A quorum of shareholders is necessary to hold a valid meeting. The presence
in person or by proxy of shareholders entitled to cast thirty percent (30%) of
all votes entitled to be cast at the meeting shall constitute a quorum at all
meetings of the shareholders, except with respect to any matter which by law or
the Charter of the company requires the separate approval of one or more classes
or series of the capital stock of the company, in which case the holders of
one-third of the shares of each such class or series (or of such classes or
series voting together as a single class) entitled to vote on the matter shall
constitute a quorum.
Under rules applicable to broker-dealers, if your broker holds your shares
in its name, the broker will be entitled to vote your shares on Proposals 1 and
7 (election of directors and ratification of selection of accountants) even if
it has not received instructions from you. Your broker will not be entitled to
vote on Proposals 2, 3, 4, 5, 6 or 8 (approving an Agreement and Plan of
Reorganization for your fund's company, approving a new advisory agreement for
your fund, changing your fund's investment restrictions, making the investment
objectives of Blue Chip and Capital Development non-fundamental, changing the
investment objective of Aggressive Growth and making it non-fundamental, and
considering other matters) unless it has received instructions from you. If your
broker does not vote your shares on Proposals 2, 3, 4, 5, 6 or 8 because it has
not received instructions from you, these shares will be considered broker
non-votes.
Broker non-votes and abstentions with respect to any proposal will count as
present for establishing a quorum.
WHAT IS THE VOTE NECESSARY TO APPROVE EACH PROPOSAL?
The affirmative vote of a plurality of votes cast is necessary to elect the
directors, meaning that the nominees receiving the most votes will be elected
(Proposal 1). In an uncontested election of directors, the plurality requirement
is not a factor.
The affirmative vote of a majority of the outstanding shares of the company
entitled to vote at the meeting is required to approve the Agreement and Plan of
Reorganization to reorganize the company as a Delaware business trust (Proposal
2). Broker non-votes and abstentions will not count as votes cast and will have
the effect of votes against Proposal 2.
4
<PAGE> 8
The affirmative vote 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 the funds' new advisory agreement (Proposal 3);
- approve new fundamental investment restrictions for Aggressive Growth,
Blue Chip, Capital Development, Charter, Constellation, Large Cap Growth
and Weingarten (Proposal 4);
- make non-fundamental the investment objective of Blue Chip and Capital
Development (Proposal 5); and
- change the investment objective of Aggressive Growth and make it non-
fundamental (Proposal 6).
The 1940 Act defines a majority of the outstanding voting securities of a
fund (a 1940 Act majority) as the lesser of (a) the vote of holders of 67% or
more of the voting securities of the fund present in person or by proxy, 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 voting securities of the fund. Broker non-votes and
abstentions will not count as votes cast and will have the effect of votes
against Proposals 3 through 6.
The affirmative vote of a majority of votes cast is necessary to ratify the
selection of KPMG LLP as your fund's independent accountants (Proposal 7). For
Proposal 7, abstentions will not count as votes cast and will have no effect on
the outcome of the vote.
CAN THE MEETING BE ADJOURNED?
The proxies may propose to adjourn the meeting to permit further
solicitation of proxies or for other purposes. Any such adjournment will require
the affirmative vote of a majority of the votes cast.
HOW CAN I OBTAIN MORE INFORMATION ABOUT THE FUNDS?
UPON YOUR REQUEST, EACH FUND WILL FURNISH YOU A FREE COPY OF ITS MOST
RECENT ANNUAL REPORT AND THE MOST RECENT SEMIANNUAL REPORT SUCCEEDING THE ANNUAL
REPORT, IF ANY. YOU SHOULD DIRECT YOUR REQUEST TO A I M FUND SERVICES, INC. AT
P.O. BOX 4739, HOUSTON, TX 77210-4739 OR BY CALLING 1-800-347-4246.
PROPOSAL 1: ELECTION OF DIRECTORS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THE ELECTION OF DIRECTORS?
Proposal 1 applies to all shareholders of all funds.
5
<PAGE> 9
WHO ARE THE NOMINEES FOR DIRECTOR?
For election of directors at the meeting, the Board has approved the
nomination of Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Edward K. Dunn,
Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Prema Mathai-Davis,
Lewis F. Pennock and Louis S. Sklar, each to serve as director until his or her
successor is elected and qualified.
The proxies will vote for the election of these nominees unless you
withhold authority to vote for any or all of them in the proxy. Each of the
nominees has indicated that he or she is willing to serve as 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 the
company, as defined in the 1940 Act (the independent directors), may recommend.
All of the nominees presently are directors of the company. The nominees
also serve as directors, trustees or officers of the following open-end
management investment companies advised or managed by A I M Advisors, Inc.
(AIM): AIM Advisor Funds, Inc., AIM Equity Funds, Inc., AIM Funds Group, AIM
International Funds, Inc., AIM Investment Securities Funds, AIM Special
Opportunities Funds, AIM Summit Fund, Inc., AIM Tax-Exempt Funds, Inc., AIM
Variable Insurance Funds, Inc., Short-Term Investments Co., Short-Term
Investments Trust and Tax-Free Investments Co. (these investment companies and
their series portfolios, if any, are referred to collectively as the AIM funds).
Robert H. Graham also serves as a director or trustee and officer of other open-
end and closed-end management investment companies managed or advised by AIM. No
director or nominee is a party adverse to the company or any of its affiliates
in any material pending legal proceedings, nor does any director or nominee have
an interest materially adverse to the company.
6
<PAGE> 10
The following table sets forth information concerning the nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING PAST
NAME, ADDRESS AND AGE DIRECTOR SINCE 5 YEARS
- --------------------- ------------------ --------------------------------
<S> <C> <C>
+*Charles T. Bauer (81) May 20, 1988 Director and Chairman, A I M
11 Greenway Plaza Management Group Inc.; A I M
Suite 100 Advisors, Inc., A I M Capital
Houston, TX 77046-1173 Management, Inc.; A I M
Distributors, Inc.; A I M Fund
Services, Inc. and Fund
Management Company; and
Executive Vice Chairman and
Director, AMVESCAP PLC.
+Bruce L. Crockett (55) October 4, 1993 Director, ACE Limited (insurance
906 Frome Lane company). Formerly, Director,
McLean, VA 22102 President and Chief Executive
Officer, COMSAT Corporation; and
Chairman, Board of Governors of
INTELSAT (international
communications company).
Owen Daly II (75) May 24, 1988 Formerly, Director, Cortland
Six Blythewood Road Trust Inc. (investment company),
Baltimore, MD 21210 CF & I Steel Corp., Monumental Life
Insurance Company and Monumental
General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
Edward K. Dunn, Jr. (64) March 10, 1998 Chairman of the Board of
2 Hopkins Plaza Directors, Mercantile Mortgage
8th Floor, Suite 805 Corporation. Formerly, Vice
Baltimore, MD 21201 Chairman of the Board of
Directors and President and
Chief Operating Officer,
Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile
Bankshares.
Jack M. Fields (48) March 11, 1997 Chief Executive Officer, Texana
Jetero Plaza, Suite E Global, Inc. (foreign trading
8810 Will Clayton Parkway company) and Twenty First
Humble, TX 77338 Century Group, Inc. (a
governmental affairs company);
and Director, Telscape
International and Administaff.
Formerly, Member of the U.S.
House of Representatives.
</TABLE>
+ Does not include years of service as a director or trustee of any predecessor
funds.
* Mr. Bauer is an interested person of AIM and 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 AMVESCAP
PLC, which, through A I M Management Group Inc., owns all of the outstanding
stock of AIM.
7
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING PAST
NAME, ADDRESS AND AGE DIRECTOR SINCE 5 YEARS
- --------------------- ------------------ --------------------------------
<S> <C> <C>
**Carl Frischling (63) May 24, 1988 Partner, Kramer Levin Naftalis &
919 Third Avenue Frankel LLP (law firm). Formerly
New York, NY 10022 Partner, Reid & Priest (law
firm).
***Robert H. Graham (53) May 10, 1994 Director, President and Chief
11 Greenway Plaza Executive Officer, A I M
Suite 100 Management Group Inc.; Director
Houston, TX 77046-1173 and President, A I M Advisors,
Inc.; Director and Senior Vice
President, A I M Capital
Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund
Management Company; and Director
and Chief Executive Officer,
Managed Products, AMVESCAP PLC.
Prema Mathai-Davis (49) September 10, 1998 Chief Executive Officer, YWCA of
350 Fifth Avenue, Suite 301 the U.S.A.
New York, NY 10118
+Lewis F. Pennock (57) May 24, 1988 Partner, Pennock & Cooper (law
6363 Woodway, Suite 825 firm).
Houston, TX 77057
Louis S. Sklar (60) September 27, 1989 Executive Vice President,
The Williams Tower Development and Operations,
50th Floor Hines Interests Limited
2800 Post Oak Boulevard Partnership (real estate
Houston, TX 77056 development).
</TABLE>
+ Does not include years of service as a director or trustee of any
predecessor funds.
** Mr. Frischling is an interested person of the company, as defined in the
1940 Act, primarily because of payments received by his law firm from the
company for services to the independent directors of the company.
*** Mr. Graham is an interested person of AIM and 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
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM.
WHAT ARE THE RESPONSIBILITIES OF THE BOARD?
The Board is responsible for the general oversight of the funds' business
and for assuring that the funds are managed in the best interests of each fund's
respective shareholders. The Board periodically reviews the funds' investment
performance as well as the quality of other services provided to the funds and
their shareholders by each of the fund's service providers, including AIM and
its affiliates. At least annually, the Board reviews the fees paid by the
company for these services and the overall level of the funds' operating
expenses.
8
<PAGE> 12
WHY ARE DIRECTORS BEING ELECTED AT THE PRESENT TIME?
Under the 1940 Act, the Board may fill vacancies on the Board or appoint
new directors only if, immediately thereafter, at least two-thirds of the
directors will have been elected by shareholders. Currently, seven of the
company's ten directors have been elected by shareholders. As directors retire,
resign or otherwise cease their service as directors in the future, the company
may be unable to fill the vacancies created by such action because three of the
company's ten directors have not been elected by shareholders. To provide the
Board with the flexibility to fill vacancies created when directors cease their
service as directors, and in light of the fact that only seven of the company's
directors have been elected by shareholders, the Board believes it is
appropriate for shareholders to elect directors at the present time.
HOW LONG CAN DIRECTORS SERVE ON THE BOARD?
Directors generally hold office until their successors are elected and
qualified. Pursuant to a policy adopted by the Board in 1992, each duly elected
or appointed independent director may continue to serve as a director until
December 31 of the year in which the director turns 72. Independent directors
who were age 65 or older and serving on the board of one or more of the AIM
funds when the policy was adopted in 1992 may continue to serve until December
31 of the year in which the director turns 75. A director of the company may
resign or be removed for cause by a vote of the holders of a majority of the
outstanding shares of the funds at any time. A majority of the Board may extend
from time to time the retirement date of a director. The Board has agreed to
extend the retirement date of Mr. Daly, who otherwise would have retired
December 31, 2000, to December 31, 2001. In making this decision, the Board took
into account Mr. Daly's experience and active participation as a director.
WHAT ARE SOME OF THE WAYS IN WHICH THE BOARD REPRESENTS MY INTERESTS?
The Board seeks to represent shareholder interests by:
- reviewing the funds' investment performance on an individual basis with
the funds' respective managers;
- reviewing the quality of the various other services provided to the funds
and their shareholders by each of the fund's service providers, including
AIM and its affiliates;
- discussing with senior management of AIM steps being taken to address any
performance deficiencies;
- reviewing the fees paid to AIM and its affiliates to ensure that such
fees remain reasonable and competitive with those of other mutual funds,
while at the same time providing sufficient resources to continue to
provide high-quality services in the future;
9
<PAGE> 13
- monitoring potential conflicts between the funds and AIM and its
affiliates to ensure that the funds continue to be managed in the best
interests of their shareholders; and
- monitoring potential conflicts among funds to ensure that shareholders
continue to realize the benefits of participation in a large and diverse
family of funds.
WHAT ARE THE COMMITTEES OF THE BOARD?
The standing Committees of the Board are the Audit Committee, the
Capitalization Committee, the Investments Committee and the Nominating and
Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for:
- considering management's recommendations of independent accountants for
each fund and evaluating such accountants' performance, costs and
financial stability;
- with AIM, reviewing and coordinating audit plans prepared by the funds'
independent accountants and management's internal audit staff; and
- reviewing financial statements contained in periodic reports to
shareholders with the funds' independent accountants and management.
The members of the Capitalization Committee are Messrs. Bauer, Graham
(Chairman) and Pennock. The Capitalization Committee is responsible for:
- increasing or decreasing the aggregate number of shares of any class of
the company's common stock by classifying and reclassifying the company's
authorized but unissued shares of common stock, up to the company's
authorized capital;
- fixing the terms of such classified or reclassified shares of common
stock; and
- issuing such classified or reclassified shares of common stock upon the
terms set forth in the applicable fund's prospectus, up to the company's
authorized capital.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly,
Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The
Investments Committee is responsible for:
- overseeing AIM's investment-related compliance systems and procedures to
ensure their continued adequacy; and
10
<PAGE> 14
- considering and acting, on an interim basis between meetings of the full
Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing
matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for:
- considering and nominating individuals to stand for election as
independent directors as long as the company maintains a distribution
plan pursuant to Rule 12b-1 under the 1940 Act;
- reviewing from time to time the compensation payable to the independent
directors; and
- making recommendations to the Board regarding matters related to
compensation, including deferred compensation plans and retirement plans
for the independent directors.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as directors, provided (i) that such
person is a shareholder of record at the time he or she submits such names and
is entitled to vote at the meeting of shareholders at which directors will be
elected, and (ii) that the Nominating and Compensation Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
HOW OFTEN DOES THE BOARD MEET?
The Board typically conducts regular meetings nine times a year to review
the operations of the funds and of the other AIM funds. Typically, five of these
nine meetings are held in person, each over a two-day period. One or more
Committees of the Board generally meet in conjunction with each in-person
meeting of the Board. In addition, the Board or any Committee may hold special
meetings by telephone or in person to discuss specific matters that may require
action prior to the next regular meeting.
During the fiscal year ended October 31, 1999, the Board held 9 meetings,
the Audit Committee held 5 meetings, the Investments Committee held 4 meetings
and the Nominating and Compensation Committee held 5 meetings. The
Capitalization Committee did not meet. All of the current directors and
Committee members then serving attended at least 75% of the meetings of the
Board and applicable Committees, if any, held during the fiscal year ended
October 31, 1999.
WHAT ARE THE DIRECTORS PAID FOR THEIR SERVICES?
Each director is reimbursed for expenses incurred in connection with each
meeting of the Board or any Committee attended. Each director who is not also
11
<PAGE> 15
an officer of the company is compensated for his or her services according to a
fee schedule which recognizes the fact that such director also serves as a
director or trustee of all of the other AIM funds. Each such director receives a
fee, allocated among the AIM funds for which he or she serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued for
each director:
<TABLE>
<CAPTION>
AGGREGATE RETIREMENT TOTAL
COMPENSATION BENEFITS COMPENSATION
FROM THE ACCRUED BY ALL FROM ALL
DIRECTOR COMPANY(1) AIM FUNDS(2) AIM FUNDS(3)
- -------- ------------ -------------- ------------
<S> <C> <C> <C>
Charles T. Bauer................ $ 0 $ 0 $ 0
Bruce L. Crockett............... 24,660 37,485 103,500
Owen Daly II.................... 24,660 122,898 103,500
Edward K. Dunn Jr. ............. 24,659 0 103,500
Jack M. Fields.................. 24,169 15,826 101,500
Carl Frischling(4).............. 24,541 97,791 103,500
Robert H. Graham................ 0 0 0
John F. Kroeger(5).............. 0 107,896 0
Prema Mathai-Davis.............. 24,659 0 101,500
Lewis F. Pennock................ 24,541 45,766 103,500
Ian W. Robinson(6).............. 10,014 94,442 25,000
Louis S. Sklar.................. 24,541 90,232 101,500
</TABLE>
(1) The total amount of compensation deferred by all directors of the company
during the fiscal year ended October 31, 1999, including earnings thereon,
was $159,484.
(2) During the fiscal year ended October 31, 1999, the total amount of expenses
allocated to the company in respect of such retirement benefits was
$215,041. Data reflects compensation for the calendar year ended December
31, 1999. Accruals for 1999 are based on actuarial projections from 1998.
(3) Each director serves as director or trustee of at least 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1999.
(4) During the fiscal year ended October 31, 1999, the company paid $94,929 in
legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel
LLP, for services rendered to the independent directors of the company.
(5) Mr. Kroeger was a director until June 11, 1998, when he resigned. On that
date, he became a consultant to the company. Mr. Kroeger passed away on
November 26, 1998. Mr. Kroeger's widow will receive his pension as described
below under "AIM Funds Retirement Plan for Eligible Directors/Trustees."
(6) Mr. Robinson was a director until March 12, 1999, when he retired.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible Directors/
Trustees, each director (who is not an employee of any of the AIM funds, A I M
Management Group Inc. (AIM Management) or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board. Pursuant to such
retirement plan, a director becomes eligible to retire and to receive full
benefits
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<PAGE> 16
under the plan when he or she has attained age 65 and has completed at least
five years of continuous service with one or more of the regulated investment
companies managed, administered or distributed by AIM or its affiliates (the
applicable AIM funds). Each eligible director is entitled to receive an annual
benefit from the applicable AIM funds commencing on the first day of the
calendar quarter coincident with or following his or her date of retirement
equal to a maximum of 75% of the annual retainer paid or accrued by the
applicable AIM funds for such director during the twelve-month period
immediately preceding the director's retirement (including amounts deferred
under a separate agreement between the applicable AIM funds and the director)
and based on the number of such director's years of service (not in excess of 10
years of service) completed with respect to any of the applicable AIM funds.
Such benefit is payable to each eligible director in quarterly installments. If
an eligible director dies after attaining the normal retirement date but before
receipt of all benefits under the plan, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director for no more than ten years beginning the first day of
the calendar quarter following the date of the director's death. Payments under
the plan are not secured or funded by any applicable AIM fund.
Set forth below is a table that shows the estimated annual benefits payable
to an eligible director upon retirement assuming the retainer amount reflected
below and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 18, 11, 10 and 1 years,
respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL
RETIREMENT
COMPENSATION
PAID BY ALL
NUMBER OF YEARS OF SERVICE APPLICABLE
WITH THE APPLICABLE AIM FUNDS AIM FUNDS
----------------------------- ------------
<S> <C>
10.............................. $67,500
9.............................. $60,750
8.............................. $54,000
7.............................. $47,250
6.............................. $40,500
5.............................. $33,750
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (the
deferring directors) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring directors may elect to defer receipt
of up to 100% of their compensation payable by the company, and such amounts are
13
<PAGE> 17
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' accounts will
be paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the agreement) beginning on the date the
deferring director's retirement benefits commence under the plan. The Board, in
its sole discretion, may accelerate or extend the distribution of such deferral
accounts after the deferring director's termination of service as a director of
the company. If a deferring director dies prior to the distribution of amounts
in his deferral account, the balance of the deferral account will be distributed
to his designated beneficiary in a single lump sum payment as soon as
practicable after such deferring director's death. The agreements are not funded
and, with respect to the payments of amounts held in the deferral accounts, the
deferring directors have the status of unsecured creditors of the company and of
each other AIM fund from which they are deferring compensation.
WHAT ARE OFFICERS PAID FOR THEIR SERVICES?
The company does not pay its officers for the services they provide to the
company. Instead, the officers, who are also officers or employees of AIM or its
affiliates, are compensated by AIM Management or its affiliates.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 1?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 2: APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION TO REORGANIZE
THE COMPANY AS A DELAWARE BUSINESS TRUST
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 2 applies to all shareholders of all funds.
WHAT AM I BEING ASKED TO APPROVE?
The company currently is organized as a Maryland corporation. The Board has
approved an Agreement and Plan of Reorganization (the plan), which provides for
a series of transactions to convert each fund of the company (a current fund) to
a corresponding series (a new fund) of a newly created open-end management
investment company organized as a business trust (the trust) under the Delaware
Business Trust Act. Under the plan, each current fund will transfer all its
assets to a corresponding new fund in exchange solely for voting shares of
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<PAGE> 18
beneficial interest in the new fund and the new fund's assumption of all the
current fund's liabilities (collectively, the reorganization). A form of the
plan relating to the proposed reorganization is in Appendix B. If Proposal 2 is
not approved by the shareholders, the company will continue to operate as a
Maryland corporation.
The reorganization is being proposed primarily to modernize the
organizational documents under which the company operates. AIM and the Board
believe that a number of benefits will be available to the current funds and
their shareholders once these documents conform to those of other AIM funds. The
operations of each new fund following the reorganization will be substantially
similar to those of its predecessor current fund, except that each new fund's
advisory agreement will conform to the changes proposed in Proposal 3, to the
extent Proposal 3 is approved; the fundamental investment restrictions for new
Aggressive Growth, new Blue Chip, new Capital Development, new Charter, new
Constellation, new Large Cap Growth and new Weingarten will conform to the
changes proposed in Proposal 4, to the extent that Proposal 4 is approved; the
investment objectives for new Blue Chip and new Capital Development will be made
non-fundamental as proposed in Proposal 5, if Proposal 5 is approved; and the
investment objective of new Aggressive Growth will be changed and made
non-fundamental as proposed in Proposal 6, if Proposal 6 is approved. Finally,
as described below, the trust's Agreement and Declaration of Trust differs from
the company's Charter in certain respects that are expected to improve the
company's and each fund's operations.
WHAT ARE THE REASONS FOR THE PROPOSED REORGANIZATION?
The reorganization is being proposed because, as noted above, AIM and the
Board believe that the Delaware business trust organizational form offers a
number of advantages over the Maryland corporate organizational form. As a
result of these advantages, the Delaware business trust organizational form has
been increasingly used by mutual funds, including many AIM funds.
The Delaware business trust organizational form offers greater flexibility
than the Maryland corporate form. A Maryland corporation is governed by the
detailed requirements imposed by Maryland corporate law and by the terms of its
Charter. A Delaware business trust is subject to fewer statutory requirements.
The trust will be governed primarily by the terms of an Agreement and
Declaration of Trust (trust instrument). In particular, the trust will have
greater flexibility to conduct business without the necessity of engaging in
expensive proxy solicitations to shareholders. For example, under Maryland
corporation law, amendments to the company's Charter would typically require
shareholder approval. Under Delaware law, unless the trust instrument of a
Delaware business trust provides otherwise, amendments to it may be made without
first obtaining shareholder approval. In addition, unlike Maryland corporation
law, which restricts the delegation of a board of directors' functions, Delaware
law
15
<PAGE> 19
permits the board of trustees of a Delaware business trust to delegate certain
of its responsibilities. For example, the board of trustees of a Delaware
business trust may delegate the responsibility of declaring dividends to duly
empowered committees of the board or to appropriate officers. Finally, Delaware
law permits the trustees to adapt a Delaware business trust to future
contingencies. For example, the trustees may, without a shareholder vote, change
a Delaware business trust's domicile or organizational form. In contrast, under
Maryland corporation law, a company's board of directors would be required to
obtain shareholder approval prior to changing domicile or organizational form.
The reorganization will also have certain other effects on the company, its
shareholders and management, which are described below under the heading "How
Will the Trust Compare to the Company?"
WHAT WILL THE PROPOSED REORGANIZATION INVOLVE?
To accomplish the reorganization, the trust has been formed as a Delaware
business trust pursuant to its trust instrument, and each new fund has been
established as a series of the trust. On the closing date, each current fund
will transfer all of its assets to the corresponding classes of the new fund in
exchange solely for a number of full and fractional Class A, Class B, Class C
and, if applicable, Institutional Class shares of the new fund equal to the
number of full and fractional shares of common stock of the corresponding
classes of the current fund then outstanding and the new fund's assumption of
the current fund's liabilities. Immediately thereafter, each current fund will
distribute those new fund shares to its shareholders in complete liquidation and
will, as soon as practicable thereafter, be terminated. Upon completion of the
reorganization, each shareholder of each current fund will be the owner of full
and fractional shares of the corresponding new fund equal in number and
aggregate net asset value to the shares he or she held in the current fund.
The obligations of the company and the trust under the plan are subject to
various conditions stated therein. To provide against unforeseen events, the
plan may be terminated or amended at any time prior to the closing of the
reorganization by action of the Board, notwithstanding the approval of the plan
by the shareholders of the company. However, no amendments may be made that
would materially adversely affect the interests of shareholders of any current
fund. The company and the trust may at any time waive compliance with any
condition contained in the plan, provided that the waiver does not materially
adversely affect the interests of shareholders of any current fund.
The plan authorizes the company to acquire one share of each class of each
new fund and, as the sole shareholder of the trust prior to the reorganization,
to do each of the following:
- Approve with respect to each new fund a new investment advisory agreement
that will be substantially identical to that described in Propo-
16
<PAGE> 20
sal 3. Information on the new advisory agreement, including a description
of the differences between it and the current advisory agreement, is set
forth below under Proposal 3. A form of the new advisory agreement is in
Appendix C. If Proposal 3 is not approved by a current fund's
shareholders, the trust will approve with respect to such fund an
investment advisory agreement that is substantially identical to such
fund's existing investment advisory agreement.
- Assuming that Proposal 3 is approved by shareholders, approve with
respect to each new fund a new administrative services agreement with AIM
that will be substantially identical to the company's existing
administrative services agreement with AIM, except for the changes
described in Proposal 3. If Proposal 3 is not approved by a current
fund's shareholders, the trust will approve for such fund an
administrative services agreement that is substantially identical to such
fund's existing administrative services agreement.
- Approve with respect to new Charter, new Constellation and new Weingarten
a new sub-advisory agreement that will be substantially identical to such
funds' existing sub-advisory agreement.
- Approve with respect to new AIM Dent Demographic Trends Fund (Demographic
Trends) a new sub-advisory agreement that will be substantially identical
to such fund's existing sub-advisory agreement.
- Approve with respect to each new fund new distribution agreements with
A I M Distributors, Inc. or Fund Management Company, as applicable. The
proposed distribution agreements will provide for substantially the same
distribution services as currently provided by A I M Distributors, Inc.
or Fund Management Company, as applicable.
- Approve a new distribution plan pursuant to Rule 12b-1 under the 1940 Act
with respect to each retail class of each new fund that will be
substantially identical to the corresponding current fund's existing
distribution plan for that class.
- Approve with respect to each new fund a custodian agreement with State
Street Bank and Trust Company and a transfer agency and servicing
agreement with A I M Fund Services, Inc., each of which currently
provides such services to the corresponding current fund, and a multiple
class plan pursuant to Rule 18f-3 of the 1940 Act which will be
substantially identical to the multiple class plan that exists for the
corresponding current fund.
- Elect the directors of the company as the trustees of the trust to serve
without limit in time, except as they may resign or be removed by action
of the trust's trustees or shareholders, and except as they retire in
accordance with the trust's retirement policy for trustees. The trust's
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<PAGE> 21
retirement policy for trustees is substantially identical to the
company's retirement policy for directors.
- Ratify the selection of KPMG LLP, the accountants for each current fund,
as the independent public accountants for each new fund.
- Approve such other agreements and plans as are necessary for each new
fund's operation as a series of an open-end management investment
company.
The trust's transfer agent will establish for each shareholder an account
containing the appropriate number of shares of each class of each new fund. Such
accounts will be identical in all respects to the accounts currently maintained
by the company's transfer agent for each shareholder of the current funds.
Shares held in the current fund accounts will automatically be designated as
shares of the new funds. Certificates for current fund shares issued before the
reorganization will represent shares of the corresponding new fund after the
reorganization. The trust will not normally issue share certificates. Any
account options or privileges on accounts of shareholders under the current
funds will be replicated on the new fund account.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION?
The company and the trust will receive an opinion of Ballard Spahr Andrews
& Ingersoll, LLP to the effect that the reorganization will constitute a
tax-free reorganization under section 368(a)(1)(F) of the Internal Revenue Code
of 1986, as amended. Accordingly, the current funds, the new funds and the
shareholders of the new funds will recognize no gain or loss for federal income
tax purposes as a result of the reorganization. Shareholders of the current
funds should consult their tax advisers regarding the effect, if any, of the
reorganization in light of their individual circumstances and as to state and
local consequences, if any, of the reorganization.
WILL I HAVE APPRAISAL RIGHTS?
Appraisal rights are not available to shareholders. However, shareholders
retain the right to redeem their shares of the current funds or the new funds,
as the case may be, at any time before or after the reorganization.
HOW WILL THE TRUST COMPARE TO THE COMPANY?
Structure of the Trust
The trust has been established under the laws of the State of Delaware by
the filing of a certificate of trust in the office of the Secretary of State of
Delaware. The trust has established series corresponding to and having identical
designations as the series portfolios of the company. The trust has also
established classes with respect to each new fund corresponding to and having
18
<PAGE> 22
identical designations as the classes of each current fund. Each new fund will
have the same investment objectives, policies, and restrictions as its
predecessor current fund, except that the new funds' fundamental restrictions,
investment objectives, and fundamental policies will conform to the changes
proposed in Proposals 4 through 6 (assuming approval of each of these Proposals
by the shareholders). If any of Proposals 4 through 6 are not approved by
shareholders, the new funds affected by the non-approval will continue to be
subject to the corresponding current funds' existing fundamental restrictions,
investment objectives, and fundamental policies, as applicable. The trust's
fiscal year is the same as that of the company. The trust will not have any
operations prior to the reorganization. Initially, the company will be the sole
shareholder of the trust.
As a Delaware business trust, the trust's operations are governed by its
trust instrument and Bylaws and applicable Delaware law rather than by the
company's Charter and Amended and Restated Bylaws and applicable Maryland law.
Certain differences between the two domiciles and organizational forms are
summarized below. The operations of the trust will continue to be subject to the
provisions of the 1940 Act and the rules and regulations thereunder.
Trustees and Officers of the Trust
Subject to the provisions of the trust instrument, the business of the
trust will be managed by its trustees, who serve indefinite terms and who have
all powers necessary or convenient to carry out their responsibilities. The
responsibilities, powers, and fiduciary duties of the trustees are substantially
the same as those of the directors of the company.
The trustees of the trust would be those persons elected at this meeting to
serve as directors of the company. Information concerning the nominees for
election as directors of the company, all of whom presently serve in such
positions, is set above under Proposal 1. The current officers of the company,
as well as certain AIM personnel, have been elected to serve as officers of the
trust and the current officers of the company will perform the same functions on
behalf of the trust following the reorganization that they now perform on behalf
of the company.
Shares of the Trust
The beneficial interests in the new funds will be represented by
transferable shares, par value $0.001 per share. Shareholders do not have the
right to demand or require the trust to issue share certificates, although the
trust, in its sole discretion, may issue them. The trustees have the power under
the trust instrument to establish new series and classes of shares; the
company's directors currently have a similar right. The trust instrument permits
the trustees to issue an unlimited number of shares of each class and series.
The company is authorized to issue only the number of shares specified in the
Charter and may
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<PAGE> 23
issue additional shares only with Board approval and after payment of a fee to
the State of Maryland on any additional shares authorized.
Each current fund except for Charter, Constellation and Weingarten
currently has three classes of shares: Class A, Class B, and Class C. Charter,
Constellation and Weingarten currently have these three classes of shares, and
also have an Institutional Class. The trust has established for each new fund
the classes that currently exist for its predecessor current fund. Except as
discussed in this proxy statement, shares of each class of the new funds will
have rights, privileges, and terms substantially similar to those of the
corresponding class of the current funds.
Shareholder Meeting Requirements
Maryland law provides that a special meeting of shareholders shall be
called upon the written request of shareholders holding 25% of the company's
shares. The company's Amended and Restated Bylaws allow a special meeting of
shareholders to be called upon the written request of shareholders holding 10%
of the company's shares. The trust's Bylaws provide that a special meeting of
shareholders for the purpose of voting on the removal of any trustee may be
called by the holders of 10% or more of the outstanding shares of the trust.
The trust, like the company, will operate as an open-end management
investment company registered with the Securities and Exchange Commission (SEC)
under the 1940 Act. As permitted by SEC rules, the trust will adopt as its own
the registration statement of the company. Shareholders of the new funds
therefore will have the power to vote at special meetings with respect to, among
other things, changes in any fundamental investment objectives and the
fundamental restrictions and policies of the new funds; approval of certain
changes to investment advisory contracts and plans of distribution; and
additional matters relating to the trust required by the 1940 Act.
Shareholder Voting Rights
Under Maryland law, shareholders of the company have the right to vote on
the following matters: the substantive amendment or complete restatement of the
company's Charter; generally, a consolidation, merger, or share exchange
involving the company or a transfer of the company's assets not in the ordinary
course of business; and the voluntary or, in some cases, involuntary dissolution
of the company.
Shareholders of the trust will have only those voting rights that are
explicitly set forth in the trust instrument. Under the trust instrument,
shareholders of the trust have the right to vote on the following matters: the
election or removal of trustees, provided that a meeting of shareholders has
been called for that purpose; the termination of the trust or any fund or class,
provided that a meeting of shareholders has been called for that purpose and
unless there are fewer than
20
<PAGE> 24
100 holders of record of the trust or such terminating fund or class; the sale
of all or substantially all of the assets of the trust or any fund or class,
unless the primary purpose of such sale is to change the trust's domicile or
organizational form; under certain circumstances, the merger or consolidation of
the trust or any fund or class with and into another company or with and into
another fund or class of the trust; and the amendment of the section of the
trust instrument that governs shareholders' voting rights.
Removal of Directors and Trustees
The company's Charter permits removal of a director prior to the expiration
of his or her term of office for cause, and not otherwise, by the affirmative
vote of a majority of all votes entitled to be cast for the election of
directors. Under the trust's trust instrument, a trustee may be removed by a
written instrument, signed by at least two-thirds of the number of trustees
prior to such removal, or by the affirmative vote of holders of two-thirds of
the trust's outstanding shares at a special meeting called for that purpose.
Shareholders' Rights of Inspection
Maryland law provides generally that persons who have been shareholders of
record for six months or more and who own of record at least 5% of a current
fund's outstanding shares of any class may inspect that current fund's books of
account and stock ledger. Under the trust's trust instrument and Bylaws, new
fund shareholders who have held shares of record for at least six months and who
hold at least 5% of the outstanding shares of any class of a new fund are
permitted, upon written request, to inspect a list of the shareholders of that
fund.
Shareholder Liability
Maryland law provides that a shareholder is not obligated to the company
with respect to the stock held therein, except to the extent that (1) the
subscription price or other agreed consideration for the stock has not been paid
(subject to limited exceptions); (2) the shareholder knowingly accepted an
illegal distribution; or (3) the shareholder is subject to any liability imposed
by law upon the dissolution, voluntary or involuntary, of the company.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations; however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the trust to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the trust instrument disclaims
shareholder liability for acts or obligations of the trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the trust or the trustees to all parties, and each
party thereto must expressly waive all rights
21
<PAGE> 25
of action directly against shareholders of the trust. The trust instrument
provides for indemnification out of the property of a new fund for all losses
and expenses of any shareholder of such new fund held liable on account of being
or having been a shareholder. Thus, the risk of a shareholder incurring
financial loss due to shareholder liability is limited to circumstances in which
a new fund would be unable to meet its obligations and the complaining party was
held not to be bound by the liability disclaimer.
Liability of Directors and Trustees
Under its Charter, the company limits the liability of and indemnifies its
present and past directors and officers to the maximum extent permitted by
Maryland law and the 1940 Act. Directors may be personally liable to the company
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of their duties or by reason of reckless disregard of their duties
as directors. In the event of any litigation or other proceeding against a
director or officer of the company, Maryland law permits the company to
indemnify the director or officer for certain expenses and to advance money for
such expenses unless (a) it is established that the act or omission of the
director or officer was material to the matter giving rise to the proceeding and
the act or omission was committed in bad faith or was the result of active and
deliberate dishonesty; (b) the director or officer actually received an improper
personal benefit in money, property or services; or (c) in the case of any
criminal proceeding, the director or officer had reasonable cause to believe the
act or omission was unlawful.
The trust instrument provides indemnification for current and former
trustees, officers, employees and agents of the trust to the fullest extent
permitted by Delaware law, the trust's Bylaws and other applicable law. Trustees
of the trust may be personally liable to the trust and its shareholders by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of their duties or by reason of reckless disregard of their duties as trustees.
Amendment of Charter and Trust Instrument
Under the company's Charter and Maryland law, the Charter may be amended
upon (a) adoption by the Board of a resolution setting forth the proposed
amendment and declaring that such amendment is advisable and (b) approval of
such resolution by the holders of a majority of the company's outstanding
shares. The trust instrument may be amended by a majority of the trustees
without any shareholder vote, except that the shareholders will have the right
to vote on any amendment that affects their voting rights, that reduces the
indemnification provided to shareholders or former shareholders, that is
required to have shareholder approval by law or by the trust's registration
statement, or that is submitted to the shareholders by the trustees.
----------------------------------------------------
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<PAGE> 26
The foregoing is only a summary of certain differences between and among
the company's Charter and Amended and Restated Bylaws and Maryland law and the
trust instrument and the trust's Bylaws and Delaware law. It is not a complete
list of the differences. Shareholders should refer to the provisions of these
documents and state law directly for a more thorough comparison. Copies of the
Charter and Amended and Restated Bylaws of the company, and of the trust
instrument and the trust's Bylaws are available to shareholders without charge
upon written request to the company or the trust.
WHEN WILL PROPOSAL 2 BE IMPLEMENTED?
Assuming your approval of Proposal 2, the company currently contemplates
that the reorganization will close on May 26, 2000. However, the reorganization
may close on another date if circumstances warrant.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 2?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 3: APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3 applies to all shareholders of all funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve a new advisory agreement between AIM
and the company for your fund. The Board is asking you to vote on this new
agreement because the company may amend its advisory agreement only with
shareholder approval. A form of the company's proposed Master Investment
Advisory Agreement is in Appendix C. The proposed advisory agreement amends the
current advisory agreement primarily by:
- omitting references to the provision of administrative services to the
funds;
- omitting certain expense limitations that are no longer applicable;
- clarifying existing non-exclusivity provisions;
- clarifying existing delegation provisions;
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<PAGE> 27
- adding provisions regarding affiliated brokerage;
- adding certain provisions to fully implement the funds' securities
lending program; and
- clarifying existing liability provisions.
At a meeting held on February 3, 2000, the Board voted to recommend that
you approve a Proposal to adopt the new advisory agreement.
WHO IS THE FUNDS' INVESTMENT ADVISOR?
AIM became the investment advisor for each of the funds on the dates
indicated in Appendix D. The current Master Investment Advisory Agreement, as
amended, was executed, and the funds' shareholders last voted on such agreement,
on the dates indicated in Appendix D. The Board, including a majority of the
independent directors, last approved the current advisory agreement on May 11,
1999.
AIM is a wholly owned subsidiary of AIM Management, a holding company that
has been engaged in the financial services business since 1976. The address of
AIM and AIM Management is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
AIM was organized in 1976, and, together with its subsidiaries, advises or
manages approximately 120 investment portfolios encompassing a broad range of
investment objectives. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. A list of the principal executive
officer and the directors of AIM is in Appendix E.
DO ANY OF THE COMPANY'S DIRECTORS OR EXECUTIVE OFFICERS HOLD POSITIONS WITH AIM?
Charles T. Bauer, Robert H. Graham, Gary T. Crum, Carol F. Relihan,
Melville B. Cox and Dana R. Sutton, all of whom are directors and/or executive
officers of the company, also are directors and/or officers of AIM. Each of them
also beneficially owns shares of AMVESCAP PLC and/or options to purchase shares
of AMVESCAP PLC. Additional information concerning these affiliations is in
Appendix L.
WHAT ARE THE TERMS OF THE CURRENT ADVISORY AGREEMENT?
Under the terms of the current advisory agreement, AIM supervises all
aspects of the funds' operations and provides investment advisory services to
the funds. AIM obtains and evaluates economic, statistical and financial
information to formulate and implement investment programs for the funds. AIM
will not be
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<PAGE> 28
liable to the funds or their shareholders except in the case of AIM's willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
The current advisory agreement provides that the funds will pay or cause to
be paid all of their expenses not assumed by AIM, including without limitation:
- brokerage commissions;
- taxes;
- legal, accounting, auditing or governmental fees;
- the cost of preparing share certificates;
- custodian, transfer and shareholder service agent costs;
- expenses of issue, sale, redemption, and repurchase of shares;
- expenses of registering and qualifying shares for sale;
- expenses relating to director and shareholder meetings;
- the cost of preparing and distributing reports and notices to
shareholders;
- the fees and other expenses incurred by the funds in connection with
membership in investment company organizations;
- the cost of printing copies of prospectuses and statements of additional
information distributed to the funds' shareholders; and
- all other charges and costs of the funds' operations unless otherwise
explicitly provided.
The current advisory agreement will continue in effect from year to year
for each fund only if such continuance is specifically approved at least
annually by (i) the Board or the vote of a majority of the outstanding voting
securities of that fund (as defined in the 1940 Act), and (ii) the affirmative
vote of a majority of independent directors by votes cast in person at a meeting
called for such purpose. The current advisory agreement provides that the Board,
a majority of the outstanding voting securities of a fund or AIM may terminate
the agreement for a fund on 60 days' written notice without penalty. The
agreement terminates automatically in the event of its assignment.
AIM may from time to time waive or reduce its fee. AIM may rescind
voluntary fee waivers or reductions at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee waivers or reductions prior to
the end of each fiscal year. If AIM has agreed to contractual fee waivers or
reductions, AIM may not alter those arrangements to a fund's detriment during
the period stated in the agreement between AIM and the company. AIM may not
change provisions in the current advisory agreement imposing expense limitations
without shareholder approval.
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The annual rates at which AIM receives fees from each fund under the
current advisory agreement, as well as the dollar amounts of advisory fees net
of any expense limitations or fee waivers paid to AIM by each fund and the
dollar amount of advisory fees (if any) waived by AIM for each fund for the
fiscal period or year ended October 31, 1999, are in Appendix F.
CAN AIM DELEGATE ANY OF ITS DUTIES UNDER THE ADVISORY AGREEMENT?
The current advisory agreement provides that AIM may delegate to a sub-
advisor or sub-advisors certain of its obligations under the current advisory
agreement. In accordance with this provision, AIM had entered into a sub-
advisory agreement dated May 12, 1999 with H.S. Dent Advisors, Inc. ("Dent")
with respect to Demographic Trends, pursuant to which the sub-advisor agreed to
provide AIM with investment research and advisory services and analysis and
recommendations on appropriate industry and sector allocations and weightings
for the fund's investment portfolio based on demographic trends. All investment
decisions and portfolio transactions remain the responsibility of AIM.
In addition, AIM had entered into a sub-advisory agreement dated February
28, 1997 with AIM Capital Management, Inc. ("AIM Capital") with respect to
Charter, Constellation and Weingarten, pursuant to which the sub-advisor agreed
to provide AIM with investment research and advisory services for each fund.
The sub-advisory agreement for Demographic Trends was approved by the
initial sole shareholder of the fund on June 4, 1999 and was last approved by
the Board of the company on May 12, 1999. Under the sub-advisory agreement, Dent
is entitled to receive from AIM, a sub-advisory fee calculated at the following
annual rates based upon the average daily net assets of Demographic Trends:
0.13% of the first $1 billion of average daily net assets; 0.10% of the average
daily net assets over $1 billion, to and including $2 billion; and 0.07% of
average daily net assets over $2 billion. During the fiscal year ended October
31, 1999, Dent received $97,327.58 in fees for its services to Demographic
Trends.
The sub-advisory agreement for Charter, Constellation and Weingarten was
approved by the shareholders of the funds on February 7, 1997 and was last
approved by the Board of the company on May 11, 1999. Under the sub-advisory
agreement, AIM Capital is entitled to receive from AIM, an annual sub-advisory
fee equal to 50% of the fee received by AIM under its advisory agreement with
such funds. During the fiscal year ended October 31, 1999, AIM Capital received
$19,942,309, $43,675,451 and $25,355,405 in fees for its services to Charter,
Constellation and Weingarten, respectively.
WHAT ADDITIONAL SERVICES ARE PROVIDED BY AIM AND ITS AFFILIATES?
AIM and its affiliates also provide additional services to the company and
the funds. AIM provides or arranges for others to provide administrative
services
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to the funds. A I M Distributors, Inc. serves as the principal underwriter for
each of the Class A, Class B and Class C shares of the funds, Fund Management
Company serves as the principal underwriter for each of the Institutional Class
shares of Charter, Constellation and Weingarten, and A I M Fund Services, Inc.
serves as the funds' transfer agent. These companies are wholly owned
subsidiaries of AIM. Information concerning fees paid to AIM and its affiliates
for these services is in Appendix G.
WHAT ADVISORY FEES DOES AIM CHARGE FOR SIMILAR FUNDS IT MANAGES?
The advisory fee schedules for other funds advised by AIM with similar
investment objectives as the funds are in Appendix H.
WHAT ARE THE TERMS OF THE PROPOSED ADVISORY AGREEMENT?
The primary differences between the current advisory agreement and the
proposed advisory agreement that the Board approved are:
- To omit references to the provision of administrative services to the
funds by AIM, because such services are covered by a separate
administrative services agreement between AIM and the company;
- To omit certain expense limitations that are no longer applicable;
- To clarify non-exclusivity provisions that are set forth in the current
advisory agreement;
- To clarify delegation provisions that are set forth in the current
advisory agreement;
- To add provisions regarding affiliated brokerage;
- To add certain provisions to fully implement the funds' securities
lending program; and
- To clarify that one fund is not liable for another fund's obligations,
and that AIM's liability to one fund does not automatically extend to
another fund.
Each of these changes is discussed more fully below. Except for these
changes, the terms of the current advisory agreement and the proposed advisory
agreement are substantially similar, except for the effective dates and the
renewal dates.
Administrative Services
The company and AIM are parties to a Master Administrative Services
Agreement dated February 28, 1997, as amended on March 1, 1999, May 11, 1999,
July 15, 1999 and September 28, 1999. The current advisory agreement states that
AIM will provide certain administrative services to the funds at the
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<PAGE> 31
Board's request. The Board has traditionally asked AIM to provide such services
to the funds. AIM then provides such services pursuant to the Master
Administrative Services Agreement.
The Board proposes to separate the advisory services and the administrative
services that AIM provides to the company, so that the provision of
administrative services is dealt with solely in a Master Administrative Services
Agreement. As a result, the proposed advisory agreement omits all references to
the Master Administrative Services Agreement. Since this omission will not
change the administrative services that AIM provides to the company or the
compensation AIM receives for providing administrative services, the Board
believes that this change is a matter of form rather than a substantive change
in the relationship between AIM and the company.
Expense Limitations
The current advisory agreement provides that advisory fees will be reduced
in accordance with certain expense limitations set forth in securities
regulations of the states in which the funds' shares are qualified for sale.
States can no longer impose expense limitations because federal law has
pre-empted these state regulations. Accordingly, the Board believes that this
expense limitation provision should be omitted from the proposed advisory
agreement.
Non-Exclusivity Provisions
The current advisory agreement provides that neither AIM nor the directors
or officers of the company owe an exclusive duty to the company. The current
advisory agreement expressly permits AIM to render investment advisory,
administrative and other services to other entities (including investment
companies). The current advisory agreement also expressly permits the directors
and officers of the company to serve as partners, officers, directors or
trustees of other entities (including other investment advisory companies). The
Board believes that the non-exclusivity provision in the current advisory
agreement should be bifurcated into two separate provisions: one dealing with
AIM and the other dealing with officers and directors of the company.
The non-exclusivity provisions of the proposed advisory agreement are
substantially similar to the provision in the current advisory agreement.
However, the proposed advisory agreement explicitly states that the company
recognizes that AIM's obligations to other clients may adversely affect the
company's ability to participate in certain investment opportunities. The
proposed advisory agreement also explicitly states that AIM, in its sole
discretion, shall be entitled to determine the allocation of investment
opportunities among the AIM funds and other clients in accordance with a policy
that AIM believes to be equitable.
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Delegation
The proposed advisory agreement expands the extent to which AIM can
delegate its rights, duties and obligations by expressly providing that AIM may
delegate any or all of its rights, duties or obligations under the agreement to
one or more sub-advisors. It also provides that AIM may replace sub-advisors
from time to time in accordance with applicable federal securities laws and
rules and regulations in effect or interpreted from time to time by the SEC or
with exemptive orders or other similar relief. If, in accordance with the laws,
rules, interpretations and exemptions, AIM is not required to seek shareholder
approval of a substitution in sub-advisors, it may do so upon approval of the
Board.
Affiliated Brokerage
Although AIM does not currently execute trades through brokers or dealers
that are affiliated with AIM, the proposed advisory agreement includes a new
provision that would permit such trades, subject to compliance with applicable
federal securities laws.
Securities Lending
The proposed advisory agreement includes a new provision that discusses the
services to be rendered by AIM if a fund engages in securities lending
activities, as well as the compensation AIM may receive for such services.
Services to be provided include: (a) overseeing participation in the securities
lending program to ensure compliance with all applicable regulatory and
investment guidelines; (b) assisting the securities lending agent or principal
(the agent) in determining which specific securities are available for loan; (c)
monitoring the agent to ensure that securities loans are effected in accordance
with AIM's instructions and with procedures adopted by the Board; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board with respect to securities lending activities; (e) responding to agent
inquiries; and (f) performing such other duties as may be necessary.
As compensation for such services, a lending fund shall pay AIM a fee equal
to 25% of the net monthly interest or fee income retained or paid to the fund
from such activities. AIM currently intends to waive fees, and has agreed to
seek Board approval prior to its receipt of all or a portion of such fees.
Liability
The proposed advisory agreement clarifies that no fund shall be liable for
the obligations of another fund, and the liability of AIM to one fund shall not
automatically render AIM liable to any other fund.
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WHAT DID THE DIRECTORS CONSIDER IN APPROVING THE ADVISORY AGREEMENT?
At the request of AIM, the Board discussed the approval of the proposed
advisory agreement at a meeting held in person on February 3, 2000. The
independent directors also discussed approval of the proposed advisory agreement
with independent counsel at that meeting. In evaluating the proposed advisory
agreement, the Board requested and received information from AIM to assist in
its deliberations. The Board considered various matters in determining the
reasonableness and fairness of the proposed changes in the current advisory
agreement with respect to each fund. In doing so, the Board considered the fact
that the changes (i) would not result in any changes in the persons providing
investment advisory services to the funds; (ii) would not result in any changes
to the types or level of services provided by AIM to the funds (other than to
have AIM provide certain additional services if a fund engages in securities
lending); (iii) would not result in any changes to the advisory fees payable by
the funds (other than to permit AIM's receipt of fees in connection with
securities lending); (iv) would clarify the terms under which AIM will provide
investment advisory services to the funds; and (v) would omit outdated, or
otherwise unnecessary, provisions from the new advisory agreement. After
considering these matters, the Board concluded that it is in the best interests
of the funds and their shareholders to approve the new advisory agreement.
The Board reached its conclusion after careful discussion and analysis. The
Board believes that it has carefully and thoroughly examined the pertinent
issues and alternatives. In recommending that you approve the proposed advisory
agreement, the independent directors have considered what they believe to be in
your best interests. In so doing, they were advised by independent counsel,
retained by the independent directors and paid for by the company, as to the
nature of the matters to be considered and the standards to be used in reaching
their decision.
WHEN WILL PROPOSAL 3 BE IMPLEMENTED?
If approved, the new advisory agreement will become effective on May 26,
2000 and will expire, unless renewed, on or before June 30, 2001. If
shareholders do not approve the proposed advisory agreement with respect to a
fund, the current advisory agreement will continue in effect for such fund.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 3?
-------------------------------------------------------------
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
-------------------------------------------------------------
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PROPOSALS 4(a) THROUGH 4(m): CHANGES TO THE
FUNDAMENTAL INVESTMENT RESTRICTIONS OF
AGGRESSIVE GROWTH, BLUE CHIP, CAPITAL DEVELOPMENT,
CHARTER, CONSTELLATION, LARGE CAP GROWTH
AND WEINGARTEN
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
restrictions. The Board is asking you to vote on these changes because the
investment restrictions described below are fundamental and shareholders must
approve any change. These changes are not applicable to Demographic Trends, AIM
Large Cap Basic Value Fund (Basic Value) or AIM Mid Cap Growth Fund (Mid Cap
Growth) because their investment restrictions currently are consistent with the
changes proposed for the other funds.
Pursuant to the 1940 Act, each fund has adopted fundamental restrictions
covering certain types of investment practices, which may be changed only with
shareholder approval. Restrictions that a fund has not specifically designated
as being fundamental are considered to be "non-fundamental" and may be changed
by the Board without shareholder approval. In addition to investment
restrictions, the funds operate pursuant to investment objectives and policies.
These objectives and policies govern the investment activities of the funds and
further limit their ability to invest in certain types of securities or engage
in certain types of transactions.
The Board is proposing that you approve changes to your fund's fundamental
investment restrictions. The changes will conform these restrictions to a set of
uniform model restrictions under which most AIM funds will operate, and
Demographic Trends, Basic Value, Mid Cap and other recently organized AIM funds
currently operate. The Board approved the changes to your fund's fundamental
investment restrictions at a meeting held on February 3, 2000. The current
fundamental investment restrictions for each fund are in Appendix I.
WHAT ARE THE REASONS FOR THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Several of the funds' current fundamental restrictions reflect regulatory,
business or industry conditions, practices or requirements that are no longer
applicable. For example, the National Securities Markets Improvement Act of 1996
(NSMIA) preempted state laws, under which the funds previously were regulated
and which required the adoption of certain restrictions. In addition, other
fundamental restrictions reflect federal regulatory requirements that remain in
effect but are not required to be stated as fundamental, or in some cases even
as non-fundamental, restrictions. Also, as new AIM funds have been created or
acquired during recent years, substantially similar fundamental restrictions
often have been phrased in slightly different ways, sometimes resulting in minor
but
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unintended differences in effect or potentially giving rise to unintended
differences in interpretation.
Accordingly, the Board has approved changes to certain of the funds'
fundamental restrictions in order to simplify, modernize and make more uniform
those restrictions that are required to be fundamental.
The Board expects that you will benefit from these changes in a number of
ways. The proposed uniform restrictions will provide the funds with as much
investment flexibility as is possible under the 1940 Act. The Board believes
that eliminating the disparities among the AIM funds' fundamental restrictions
will enhance management's ability to manage efficiently and effectively the
funds' assets in changing regulatory and investment environments. In addition,
by reducing to a minimum those restrictions that can be changed only by
shareholder vote, each fund will be able to avoid the costs and delays
associated with a shareholder meeting if the Board decides to make future
changes to a fund's investment policies.
WHAT ARE THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Each proposed change to the funds' fundamental restrictions is discussed
below. The proposed fundamental restrictions will provide the funds with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
operating under such interpretations or exemptions. Even though the funds will
have this flexibility, if the proposed fundamental restrictions are approved,
several new non-fundamental investment restrictions (which function as internal
operating guidelines) will become effective. AIM must follow these non-
fundamental investment restrictions in managing the funds. Of course, if
circumstances change, the Board may change or eliminate any non-fundamental
investment restriction in the future without shareholder approval.
With respect to each fund and each fundamental or non-fundamental
restriction, if a percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage resulting
from a change in the values of the fund's portfolio securities or the amount of
its total assets will not be considered a violation of the restriction.
PROPOSAL 4(a): CHANGE TO OR ADDITION OF FUNDAMENTAL RESTRICTION ON ISSUER
DIVERSIFICATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(a) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
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WHAT IS THE PROPOSED CHANGE?
Upon approval of Proposal 4(a), (i) the existing fundamental restriction on
issuer diversification for each of Aggressive Growth, Capital Development and
Charter would be changed, and (ii) a new fundamental restriction on issuer
diversification would replace the current restriction for each of Blue Chip,
Constellation, Large Cap Growth and Weingarten, to read as follows:
"The fund is a 'diversified company' as defined in the 1940 Act.
The fund will not purchase the securities of any issuer if, as a
result, the fund would fail to be a diversified company within the
meaning of the 1940 Act, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from
time to time or are interpreted from time to time by the SEC staff
(collectively, the 1940 Act laws and interpretations) or except to
the extent that the fund may be permitted to do so by exemptive
order or similar relief (collectively, with the 1940 Act laws and
interpretations, the 1940 Act laws, interpretations and
exemptions). In complying with this restriction, however, the fund
may purchase securities of other investment companies to the extent
permitted by the 1940 Act laws, interpretations and exemptions."
Discussion:
The proposed changes will permit the funds to take advantage of the 1940
Act laws, interpretations and exemptions in effect from time to time relating to
issuer diversification. The proposed changes would also eliminate minor
inconsistencies in the wording of the funds' current restrictions and would add
this restriction for those funds that do not currently have such a restriction.
However, the Board does not expect this change to have any material impact on
the funds' current operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each fund to which Proposal
4(a) applies:
"In complying with the fundamental restriction regarding issuer
diversification, the fund will not, with respect to 75% of its total
assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(ii) the fund would hold more than 10% of the outstanding voting
securities of that issuer. The fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the
1940 Act and (ii) invest its assets in securities of other money
market funds and lend money to
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other investment companies and their series portfolios that have AIM as an
investment advisor, subject to the terms and conditions of any exemptive
orders issued by the SEC."
PROPOSAL 4(b): CHANGE TO FUNDAMENTAL RESTRICTIONS ON BORROWING MONEY AND
ISSUING SENIOR SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(b) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT ARE THE PROPOSED CHANGES?
Upon the approval of Proposal 4(b), (i) the existing fundamental
restrictions on issuing senior securities and borrowing money for each of Blue
Chip, Capital Development, Large Cap Growth and Weingarten would be changed and,
in some cases, combined, and (ii) a new fundamental restriction on issuing
senior securities would be added for each of Aggressive Growth, Charter and
Constellation, to read as follows:
"The fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act laws, interpretations and exemptions."
Upon the approval of Proposal 4(b), the existing fundamental restriction on
pledging assets would be eliminated for Blue Chip, Capital Development, Charter,
Large Cap Growth and Weingarten.
Discussion:
The 1940 Act establishes limits on the ability of the funds to borrow money
or issue "senior securities," a term that is defined, generally, to refer to
obligations that have a priority over the company's shares with respect to the
distribution of its assets or the payment of dividends. Currently, the
fundamental restrictions for several of the funds is more limiting than required
by the 1940 Act. In addition, some of the funds currently do not have a
fundamental investment restriction on issuing senior securities.
The proposed changes would make the funds' restrictions on borrowing money
or issuing senior securities consistent and no more limiting than required by
the 1940 Act. The Board believes that changing the funds' fundamental
restrictions in this manner will provide flexibility for future contingencies.
However, the Board does not expect this change to have any material impact on
the funds' current operations.
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If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each fund to which Proposal
4(b) applies:
"In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The fund may
borrow from banks, broker/dealers or other investment companies or
their series portfolios that have AIM or an affiliate of AIM as an
investment advisor (an AIM fund). Other than Constellation, the fund
may not borrow for leveraging, but may borrow for temporary or
emergency purposes, in anticipation of or in response to adverse
market conditions, or for cash management purposes. Other than
Constellation, the fund may not purchase additional securities when
any borrowings from banks exceed 5% of the fund's total assets."
Blue Chip, Capital Development, Charter, Large Cap Growth and Weingarten
are not required to have a fundamental restriction with respect to the pledging
of assets. In order to maximize the funds' flexibility in this area, the Board
believes that the restriction on pledging assets for each of these funds should
be eliminated. The Board does not expect this change to have any material impact
on these funds' operations.
PROPOSAL 4(c): CHANGE TO FUNDAMENTAL RESTRICTION
ON UNDERWRITING SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(c) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT ARE THE PROPOSED CHANGES?
Upon the approval of Proposal 4(c), the existing fundamental restriction on
underwriting securities for each of the funds would be changed to read as
follows:
"The fund may not underwrite the securities of other issuers. This
restriction does not prevent the fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the fund may be considered to be an
underwriter under the Securities Act of 1933."
Upon the approval of Proposal 4(c), Weingarten's existing fundamental
restriction on purchasing restricted securities ("letter stock") would also be
eliminated.
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Discussion:
The proposed changes to this fundamental restriction would expand the types
of transactions in which a fund may engage, even if it may be considered to be
an underwriter, and would eliminate minor differences in the wording of the
funds' current restrictions on underwriting securities. The Board does not
expect this change to have any material impact on the funds' operations.
There is no legal requirement that Weingarten have a fundamental
restriction on purchasing restricted securities. In order to maximize
Weingarten's flexibility in this area, the Board believes that this restriction
should be eliminated. The Board does not expect this change to have any material
impact on Weingarten's operations. Weingarten will continue to be subject to a
non-fundamental investment restriction that prohibits it from investing more
than 15% of its net assets in illiquid securities, including repurchase
agreements with maturities in excess of seven days.
PROPOSAL 4(d): CHANGE TO FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(d) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(d), the existing fundamental restriction on
industry concentration for each of the funds would be changed to read as
follows:
"The fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act laws, interpretations and exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the fund's investments in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) tax-exempt obligations issued by governments
or political subdivisions of governments. In complying with this
restriction, the fund will not consider a bank-issued guaranty or
financial guaranty insurance as a separate security."
Discussion:
The proposed changes to the funds' fundamental restriction on concentration
would eliminate minor inconsistencies in the wording of the funds' current
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restrictions on concentration. The Board does not expect this change to have any
material impact on the funds' operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each fund to which Proposal
4(d) applies:
"In complying with the fundamental restriction regarding industry
concentration, the fund may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in
the same industry."
PROPOSAL 4(e): CHANGE TO FUNDAMENTAL RESTRICTION ON PURCHASING OR SELLING REAL
ESTATE
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(e) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(e), the existing fundamental restriction on
real estate investments for each of the funds would be changed to read as
follows:
"The fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein."
Discussion:
The proposed changes to this fundamental restriction would eliminate minor
differences in the wording of the funds' current restriction on real estate
investments and would clarify the types of real estate related securities that
are permissible investments for each fund. In addition, the proposed restriction
includes an exception that permits each fund to hold real estate acquired as a
result of ownership of securities or other instruments. The Board does not
expect this change to have a material impact on the funds' operations.
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PROPOSAL 4(f): CHANGE TO FUNDAMENTAL RESTRICTION ON PURCHASING OR SELLING
COMMODITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(f) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT ARE THE PROPOSED CHANGES?
Upon the approval of Proposal 4(f), (i) the existing fundamental
restriction on investing in commodities for each of Aggressive Growth, Capital
Development, Charter, Constellation, Large Cap Growth and Weingarten would be
changed, and (ii) a new fundamental restriction on investing in commodities
would be added for Blue Chip, to read as follows:
"The fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the fund from
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
Upon the approval of Proposal 4(f), the existing fundamental restriction on
investments in oil, gas or other mineral exploration or development programs for
Charter and Constellation would be eliminated.
Upon the approval of Proposal 4(f), Blue Chip's existing fundamental
restriction with regard to investing in puts, calls, straddles, spreads or
combinations thereof (other than covered put and call options, and options on
financial futures contracts) would be eliminated.
Discussion:
The proposed changes to this fundamental restriction are intended to ensure
that the funds will have the maximum flexibility to enter into hedging and other
transactions utilizing financial contracts and derivative products when doing so
is permitted by the funds' other investment policies and would eliminate minor
differences in the wording of the funds' current restrictions on investing in
commodities. Furthermore, the proposed restriction would allow the funds to
respond to the rapid and continuing development of derivative products. The
proposed restriction broadens the exception to the prohibition on buying and
selling physical commodities to cover all financial derivative instruments.
Charter and Constellation are not required to have a fundamental
restriction with regard to investing in oil, gas or mineral investments. To
maximize each fund's flexibility in this area, the Board believes that the
restrictions on oil, gas and mineral investments for Charter and Constellation
should be eliminated.
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These restrictions were imposed by state laws and NSMIA preempted state law
requirements. Notwithstanding the elimination of this fundamental restriction,
neither Charter nor Constellation expects to invest at the present time in oil,
gas or other mineral exploration or development programs.
There is no legal requirement that Blue Chip have a fundamental restriction
with regard to investing in puts, calls, straddles, spreads or combinations
thereof. To maximize Blue Chip's flexibility in this area, the Board believes
that this restriction should be eliminated. The Board does not expect this
change to have any material impact on the fund's current operations. A
description of these types of transactions and the potential risks in connection
with hedging and other transactions utilizing financial contracts and derivative
products is set forth in Appendix J.
PROPOSAL 4(G): CHANGE TO FUNDAMENTAL RESTRICTION
ON MAKING LOANS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(g) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(g), the existing fundamental restriction on
making loans for each of the funds would be changed to read as follows:
"The fund may not make personal loans or loans of its assets to
persons who control or are under common control with the fund, except
to the extent permitted by 1940 Act laws, interpretations and
exemptions. This restriction does not prevent the fund from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and
participation interests."
Discussion:
The proposed changes to this fundamental restriction would eliminate minor
differences in the wording of the funds' current restriction on making loans. In
addition, the proposed restriction more completely describes various types of
debt instruments available in the financial markets that the funds may purchase
that do not constitute the making of a loan, and broadens the potential
circumstances under which the funds could make loans.
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<PAGE> 43
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each fund to which Proposal
4(g) applies:
"In complying with the fundamental restriction with regard to making
loans, the fund may lend up to 33 1/3% of its total assets and may
lend money to another AIM fund, on such terms and conditions as the
SEC may require in an exemptive order."
PROPOSAL 4(h): APPROVAL OF A NEW FUNDAMENTAL
INVESTMENT RESTRICTION ON INVESTING ALL OF
EACH FUND'S ASSETS IN AN OPEN-END FUND
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(h) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Constellation, Large Cap Growth and Weingarten.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(h), the following fundamental investment
restriction on investing in an open-end fund would be added for each of the
funds:
"The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies and restrictions as the
fund."
Discussion:
The Board has approved, subject to shareholder approval, the adoption of a
new fundamental investment restriction that would permit each of the funds to
invest all of its assets in another open-end fund. At present the Board has not
considered any specific proposal to authorize a fund to invest all of its assets
in this fashion. The Board will authorize investing a fund's assets in another
open-end fund only if the Board first determines that it is in the best
interests of such fund and its shareholders.
The purpose of this proposal is to enhance the flexibility of each fund and
permit it to take advantage of potential efficiencies in the future available
through investment in another open-end fund. This structure allows several funds
with different distribution pricing structures, but the same investment
objective, policies and limitations, to combine their assets in a pooled fund
instead of managing them separately. This could lower the costs of obtaining
portfolio execution, custodial, investment advisory and other services for the
fund and could assist in portfolio management to the extent the cash flows of
each
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<PAGE> 44
investment vehicle offset each other or provide for less volatile asset changes.
Of course, such benefits may not occur.
At present, certain of the fundamental investment restrictions of each fund
may prevent it from investing all of its assets in another registered investment
company and would require a vote of fund shareholders before such a structure
could be adopted. To avoid the costs associated with a subsequent shareholder
meeting, the Board recommends that you vote to permit all of the assets of your
fund to be invested in an open-end fund, without a further vote of shareholders,
but only if the Board subsequently determines that such action is in the best
interests of your fund and its shareholders. If you approve this proposal, the
fundamental restrictions of your fund would be changed to permit such
investment.
A fund's methods of operation and shareholder services would not be
materially affected by its investment in an open-end fund, except that the
assets of the fund might be managed as part of a larger pool. If a fund invested
all of its assets in an open-end fund, it would hold only investment securities
issued by the open-end fund, and the open-end fund would invest directly in
individual securities of other issuers. The fund otherwise would continue its
normal operations. The Board would retain the right to withdraw the fund's
investments from the open-end fund, and the fund then would resume investing
directly in individual securities of other issuers as it does currently.
AIM may benefit from the use of this structure if, as a result, overall
assets under management are increased (since management fees are based on
assets). Also, AIM's expense of providing investment and other services to the
funds may be reduced.
If you approve the proposed restriction, each fund will have the ability to
invest all of its assets in another open-end investment company. Because the
funds do not currently intend to do so, the following non-fundamental investment
restriction will become effective for each of the funds:
"Notwithstanding the fundamental investment restriction, with regard
to investing all assets in an open-end fund, the fund may not invest
all of its assets in the securities of a single open-end management
investment company with the same fundamental investment objectives,
policies and limitations as the fund."
PROPOSAL 4(I): ELIMINATION OF FUNDAMENTAL RESTRICTION ON MARGIN TRANSACTIONS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(i) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development, Charter, Large Cap Growth and Weingarten.
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<PAGE> 45
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(i), the existing fundamental restriction on
engaging in margin transactions for each of the funds would be eliminated.
Discussion:
Aggressive Growth, Blue Chip, Capital Development, Charter, Large Cap
Growth and Weingarten are not required to have a fundamental restriction on
margin transactions. In order to maximize the funds' flexibility in this area,
the Board believes that the restrictions on margin transactions for these funds
should be deleted. Although the funds would have greater flexibility to engage
in margin transactions, if shareholders approve Proposal 4(i), none of
Aggressive Growth, Blue Chip, Capital Development, Charter, Large Cap Growth and
Weingarten presently intends to purchase any security on margin, except that it
may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities. The payment by any of those funds
of initial or variation margin in connection with futures or related options
transactions will not be considered the purchase of a security on margin.
Accordingly, the Board does not expect this change to have any material impact
on the funds' current operations.
PROPOSAL 4(j): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON SHORT SALES OF SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(j) applies only to shareholders of Aggressive Growth, Blue Chip,
Capital Development and Charter.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(j), the existing fundamental restriction on
short sales of securities for each of the funds would be eliminated.
Discussion:
Aggressive Growth, Blue Chip, Capital Development and Charter currently
have a fundamental restriction with regard to selling securities short. For each
of the funds except Charter, the fundamental restriction allows short sales
"against the box," which means that a fund contemporaneously owns or has the
right to acquire at no additional cost securities identical to, or convertible
into or exchangeable for, those securities sold short. However, the fundamental
restriction does not permit short sales that are not against the box. The SEC
considers short sales of securities by a fund that are not against the box to be
"senior securities." As such, they would be covered under the fundamental
restriction on issuing senior securities that shareholders are being asked to
vote on in Proposal 4(b). Therefore, the Board believes that the fundamental
restriction on short
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<PAGE> 46
sales of securities that are not against the box is unnecessary and should be
eliminated for each of the above funds. These funds would retain the ability to
engage in short sales against the box, provided that none of the funds may
deposit or pledge more than 10% of its total assets as collateral for such short
sales at any one time.
Charter's current fundamental restriction on short sales prohibits all
short sales, regardless of whether they are against the box. To maximize
Charter's flexibility in this area and to allow Charter to engage in short sales
against the box, the Board believes that Charter's fundamental restriction on
selling securities short should be eliminated.
If shareholders approve proposal 4(j), none of Aggressive Growth, Blue
Chip, Capital Development and Charter will make short sales of securities or
maintain a short position unless at all times when a short position is open, the
fund owns an equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold short. In no
event may more than 10% of the fund's total assets be deposited or pledged as
collateral for such sales at any one time. The Board does not expect this change
to have any material impact on the funds' current operations.
PROPOSAL 4(k): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON INVESTING FOR THE PURPOSE OF CONTROL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(k) applies only to shareholders of Charter, Constellation and
Weingarten.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(k), the existing fundamental restriction on
investing for the purpose of control for each of the funds would be eliminated.
Discussion:
The Board proposes to eliminate this fundamental restriction, which
prohibits each of the funds from investing in companies for the purpose of
exercising control or management. Elimination of this restriction would clarify
each fund's ability to exercise freely its rights as a shareholder of the
companies in which it invests. No fund, however, currently intends to become
involved in directing or administering the day-to-day operations of any company.
AIM believes that it should be able to communicate freely each fund's views
as a shareholder on important matters of policy to a company's management, its
board of directors and its shareholders, when AIM or the Board believes that
such action or policy may affect significantly the value of its investment. The
43
<PAGE> 47
activities that each fund might engage in, either individually or with others,
include seeking changes in a company's direction, seeking the sale of a company
or a portion of its assets, or participating in a takeover effort or in
opposition to a takeover effort. AIM believes that each fund currently may
engage in such activities without necessarily violating this fundamental
restriction. Nevertheless, the existence of the investment restriction might
give rise to a claim that such activities did in fact constitute investing for
control or management.
PROPOSAL 4(l): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON PURCHASING SECURITIES OF ISSUERS IN WHICH OFFICERS AND DIRECTORS
OF THE COMPANY AND ITS AFFILIATES OWN SECURITIES.
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(l) applies only to shareholders of Charter.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(l), Charter's existing fundamental
restriction on purchasing securities of issuers in which affiliates of the
company own securities would be eliminated.
Discussion:
There is no legal requirement that Charter have this fundamental
restriction. This restriction was imposed by state laws and NSMIA preempted
state law requirements. Moreover, the Board and AIM do not believe this
restriction provides any safeguards against conflicts of interest that are not
covered under AIM's and the company's Code of Ethics. Accordingly, the Board
believes this restriction should be eliminated.
PROPOSAL 4(M): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON TRANSACTIONS WITH OFFICERS AND
DIRECTORS OF CHARTER IN SECURITIES OTHER THAN
CAPITAL STOCK OF CHARTER
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(m) applies only to shareholders of Charter.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(m), Charter's existing fundamental
restriction on purchasing from or selling to any officer, director or employee
of Charter, or its advisors or distributor, or to any of their officers or
directors, any securities other than shares of capital stock of Charter, would
be eliminated.
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<PAGE> 48
Discussion:
There is no legal requirement that Charter have this fundamental
restriction. This restriction was imposed by state laws and NSMIA preempted
state law requirements. Moreover, the Board and AIM do not believe this
restriction provides any safeguards against conflicts of interest that are not
covered under the 1940 Act, and AIM's and the company's Code of Ethics.
Accordingly, the Board believes this restriction should be eliminated.
WHEN WILL PROPOSALS 4(a) THROUGH 4(m) BE IMPLEMENTED?
If you approve each of the above proposals, the new fundamental
restrictions will replace the fundamental investment restrictions for the
specified funds. Accordingly, the proposed fundamental restrictions will become
the only fundamental investment restrictions under which the specified funds
will operate. If approved, the above restrictions may not be changed with
respect to your fund without the approval of the holders of a majority of your
fund's outstanding voting securities (as defined in the 1940 Act). The Board
anticipates that these proposals, if approved, will be implemented on May 26,
2000.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSALS 4(a) THROUGH 4(m)?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSALS 4(a) THROUGH 4(m).
PROPOSAL 5: CHANGING THE INVESTMENT OBJECTIVES
OF BLUE CHIP AND CAPITAL DEVELOPMENT
SO THAT THEY ARE NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 5 applies only to shareholders of Blue Chip and Capital
Development.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve making your fund's investment
objective non-fundamental, rather than fundamental. The Board is asking you to
vote on this change because the investment objective of your fund presently is
fundamental and shareholders must approve any change.
The current investment objective of your fund is in Appendix K. By making
this objective non-fundamental, the Board may change it as it deems appropriate,
without seeking a shareholder vote. The Board does not anticipate changing the
investment objective of your fund at the present time.
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<PAGE> 49
The Board expects that you will benefit from this proposed change because
it will have the ability to respond more quickly to new developments and
changing trends in the marketplace without incurring the time and the costs of a
shareholder vote. This should make your fund more competitive among its peers.
WHEN WILL PROPOSAL 5 BE IMPLEMENTED?
The Board anticipates that Proposal 5, if approved, will be implemented on
May 26, 2000.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 5?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 6: CHANGING THE INVESTMENT OBJECTIVE OF
AGGRESSIVE GROWTH AND MAKING IT NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 6 applies only to shareholders of Aggressive Growth.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
objective by making it non-fundamental and by eliminating from the investment
objective the types of securities your fund proposes to purchase in seeking to
achieve its objective. The Board is asking you to vote on these changes because
the investment objective of your fund presently is fundamental and shareholders
must approve any change.
The current investment objective of your fund is in Appendix K. By making
this objective non-fundamental, the Board may change it as it deems appropriate,
without seeking a shareholder vote. The Board does not anticipate making
additional changes to the investment objective of your fund at the present time.
Your fund's current investment objective includes the types of securities
that your fund proposes to purchase to achieve its objective. The Board believes
that the basic investment objective of your fund should be separate from the
types of securities your fund may purchase to achieve its objective. This change
will permit the Board to change the types of securities your fund may purchase
without also changing the fund's investment objective.
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<PAGE> 50
WHAT IS THE PROPOSED CHANGE?
If shareholders of Aggressive Growth approve this proposal, the investment
objective of Aggressive Growth will read as follows:
"The fund's investment objective is to achieve long-term growth of
capital."
Aggressive Growth will also retain the investment policy of investing
primarily in common stocks of companies whose earnings the fund's portfolio
managers expect to grow more than 15% per year.
The Board expects that you will benefit from these proposed changes because
it will have the ability to respond more quickly to new developments and
changing trends in the marketplace. This should make your fund more competitive
among its peers.
WHEN WILL PROPOSAL 6 BE IMPLEMENTED?
The Board anticipates that Proposal 6, if approved, will be implemented on
May 26, 2000.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 6?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 7: RATIFICATION OF SELECTION OF KPMG LLP AS INDEPENDENT ACCOUNTANTS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 7 applies to all shareholders of all funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board has selected KPMG LLP as independent accountants for each fund
for its fiscal year ending October 31, 2000. As each fund's independent
accountants, KPMG LLP will examine and verify the accounts and securities of
that fund and report on them to the Board and to that fund's shareholders. The
Board's selection will be submitted for your ratification at the meeting.
WHY HAS THE BOARD SELECTED KPMG LLP AS THE INDEPENDENT ACCOUNTANTS?
KPMG was selected primarily on the basis of its expertise as auditors of
investment companies, its independence from AIM and its affiliates, the quality
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<PAGE> 51
of its audit services, and the competitiveness of the fees charged for these
services. KPMG LLP also serves as independent accountants for some of the other
AIM funds.
WILL A REPRESENTATIVE FROM KPMG LLP BE AVAILABLE FOR QUESTIONS?
The Board expects that a representative of KPMG LLP will be present at the
meeting. The representative will have an opportunity to make a statement should
he or she desire to do so and will be available to respond to shareholders'
questions.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 7?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
GENERAL INFORMATION
WHO ARE THE EXECUTIVE OFFICERS OF THE COMPANY?
Information about the executive officers of the company is in Appendix L.
WHAT IS THE SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN HOLDERS?
Information about the ownership of each class of each fund's shares by the
directors and the executive officers of the company and by 5% holders of each
class is in Appendix M.
WHO ARE THE INVESTMENT ADVISOR, SUB-ADVISORS, ADMINISTRATOR AND PRINCIPAL
UNDERWRITERS OF THE FUNDS?
A I M Advisors, Inc. serves as the investment advisor and administrator for
the funds. A I M Capital Management, Inc. serves as the sub-advisor for Charter,
Constellation and Weingarten. H.S. Dent Advisors, Inc. serves as the sub-advisor
for Demographic Trends.
A I M Distributors, Inc., serves as the principal underwriter for each of
the Class A, Class B and Class C shares of the funds. Fund Management Company
serves as the principal underwriter for each of the Institutional Class shares
of Charter, Constellation and Weingarten.
The principal address for each of these entities other than H.S. Dent
Advisors, Inc. is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The
principal address for H.S. Dent Advisors, Inc. is 6515 Gwin Road, Oakland,
California 94611.
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HAS THE COMPANY HIRED A PROXY SOLICITOR?
The company has engaged the services of Shareholder Communications
Corporation (SCC) to assist it in soliciting proxies for the meeting. The
company estimates that the aggregate cost of SCC's services will be
approximately $[ ]. The company will bear the cost of soliciting proxies.
The company expects to solicit proxies principally by mail, but either the
company or SCC may also solicit proxies by telephone, facsimile, the Internet or
personal interview. The company may also reimburse firms and others for their
expenses in forwarding solicitation materials to the beneficial owners of shares
of the funds.
HOW CAN I SUBMIT A PROPOSAL?
As a general matter, the funds do not hold regular meetings of
shareholders. If you wish to submit a proposal for consideration at a meeting of
shareholders of a fund, you 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, the company must receive proposals
a reasonable time before proxy materials are prepared relating to that meeting.
Your proposal also must comply with applicable law.
OTHER MATTERS
The Board does not know of any matters to be presented at the meeting other
than those set forth in this proxy statement. If any other business should come
before the meeting, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
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<PAGE> 53
APPENDIX A
SHARES OF AIM EQUITY FUNDS, INC.
OUTSTANDING ON FEBRUARY 18, 2000
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND (CLASS) FEBRUARY 18, 2000
- -------------------- -----------------
<S> <C>
AIM Aggressive Growth Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Blue Chip Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Capital Development Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Charter Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
Institutional Class....................................... [ ]
AIM Constellation Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
Institutional Class....................................... [ ]
AIM Dent Demographic Trends Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Emerging Growth Fund*
Class A................................................... 0
Class B................................................... 0
Class C................................................... 0
AIM Large Cap Basic Value Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Large Cap Growth Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
</TABLE>
- ---------------
<TABLE>
<S> <C>
* AIM Emerging Growth Fund had not commenced operations as of February 18,
2000.
</TABLE>
A-1
<PAGE> 54
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND (CLASS) FEBRUARY 18, 2000
- -------------------- -----------------
<S> <C>
AIM Mid Cap Growth Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Weingarten Fund
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
Institutional Class....................................... [ ]
</TABLE>
A-2
<PAGE> 55
APPENDIX B
AIM EQUITY FUNDS, INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
December 30, 1999, is entered into by and between AIM Equity Funds, Inc., a
Maryland corporation (the "Company"), acting on its own behalf and on behalf of
each of its series portfolios, all of which are identified on Schedule A to this
Agreement, and AIM Equity Funds, a Delaware business trust (the "Trust"), acting
on its own behalf and on behalf of each of its series portfolios, all of which
are identified on Schedule A to this Agreement.
BACKGROUND
The Company is organized as a series management investment company and is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940. The Company currently publicly offers shares of common
stock representing interests in eleven separate series portfolios. Each of these
series portfolios is listed on Schedule A and is referred to in this Agreement
as a "Current Fund."
The Board of Directors of the Company has designated multiple classes of
common stock that represent interests in each Current Fund. Each of these
classes is listed on Schedule B and is referred to in this Agreement as a
"Current Fund Class."
The Company desires to change its form and place of organization by
reorganizing as the Trust. In anticipation of such reorganization (the
"Reorganization"), the Board of Trustees of the Trust has established eleven
series portfolios corresponding to the Current Funds (each a "New Fund"), and
has designated multiple classes of shares of beneficial interest in each New
Fund corresponding to the Current Fund Classes (each a "New Fund Class").
Schedule A lists the New Funds and Schedule B lists the New Fund Classes.
The Reorganization will occur through the transfer of all of the assets of
each Current Fund to the corresponding New Fund. In consideration of its receipt
of these assets, each New Fund will assume all of the liabilities of the
corresponding Current Fund, and will issue to the Current Fund shares of
beneficial interest in the New Fund ("New Fund Shares"). New Fund Shares
received by the Current Fund will have an aggregate net asset value equal to the
aggregate net asset value of the shares of the Current Fund immediately prior to
the Reorganization (the "Current Fund Shares"). The Current Fund will then
distribute the New Fund Shares it has received to its shareholders.
The Reorganization is subject to, and shall be effected in accordance with,
the terms of this Agreement. This Agreement is intended to be and is adopted by
B-1
<PAGE> 56
the Company, on its own behalf and on behalf of the Current Funds, and by the
Trust, on its own behalf and on behalf of the New Funds, as a Plan of
Reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
Any capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the preamble or background to this Agreement. In addition,
the following terms shall have the following meanings:
1.1 "Assets" shall mean all assets including, without limitation, all
cash, cash equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and prepaid
expenses shown as assets on a Current Fund's books, and other property owned by
a Current Fund at the Effective Time.
1.2 "Closing" shall mean the consummation of the transfer of assets,
assumption of liabilities and issuance of shares described in Sections 2.1 and
2.2 of this Agreement, together with the related acts necessary to consummate
the Reorganization, to occur on the date set forth in Section 3.1.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Current Fund" shall mean each of the Company's eleven series
portfolios.
1.5 "Current Fund Class" shall mean each class of common stock of the
Company representing an interest in a Current Fund.
1.6 "Current Fund Shares" shall mean the shares of the Current Funds
outstanding immediately prior to the Reorganization.
1.7 "Effective Time" shall have the meaning set forth in Section 3.1.
1.8 "Liabilities" shall mean all liabilities of a Current Fund including,
without limitation, all debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
determinable at the Effective Time, and whether or not specifically referred to
herein.
1.9 "New Fund" shall mean each of the series portfolios of the Trust, one
of which shall correspond to one of the Current Funds as shown on Schedule A.
1.10 "New Fund Class" shall mean each class representing an interest in a
New Fund, one of which shall correspond to one of the Current Fund Classes as
shown on Schedule B.
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<PAGE> 57
1.11 "New Fund Shares" shall mean those shares of beneficial interest in a
New Fund, issued to a Current Fund in consideration of the New Fund's receipt of
the Current Fund's Assets.
1.12 "Registration Statement" shall have the meaning set forth in Section
5.4
1.13 "RIC" shall mean a regulated investment company under Subchapter M of
the Code.
1.14 "SEC" shall mean the Securities and Exchange Commission.
1.15 "Shareholder(s)" shall mean a Current Fund's shareholder(s) of
record, determined as of the Effective Time.
1.16 "Shareholders' Meeting" shall have the meaning set forth in Section
5.1.
1.17 "Transfer Agent" shall have the meaning set forth in Section 2.2
1.18 "1940 Act" shall mean the Investment Company Act of 1940, as amended.
2. PLAN OF REORGANIZATION.
2.1 The Company agrees, on behalf of each Current Fund, to assign, sell
convey, transfer and deliver all of the Assets of each Current Fund to its
corresponding New Fund. The Trust, on behalf of the each New Fund agrees in
exchange therefor:
(a) to issue and deliver to the Current Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares for each
New Fund Class designated in Schedule B equal to the number of full and
fractional Current Fund Shares for each corresponding Current Fund Class
designated in Schedule B; and
(b) to assume all of the Current Fund's Liabilities.
Such transactions shall take place at the Closing.
2.2 At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Shares issued pursuant to Section 5.2 shall be
redeemed by each New Fund for $1.00 and (b) each Current Fund shall distribute
the New Fund Shares received by it pursuant to Section 2.1 to the Current Fund's
Shareholders in exchange for such Shareholders' Current Fund Shares. Such
distribution shall be accomplished through opening accounts, by the transfer
agent for the Trust (the "Transfer Agent"), on each New Fund's share transfer
books in the Shareholders' names and transferring New Fund Shares to such
accounts. Each Shareholder's account shall be credited with the respective pro
rata number of full and fractional (rounded to the third decimal place) New
B-3
<PAGE> 58
Fund Shares of each New Fund Class due that Shareholder. All outstanding
Current Fund Shares, including those represented by certificates, shall
simultaneously be canceled on each Current Fund's share transfer books. The
Trust shall not issue certificates representing the New Fund Shares in
connection with the Reorganization. However, certificates representing Current
Fund Shares shall represent New Fund Shares after the Reorganization.
2.3 As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to Section 2.2, the Company shall dissolve its existence as
corporation under Maryland law.
2.4 Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder of the Current Fund Shares exchanged
therefor shall be paid by the person to whom such New Fund Shares are to be
issued, as a condition of such transfer.
2.5 Any reporting responsibility of the Company or each Current Fund to a
public authority is, and shall remain its responsibility up to and including the
date on which it is terminated.
3. CLOSING.
3.1 The Closing shall occur at the principal office of the Company on May
26, 2000, or on such other date and at such other place upon which the parties
may agree. All acts taking place at the Closing shall be deemed to take place
simultaneously as of the Company's and the Trust's close of business on the date
of the Closing or at such other time as the parties may agree (the "Effective
Time").
3.2 The Company or its fund accounting agent shall deliver to the Trust at
the Closing, a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot) concerning the
Assets, including all portfolio securities, transferred by the Current Funds to
the New Funds, as reflected on the New Funds' books immediately following the
Closing, does or will conform to such information on the Current Funds' books
immediately before the Closing. The Company shall cause the custodian for each
Current Fund to deliver at the Closing a certificate of an authorized officer of
the custodian stating that (a) the Assets held by the custodian will be
transferred to each corresponding New Fund at the Effective Time and (b) all
necessary taxes in conjunction with the delivery of the Assets, including all
applicable federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made.
3.3 The Company shall deliver to the Trust at the Closing a list of the
names and addresses of each Shareholder of each Current Fund and the number of
outstanding Current Fund Shares of the Current Fund Class owned by each
Shareholder, all as of the Effective Time, certified by the Company's Secretary
or Assistant Secretary. The Trust shall cause the Transfer Agent to deliver at
the
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<PAGE> 59
Closing a certificate as to the opening on each New Fund's share transfer books
of accounts in the Shareholders' names. The Trust shall issue and deliver a
confirmation to the Company evidencing the New Fund Shares to be credited to
each corresponding Current Fund at the Effective Time or provide evidence
satisfactory to the Company that such shares have been credited to each Current
Fund's account on such books. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, stock certificates, receipts, or
other documents as the other party or its counsel may reasonably request.
3.4 The Company and the Trust shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Company represents and warrants on its own behalf and on behalf of
each Current Fund as follows:
(a) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland, and its Charter
is on file with the Maryland Department of Assessments and Taxation;
(b) The Company is duly registered as an open-end series management
investment company under the 1940 Act, and such registration is in full
force and effect;
(c) Each Current Fund is a duly established and designated series of
the Company;
(d) At the Closing, each Current Fund will have good and marketable
title to its Assets and full right, power, and authority to sell, assign,
transfer, and deliver its Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, the corresponding New Fund
will acquire good and marketable title to the Assets;
(e) The New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
(f) Each Current Fund is a "fund" as defined in Section 851(g)(2) of
the Code; each Current Fund qualified for treatment as a RIC for each past
taxable year since it commenced operations and will continue to meet all
the requirements for such qualification for its current taxable year (and
the Assets will be invested at all times through the Effective Time in a
manner that ensures compliance with the foregoing); each Current Fund has
no earnings and profits accumulated in any taxable year in which the
provisions
B-5
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of Subchapter M did not apply to it; and each Current Fund has made all
distributions for each such past taxable year that are necessary to avoid
the imposition of federal excise tax or has paid or provided for the
payment of any excise tax imposed for any such year;
(g) There is no plan or intention of the Shareholders who individually
own 5% or more of any Current Fund Shares and, to the best of the Company's
knowledge, there is no plan or intention of the remaining Shareholders to
redeem or otherwise dispose of any New Fund Shares to be received by them
in the Reorganization. The Company does not anticipate dispositions of
those shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of redemptions of shares of the Current Fund as a
series of an open-end investment company. Consequently, the Company is not
aware of any plan that would cause percentage of Shareholder interests, if
any, that will be disposed of as a result of or at the time of the
Reorganization will be one percent (1%) or more of the shares of the
Current Fund outstanding as of the Effective Time;
(h) The Liabilities were incurred by the Current Funds in the ordinary
course of their business and are associated with the Assets;
(i) The Company is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of Section 368(a)(3)(A) of the Code;
(j) As of the Effective Time, no Current Fund will have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Current Fund Shares except for
the right of investors to acquire its shares at net asset value in the
normal course of its business as an open-end diversified management
investment company operating under the 1940 Act;
(k) At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by the Company's
shareholders; and
(l) Throughout the five-year period ending on the date of the Closing,
each Current Fund will have conducted its historic business within the
meaning of Section 1.368-1(d) of the Income Tax Regulations under the Code
in a substantially unchanged manner;
(m) The fair market value of the Assets of each Current Fund
transferred to the corresponding New Fund will equal or exceed the sum of
the Liabilities assumed by the New Fund plus the amount of Liabilities, if
any, to which the transferred Assets are subject.
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4.2 The Trust represents and warrants on its own behalf, and on behalf of
each New Fund as follows:
(a) The Trust is a business trust duly organized, validly existing,
and in good standing under the laws of the State of Delaware, and its
Certificate of Trust has been duly filed in the office of the Secretary of
State of Delaware;
(b) At the Effective Time, the Trust will succeed to the Company's
registration statement filed under the 1940 Act with the SEC and thus will
become duly registered as an open-end management investment company under
the 1940 Act;
(c) At the Effective Time, each New Fund will be a duly established
and designated series of the Trust;
(d) No New Fund has commenced operations nor will it commence
operations until after the Closing;
(e) Prior to the Effective Time, there will be no issued and
outstanding shares in any New Fund or any other securities issued by the
Trust on behalf of any New Fund, except as provided in Section 5.2;
(f) No consideration other than New Fund Shares (and the New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization;
(g) The New Fund Shares to be issued and delivered to the
corresponding Current Fund hereunder will, at the Effective Time, have been
duly authorized and, when issued and delivered as provided herein, will be
duly and validly issued and outstanding shares of the New Fund, fully paid
and non-assessable;
(h) Each New Fund will be a "fund" as defined in Section 851(g)(2) of
the Code and will meet all the requirements to qualify for treatment as a
RIC for its taxable year in which the Reorganization occurs;
(i) The Trust, on behalf of the New Funds, has no plan or intention to
issue additional New Fund Shares following the Reorganization except for
shares issued in the ordinary course of its business as a series of an
open-end investment company; nor does the Trust, on behalf of the New
Funds, have any plan or intention to redeem or otherwise reacquire any New
Fund Shares issued pursuant to the Reorganization, other than in the
ordinary course of its business or to the extent necessary to comply with
its legal obligation under Section 22(e) of the 1940 Act;
(j) Each New Fund will actively continue the corresponding Current
Fund's business in substantially the same manner that the Current Fund
conducted that business immediately before the Reorganization; and no New
Fund has any plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of its business
or
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dispositions necessary to maintain its qualification as a RIC, although in
the ordinary course of its business the New Fund will continuously review
its investment portfolio (as each Current Fund did before the
Reorganization) to determine whether to retain or dispose of particular
stocks or securities, including those included in the Assets;
(k) There is no plan or intention for any of the New Funds to be
dissolved or merged into another corporation or business trust or "fund"
thereof (within the meaning of section 851(g)(2) of the Code) following the
Reorganization; and
4.3 Each of the Company and the Trust, on its own behalf and on behalf of
each Current Fund or each New Fund, as appropriate, represents and warrants as
follows:
(a) The fair market value of the New Fund Shares of each New Fund
received by each Shareholder will be equal to the fair market value of the
Current Fund Shares of the corresponding Current Fund surrendered in
exchange therefor;
(b) Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares of each New Fund and will own
such shares solely by reason of their ownership of the Current Fund Shares
of the corresponding Current Fund immediately before the Reorganization;
(c) The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
(d) There is no intercompany indebtedness between a Current Fund and a
New Fund that was issued or acquired, or will be settled, at a discount;
and
(e) Immediately following consummation of the Reorganization, each New
Fund will hold the same assets, except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization, and be subject to
the same liabilities that the corresponding Current Fund held or was
subject to immediately prior to the Reorganization. Assets used to pay (i)
expenses, (ii) all redemptions (other than redemptions at the usual rate
and frequency of the Current Fund as a series of an open-end investment
company), and (iii) distributions (other than regular, normal
distributions), made by a Current Fund after the date of this Agreement
will, in the aggregate, constitute less than one percent (1%) of its net
assets.
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5. COVENANTS
5.1 As soon as practicable after the date of this Agreement, the Company
shall call a meeting of its Shareholders (the "Shareholders Meeting") to
consider and act on this Agreement. The Board of Directors of the Company shall
recommend that Shareholders approve this Agreement and the transactions
contemplated by this Agreement. Approval by Shareholders of this Agreement will
authorize the Company, and the Company hereby agrees, to vote on the matters
referred to in Sections 5.2 and 5.3.
5.2 The Trust's trustees shall authorize the issuance of, and each New
Fund shall issue, prior to the Closing, one New Fund Share in each New Fund
Class of each New Fund to the Company in consideration of the payment of $1.00
per share for the purpose of enabling the Company to elect the Company's
directors as the Trust's trustees (to serve without limit in time, except as
they may resign or be removed by action of the Trust's trustees or
shareholders), to ratify the selection of the Trust's independent accountants,
and to vote on the matters referred to in Section 5.3;
5.3 Immediately prior to the Closing, the Trust (on its own behalf of and
with respect to each New Fund or each New Fund Class, as appropriate) shall
enter into a Master Investment Advisory Agreement, a Master Sub-Advisory
Agreement, a Master Administrative Services Agreement, Master Distribution
Agreements, a Custodian Agreement and a Transfer Agency and Servicing Agreement;
shall adopt plans of distribution pursuant to Rule 12b-1 of the 1940 Act, a
multiple class plan pursuant to Rule 18f-3 of the 1940 Act and shall enter into
or adopt, as appropriate, such other agreements and plans as are necessary for
each New Fund's operation as a series of an open-end investment company. Each
such agreement and plan shall have been approved by the Trust's trustees and, to
the extent required by law, by such of those trustees who are not "interested
persons" of the Trust (as defined in the 1940 Act) and by the Company as the
sole shareholder of each New Fund.
5.4 The Company or the Trust, as appropriate, shall file with the SEC one
or more post-effective amendments to the Company's Registration Statement on
Form N-1A under the Securities Act of 1933, as amended, and the 1940 Act, as
amended (the "Registration Statement"), (i) which contain such amendments to
such Registration Statement as are determined by the Company to be necessary and
appropriate to effect the Reorganization and (ii) pursuant to which the Trust
adopts such Registration Statement, as so amended, as its own, and shall use its
best efforts to have such post-effective amendment or amendments to the
Registration Statement become effective as of the Closing.
6. CONDITIONS PRECEDENT.
The obligations of the Company, on its own behalf and on behalf of each
Current Fund, and the Trust, on its own behalf and on behalf of each New Fund,
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will be subject to (a) performance by the other party of all its obligations to
be performed hereunder at or before the Effective Time, (b) all representations
and warranties of the other party contained herein being true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated hereby, as of the Effective Time, with the same
force and effect as if made on and as of the Effective Time, and (c) the further
conditions that, at or before the Effective Time:
6.1 The Shareholders of the Company shall have approved this Agreement and
the transactions contemplated by this Agreement in accordance with applicable
law.
6.2 All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either the Company or the Trust to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain such consults, orders,
and permits would not involve a risk of a material adverse effect on the assets
or properties of either a Current Fund or a New Fund, provided that either the
Company or the Trust may for itself waive any of such conditions.
6.3 Each of the Company and the Trust shall have received an opinion from
Ballard Spahr Andrews & Ingersoll, LLP as to the federal income tax consequences
mentioned below. In rendering such opinion, such counsel may rely as to factual
matters, exclusively and without independent verification, on the
representations made in this Agreement (or in separate letters of representation
that the Company and the Trust shall use their best efforts to deliver to such
counsel) and the certificates delivered pursuant to Section 3.4. Such opinion
shall be substantially to the effect that, based on the facts and assumptions
stated therein and conditioned on consummation of the Reorganization in
accordance with this Agreement, for federal income tax purposes:
(a) The Reorganization will constitute a reorganization within the
meaning of section 368(a) of the Code, and each Current Fund and each New
Fund will be "a party to a reorganization" within the meaning of section
368(b) of the Code;
(b) No gain or loss will be recognized to a Current Fund on the
transfer of the Assets to the corresponding New Fund in exchange solely for
New Fund Shares and the New Fund's assumption of the Liabilities or on the
subsequent distribution of New Fund Shares to the Shareholders, in
constructive exchange for their Current Fund Shares, in liquidation of the
Current Fund;
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(c) No gain or loss will be recognized to a New Fund on its receipt of
the Assets in exchange for New Fund Shares and its assumption of the
Liabilities;
(d) Each New Fund's basis for the Assets will be the same as the basis
thereof in the corresponding Current Fund's hands immediately before the
Reorganization, and the New Fund's holding period for the Assets will
include the Current Fund's holding period therefor;
(e) A Shareholder will recognize no gain or loss on the constructive
exchange of Current Fund Shares solely for New Fund Shares pursuant to the
Reorganization; and
(f) A Shareholder's basis for the New Fund Shares of each New Fund to
be received in the Reorganization will be the same as the basis for the
Current Fund Shares of the corresponding Current Fund to be constructively
surrendered in exchange for such New Fund Shares, and a Shareholder's
holding period for such New Fund Shares will include its holding period for
the Current Fund Shares constructively surrendered, provided that the New
Fund Shares are held as capital assets by the Shareholder at the Effective
Time.
6.4 No stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the SEC (and not withdrawn or terminated).
At any time prior to the Closing, any of the foregoing conditions (except
those set forth in Section 6.1) may be waived by the directors/trustees of
either the Company or the Trust if, in their judgment, such waiver will not have
a material adverse effect on the interests of the Current Fund's shareholders.
7. EXPENSES.
Except as otherwise provided in Section 4.3(c), all expenses incurred in
connection with the transactions contemplated by this Agreement (regardless of
whether they are consummated) will be borne by the parties as they mutually
agree.
8. ENTIRE AGREEMENT.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties.
9. AMENDMENT.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding its approval by the Company's Shareholders, in such manner as
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<PAGE> 66
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
10. TERMINATION.
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by the Company's Shareholders:
10.1 By either the Company or the Trust (a) in the event of the other
party's material breach of any representation, warranty, or covenant contained
herein to be performed at or prior to the Effective Time, (b) if a condition to
its obligations has not been met and it reasonably appears that such condition
will not or cannot be met, or (c) if the Closing has not occurred on or before
July 31, 1999; or
10.2 By the parties' mutual agreement.
Except as otherwise provided in Section 7, in the event of termination
under Sections 10.1(c) or 10.2, there shall be no liability for damages on the
part of either the Company or the Trust or any Current Fund or corresponding New
Fund, to the other.
11. MISCELLANEOUS.
11.1 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
11.2 Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
11.3 The execution and delivery of this Agreement have been authorized by
the Trust's trustees, and this Agreement has been executed and delivered by
authorized officers of the Trust acting as such; neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them or any shareholder of the Trust personally, but shall bind only the
assets and property of the New Funds, as provided in the Trust's Agreement and
Declaration of Trust.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
<TABLE>
<S> <C>
Attest: AIM EQUITY FUNDS, INC.,
on behalf of each of its series
listed in Schedule A to this
Agreement
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- --------------------------------------- ----------------------------------
Title: President
-----------------------------
Attest: AIM EQUITY FUNDS
on behalf of each of its series
listed in Schedule A to this
Agreement
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- --------------------------------------- ----------------------------------
Title: President
------------------------------
</TABLE>
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<PAGE> 68
SCHEDULE A
<TABLE>
<CAPTION>
SERIES OF AIM EQUITY FUNDS, INC. CORRESPONDING SERIES OF AIM EQUITY FUNDS
(EACH A "CURRENT FUND") (EACH A "NEW FUND")
- -------------------------------- ----------------------------------------
<S> <C>
AIM Aggressive Growth Fund AIM Aggressive Growth Fund
AIM Blue Chip Fund AIM Blue Chip Fund
AIM Capital Development Fund AIM Capital Development Fund
AIM Charter Fund AIM Charter Fund
AIM Constellation Fund AIM Constellation Fund
AIM Dent Demographic Trends Fund AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund AIM Mid Cap Growth Fund
AIM Weingarten Fund AIM Weingarten Fund
</TABLE>
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<PAGE> 69
SCHEDULE B
<TABLE>
<CAPTION>
CLASSES OF EACH CURRENT FUND CORRESPONDING CLASSES OF EACH NEW FUND
- ---------------------------- --------------------------------------
<S> <C>
AIM Aggressive Growth Fund AIM Aggressive Growth Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Blue Chip Fund AIM Blue Chip Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Capital Development Fund AIM Capital Development Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Charter Fund AIM Charter Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Institutional Class Shares Institutional Class Shares
AIM Constellation Fund AIM Constellation Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Institutional Class Shares Institutional Class Shares
AIM Dent Demographic Trends Fund AIM Dent Demographic Trends Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Emerging Growth Fund AIM Emerging Growth Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Large Cap Basic Value Fund AIM Large Cap Basic Value Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Large Cap Growth Fund AIM Large Cap Growth Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Mid Cap Growth Fund AIM Mid Cap Growth Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
</TABLE>
B-15
<PAGE> 70
<TABLE>
<CAPTION>
CLASSES OF EACH CURRENT FUND CORRESPONDING CLASSES OF EACH NEW FUND
- ---------------------------- --------------------------------------
<S> <C>
AIM Weingarten Fund AIM Weingarten Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Institutional Class Shares Institutional Class Shares
</TABLE>
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<PAGE> 71
APPENDIX C
AIM EQUITY FUNDS, INC.
FORM OF MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this day of , , by and
between AIM Equity Funds, Inc., 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 "l940 Act"), as an open-end, diversified management
investment company;
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 (the "Charter") authorizes the Board of
Directors of the Company (the "Board of Directors") to create separate series of
shares of common stock in the Trust, and as of the date of this Agreement, the
Board of Directors has created eleven separate series portfolios (such
portfolios and any other portfolios hereafter added to the Company being
referred to 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 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.
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<PAGE> 72
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;
(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Board of
Trustees;
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Board of Directors; and
(e) 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. Securities Lending Duties and Fees. The Advisor agrees to provide the
following services in connection with the securities lending activities of each
Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure that
securities loans are effected in accordance with the Advisor's instructions and
with procedures adopted by the Board of Directors; (d) prepare appropriate
periodic reports for, and seek appropriate approvals from, the Board of
Directors with respect to securities lending activities; (e) respond to Agent
inquiries; and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in connection
with securities lending activities of each Fund, a lending Fund shall pay the
Advisor a fee equal to 25% of the net monthly interest or fee income retained or
paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate
any or all of its rights, duties and obligations under this Agreement to one or
more sub-advisors, and may enter into agreements with sub-advisors, and may
replace any such sub-advisors from time to time in its discretion, in accordance
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<PAGE> 73
with the 1940 Act, the Advisers Act, and rules and regulations thereunder, as
such statutes, rules and regulations are amended from time to time or are
interpreted from time to time by the staff of the Securities and Exchange
Commission ("SEC"), and if applicable, exemptive orders or similar relief
granted by the SEC and upon receipt of approval of such sub-advisors by the
Board of Directors and by shareholders (unless any such approval is not required
by such statutes, rules, regulations, interpretations, orders or similar
relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Company in any way or otherwise be deemed to be an agent of the
Company.
6. 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.
7. 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 Charter, 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.
8. 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.
(a) The Advisor's primary consideration in effecting a security
transaction will be to obtain the best execution.
(b) 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; 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
C-3
<PAGE> 74
available from another broker-dealer if the difference is reasonably
justified by other aspects of the fund execution services offered.
(c) Subject to such policies as the Board of Directors may from time
to time determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Funds to pay a broker or dealer that
provides brokerage and research services to the Advisor an amount of
commission for effecting a fund 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 indicating the brokers to whom such allocations have
been made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor does
not delegate trading responsibility to one or more sub-advisors, 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.
(e) Subject to the other provisions of this Section 8, the 1940 Act,
the Securities Exchange Act of 1934, and rules and regulations thereunder,
as such statutes, rules and regulations are amended from time to time or
are interpreted from time to time by the staff of the SEC, any exemptive
orders issued by the SEC, and any other applicable provisions of law, the
Advisor may select brokers or dealers with which it or the Funds are
affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is
set forth in Appendix B attached hereto.
10. 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
C-4
<PAGE> 75
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.
11. Services to Other Companies or Accounts. The Company understands that
the Advisor now acts, will continue to act and may act in the future as
investment manager or advisor to fiduciary and other managed accounts, and as
investment manager or advisor to other investment companies, including any
offshore entities, or accounts, and the Company has no objection to the Advisor
so acting, provided that whenever the Company and one or more other investment
companies or accounts managed or advised by the Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each company and account.
The Company recognizes that in some cases this procedure may adversely affect
the size of the positions obtainable and the prices realized for the Funds.
12. Non-Exclusivity. The Company understands that the persons employed by
the Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature. The Company
further understands and agrees 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.
13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Appendix A attached hereto.
If so approved, this Agreement shall thereafter continue in force and effect
until June 30, 2001, 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 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
C-5
<PAGE> 76
(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.
14. 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 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.
15. Amendment. No amendment of this Agreement shall be effective unless it
is in writing and signed by the party against which enforcement of the amendment
is sought.
16. Liability of Advisor and Fund. 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. Any
liability of the Advisor to one Fund shall not automatically impart liability on
the part of the Advisor to any other Fund. No Fund shall be liable for the
obligations of any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are binding
only upon the assets and property of the Company and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as shareholders of private corporations for
profit.
18. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other 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 and that of the Advisor shall be 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173.
19. 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
C-6
<PAGE> 77
any controlling decision of any such court, by rules, regulations or orders of
the SEC 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 SEC, 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.
20. 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.
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>
AIM Equity Funds, Inc.
(a Maryland corporation)
Attest:
By:
- ---------------------------------------
Assistant Secretary --------------------------------------
President
(SEAL)
Attest: A I M Advisors, Inc.
- --------------------------------------- By:
Assistant Secretary
--------------------------------------
(SEAL) President
</TABLE>
C-7
<PAGE> 78
Appendix A
FUNDS AND EFFECTIVE DATES
<TABLE>
<CAPTION>
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
- ------------ ------------------
<S> <C>
AIM Aggressive Growth Fund........................ May 26, 2000
AIM Blue Chip Fund................................ May 26, 2000
AIM Capital Development Fund...................... May 26, 2000
AIM Charter Fund.................................. May 26, 2000
AIM Constellation Fund............................ May 26, 2000
AIM Dent Demographic Trends Fund.................. May 26, 2000
AIM Emerging Growth Fund.......................... March [23], 2000
AIM Large Cap Basic Value Fund.................... May 26, 2000
AIM Large Cap Growth Fund......................... May 26, 2000
AIM Mid Cap Growth Fund........................... May 26, 2000
AIM Weingarten Fund............................... May 26, 2000
</TABLE>
C-8
<PAGE> 79
APPENDIX B
COMPENSATION TO THE ADVISOR
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered, an advisory 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.
AIM AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $150 million.............. 0.80%
Over $150 million............... 0.625%
</TABLE>
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $350 million.............. 0.75%
Over $350 million............... 0.625%
</TABLE>
AIM CHARTER FUND
AIM CONSTELLATION FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $30 million............... 1.00%
Over $30 million to and
including $150 million........ 0.75%
Over $150 million............... 0.625%
</TABLE>
AIM DENT DEMOGRAPHIC TRENDS FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $2 billion................ 0.85%
Over $2 billion................. 0.80%
</TABLE>
AIM EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
[First $1 billion............... 0.85%
Over $1 billion................. 0.80%]
</TABLE>
AIM LARGE CAP BASIC VALUE FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion................ 0.60%
Over $1 billion to and including
$2 billion.................... 0.575%
Over $2 billion................. 0.55%
</TABLE>
C-9
<PAGE> 80
AIM LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion................ 0.75%
Over $1 billion to and including
$2 billion.................... 0.70%
Over $2 billion................. 0.625%
</TABLE>
AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion................ 0.80%
Over $1 billion................. 0.75%
</TABLE>
AIM WEINGARTEN FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $30 million............... 1.00%
Over $30 million to and
including $350 million........ 0.75%
Over $350 million............... 0.625%
</TABLE>
C-10
<PAGE> 81
APPENDIX D
DATES OF ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
DATE OF CURRENT DATE LAST SUBMITTED TO DATE AIM BECAME
NAME OF FUND ADVISORY AGREEMENT A VOTE OF SHAREHOLDERS INVESTMENT ADVISOR
- ------------ ------------------ ---------------------- ------------------
<S> <C> <C> <C>
AIM Aggressive Growth February 28, 1997, as February 7, 1997* June 30, 1992
Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Blue Chip Fund February 28, 1997, as February 7, 1997* March 12, 1996
amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Capital February 28, 1997, as February 7, 1997* March 12, 1996
Development Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Charter Fund February 28, 1997, as February 7, 1997* September 30, 1988
amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Constellation February 28, 1997, as February 7, 1997* September 30, 1988
Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Dent Demographic February 28, 1997, as June 4, 1999** May 12, 1999
Trends Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Large Cap Basic February 28, 1997, as June 4, 1999** May 12, 1999
Value Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Large Cap Growth February 28, 1997, as February 26, 1999** March 1, 1999
Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Mid Cap Growth February 28, 1997, as November 1, 1999** September 28, 1999
Fund amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
AIM Weingarten Fund February 28, 1997, as February 7, 1997* September 30, 1988
amended March 1, 1999, May
12, 1999, July 15, 1999 and
September 28, 1999
</TABLE>
* The current advisory agreement was last submitted to a vote of public
shareholders of the fund in connection with a merger between A I M Management
Group Inc. and a subsidiary of INVESCO PLC.
** The current advisory agreement was submitted to a vote of the initial
shareholder of the fund prior to the commencement of operations.
D-1
<PAGE> 82
APPENDIX E
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF
A I M ADVISORS, INC.
The following table provides information with respect to the principal
executive officer and the directors of A I M Advisors, Inc., all of whose
business address is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH AIM PRINCIPAL OCCUPATION
---------------- ------------------------ -----------------------------------
<S> <C> <C>
Charles T. Bauer Director and Chairman See director table under Proposal 1
Gary T. Crum Director and Senior Vice See Appendix L
President
Robert H. Graham Director and President See director table under Proposal 1
Dawn M. Hawley Director, Senior Vice Senior Vice President, Chief
President and Treasurer Financial Officer and Treasurer,
A I M Management Group Inc.; and
Vice President and Treasurer, A I M
Capital Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc., and Fund Management
Company.
Carol F. Relihan Director, Senior Vice See Appendix L
President, General
Counsel and Secretary
</TABLE>
E-1
<PAGE> 83
APPENDIX F
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE NET FEES
TOTAL NET ASSETS PAID TO AIM
FOR THE FOR THE FEE WAIVERS FOR THE
ANNUAL RATE MOST RECENTLY MOST RECENTLY MOST RECENTLY
(BASED ON AVERAGE COMPLETED FISCAL COMPLETED FISCAL COMPLETED FISCAL
NAME OF FUND DAILY NET ASSETS) PERIOD OR YEAR PERIOD OR YEAR PERIOD OR YEAR
- ------------ ------------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C>
AIM Aggressive 0.80% of the first $ 2,840,171,882 $17,085,022 $ 0
Growth Fund $150 million;
0.625% of the
excess over $150
million
AIM Blue Chip Fund 0.75% of the first $ 4,540,673,179 $21,592,076 $ 0
$350 million;
0.625% of the
excess over $350
million
AIM Capital 0.75% of the first $ 1,084,854,198 $ 8,102,504 $ 0
Development Fund $350 million;
0.625% of the
excess over $350
million
AIM Charter Fund 1.00% of the first $ 7,360,685,298 $39,884,618 $1,130,089
$30 million; 0.75%
over $30 million up
to $150 million;
0.625% of the
excess over $150
million
AIM Constellation 1.00% of the first $15,288,481,794 $87,350,901 $3,107,849
Fund $30 million; 0.75%
over $30 million up
to $150 million;
0.625% of the
excess over $150
million
AIM Dent Demographic 0.85% of the first $ 392,908,501 $ 646,554 $ 43,724
Trends Fund $2 billion; 0.80%
of the excess over
$2 billion
AIM Large Cap Basic 0.60% of the first $ 1,153,107 $ 0 $ 2,279
Value Fund $1 billion; 0.575%
over $1 billion up
to $2 billion;
0.55% of the excess
over $2 billion
AIM Large Cap Growth 0.75% of the first $ 13,869,426 $ 10,176 $ 32,079
Fund $1 billion; 0.70%
over $1 billion up
to $2 billion;
0.625% of the
excess over $2
billion
</TABLE>
F-1
<PAGE> 84
<TABLE>
<CAPTION>
AGGREGATE NET FEES
TOTAL NET ASSETS PAID TO AIM
FOR THE FOR THE FEE WAIVERS FOR THE
ANNUAL RATE MOST RECENTLY MOST RECENTLY MOST RECENTLY
(BASED ON AVERAGE COMPLETED FISCAL COMPLETED FISCAL COMPLETED FISCAL
NAME OF FUND DAILY NET ASSETS) PERIOD OR YEAR PERIOD OR YEAR PERIOD OR YEAR
- ------------ ------------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C>
AIM Mid Cap Growth 0.80% of the first N/A* N/A* N/A*
Fund $1 billion; 0.75%
of the excess over
$1 billion
AIM Weingarten Fund 1.00% of the first $ 9,600,690,471 $50,710,809 $4,288,405
$30 million; 0.75%
over $30 million up
to $350 million;
0.625% of the
excess over $350
million
</TABLE>
* AIM Mid Cap Growth Fund commenced operations on November 1, 1999.
F-2
<PAGE> 85
APPENDIX G
FEES PAID TO AIM AND AFFILIATES IN MOST RECENT FISCAL YEAR
The following chart sets forth the fees paid during the fiscal period or
year ended October 31, 1999 by the company to A I M Advisors, Inc. (AIM) for
administrative services, and to affiliates of AIM. The administrative and other
services currently provided by AIM and its affiliates will continue to be
provided after the investment advisory contract with AIM is approved.
<TABLE>
<CAPTION>
AIM FUND
(ADMINISTRATIVE A I M MANAGEMENT A I M FUND
SERVICES) DISTRIBUTORS, INC.* COMPANY SERVICES, INC.
--------------- ------------------- ---------- --------------
<S> <C> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth
Fund.................. $126,956 $ 219,480 $N/A $ 2,216,555
AIM Blue Chip Fund...... 153,309 13,809,743 N/A 3,853,483
AIM Capital Development
Fund.................. 111,632 4,992,036 N/A 2,293,295
AIM Charter Fund........ 235,274 16,930,533 0 4,807,681
AIM Constellation
Fund.................. 431,120 9,249,710 0 11,438,795
AIM Dent Demographic
Trends Fund........... 16,849 425,554 N/A 82,863
AIM Large Cap Basic
Value Fund............ 16,849 N/A N/A 76
AIM Large Cap Growth
Fund.................. 29,197 17,369 N/A 2,310
AIM Mid Cap Growth
Fund**................ N/A** N/A** N/A N/A**
AIM Weingarten Fund..... 281,500 11,785,123 0 5,776,859
</TABLE>
* Net amount received from Rule 12b-1 fees. Excludes amounts reallowed to
brokers, dealers, agents and other service providers.
** AIM Mid Cap Growth Fund commenced operations on November 1, 1999.
G-1
<PAGE> 86
APPENDIX H
ADVISORY FEE SCHEDULES FOR OTHER AIM FUNDS
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have the same investment
objective as Aggressive Growth, Capital Development, Constellation, Demographic
Trends, Large Cap Growth, Mid Cap Growth and Weingarten.
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Asian Growth Fund....... 0.95% of the first $500 million; $ 42,497,099
0.90% of the excess over $500
million
AIM European Development
Fund....................... 0.95% of the first $500 million; $ 178,160,567
0.90% of the excess over $500
million
AIM Global Aggressive Growth
Fund....................... 0.90% of the first $1 billion; $ 1,795,495,057
0.85% of the excess over $1
billion
AIM Global Growth Fund...... 0.85% of the first $1 billion; $ 845,251,073
0.80% of the excess over $1
billion
AIM International Equity
Fund....................... 0.95% of the first $1 billion; $ 3,063,733,110
0.90% of the excess over $1
billion
AIM Select Growth Fund...... 0.80% of the first $150 million; $ 1,079,458,334
0.625% of the excess over $150
million
AIM V.I. Aggressive Growth
Fund....................... 0.80% of first $150 million; $ 17,325,844
0.625% of the excess over $150
million
AIM V.I. Capital
Appreciation Fund.......... 0.65% of first $250 million; 0.60% $ 1,131,217,460
of the excess over $250 million
AIM V.I. Capital Development
Fund....................... 0.75% of first $350 million; $ 11,034,931
0.625% of the excess over $350
million
AIM V.I. Dent Demographic
Trends Fund................ 0.85% of first $2 billion; 0.80% $ 999,599
of the excess over $2 billion
AIM V.I. Growth Fund........ 0.65% of first $250 million; 0.60% $ 704,095,680
of the excess over $250 million
</TABLE>
H-1
<PAGE> 87
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM V.I. International
Equity Fund................ 0.75% of first $250 million; 0.70% $ 454,059,551
of excess over $250 million
AIM V.I. Telecommunications
Fund....................... 1.00% $ 108,427,764
AIM Summit Fund, Inc........ 1.00% of the first $10 million; $ 2,624,615,009
0.75% of the next $140 million;
0.625% in excess of $150 million
AIM Large Cap Opportunities
Fund....................... Base fee of 1.50%; maximum annual N/A*
performance adjustment of +/-
1.00%
AIM Mid Cap Opportunities
Fund....................... Base fee of 1.00%; maximum annual $ 4,789,875
adjustment of +/- 1.00%
AIM Small Cap Opportunities
Fund....................... Base fee of 1.00%; maximum annual $ 365,491,330
adjustment of +/-0.75%
AIM Basic Value Fund........ First $500 million 0.475%; Next $ 136,276,615
$500 million 0.45%; Next $500
million 0.425%; excess over 0.40%
AIM Euroland Growth Fund.... First $500 million 0.975%; Next $ 541,308,192
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Japan Growth Fund....... First $500 million 0.975%; Next $ 304,533,247
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Mid Cap Equity Fund..... First $500 million 0.725%; Next $ 333,668,281
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM New Pacific Growth
Fund....................... First $500 million 0.975%; Next $ 139,121,407
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
</TABLE>
* AIM Large Cap Opportunities Fund commenced operations on December 30, 1999.
H-2
<PAGE> 88
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Small Cap Growth Fund... First $500 million 0.475%; Next $ 716,060,823
$500 million 0.45%; Next $500
million 0.425%; excess over 0.40%
AIM Global Consumer Products
and Services Fund.......... First $500 million 0.725%; Next $ 184,973,907
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global Financial
Services Fund.............. First $500 million 0.725%; Next $ 81,913,285
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global Health Care
Fund....................... First $500 million 0.975%; Next $ 462,669,291
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Global Infrastructure
Fund....................... First $500 million 0.725%; Next $ 45,124,457
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global Resources Fund... First $500 million 0.725%; Next $ 35,998,488
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global
Telecommunications and
Technology Fund............ First $500 million 0.975%; Next $ 1,935,476,632
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Latin American Growth
Fund....................... First $500 million 0.975%; Next $ 88,788,170
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Global Trends Fund...... First $500 million 0.975%; Next $ 51,201,676
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
</TABLE>
* AIM Large Cap Opportunities Fund commenced operations on December 30, 1999.
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The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have the same investment
objective as Blue Chip, Charter and Basic Value.
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Value Fund.............. 0.80% of the first $150 million; $27,839,018,320
0.625% of the excess over $150
million
AIM V.I. Blue Chip Fund..... 0.75% of first $350 million; $ 999,604
0.625% of the excess over $350
million
AIM V.I. Growth and Income
Fund....................... 0.65% of first $250 million; 0.60% $ 2,443,263,980
of the excess over $250 million
AIM V.I. Value Fund......... 0.65% of first $250 million; 0.60% $ 2,383,366,571
of the excess over $250 million
AIM Developing Markets
Fund....................... First $500 million 0.975%; Next $ 207,748,020
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
</TABLE>
* AIM Large Cap Opportunities Fund commenced operations on December 30, 1999.
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APPENDIX I
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AIM AGGRESSIVE GROWTH FUND
Aggressive Growth may not:
(a) with respect to 75% of the total assets of the Fund, purchase the
securities of any issuer if such purchase would cause more than 5% of the
value of its assets to be invested in the securities of such issuer (except
U.S. Government securities including securities issued by its agencies and
instrumentalities and except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order);
(b) concentrate 25% or more of its investments in a particular
industry;
(c) make short sales of securities (unless at all times when a short
position is open it either owns an amount of such securities or owns
securities which, without payment of any further consideration, are
convertible into or exchangeable for securities of the same issue as, and
equal in amount to, the securities sold short, and unless not more than 10%
of the Fund's total assets (taken at current value) is held for such sales
at any one time) or purchase securities on margin, but it may obtain such
short-term credit as is necessary for the clearance of purchases and sales
of securities and may make margin payments in connection with transactions
in stock index futures contracts and options thereon;
(d) act as a securities underwriter under the 1933 Act;
(e) make loans, except (i) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly and
purchased by financial institutions, and (ii) through the purchase of
short-term obligations (maturing within a year), including repurchase
agreements, provided that the Fund may lend its portfolio securities
provided the value of such loaned securities does not exceed 33 1/3% of its
total assets;
(f) borrow, except that the Fund may enter into stock index futures
contracts and that the right is reserved to borrow from banks, provided
that no borrowing may exceed one-third of the value of its total assets
(including the proceeds of such borrowing) and may secure such borrowings
by pledging up to one-third of the value of its total assets. (For the
purposes of this restriction, neither collateral arrangements with respect
to margin for a stock index futures contracts nor the segregation of
securities in connection with short sales are deemed to be a pledge of
assets); or
(g) buy or sell commodities, commodity contracts or real estate.
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AIM BLUE CHIP FUND
Blue Chip may not:
(a) issue bonds, debentures or senior equity securities;
(b) concentrate its investments; that is, invest 25% or more of the
value of its assets in issuers which conduct their business operations in
the same industry;
(c) invest in real estate, except that this restriction does not
preclude investments in real estate investment trusts;
(d) write, purchase, or sell puts, calls, straddles, spreads or
combinations thereof (other than covered put and call options), or sell
securities short (except against the box collateralized by not more than
10% of its net assets) or deal in commodities;
(e) make loans, except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or
purchasing short-term obligations, is not considered to be a loan for
purposes of this restriction, provided that the Fund may lend its portfolio
securities provided the value of such loaned securities does not exceed
33 1/3% of its total assets;
(f) purchase securities on margin, except that the Fund may obtain
such short term credits as may be necessary for the clearance of purchases
or sales of securities;
(g) borrow money or pledge its assets except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian
bank) amounts of up to 10% of the value of its total assets, and may pledge
amounts of up to 20% of its total assets to secure such borrowings; or
(h) act as an underwriter of securities of other issuers.
AIM CAPITAL DEVELOPMENT FUND
Capital Development may not:
(a) with respect to 75% of the total assets of the Fund, purchase the
securities of any one issuer (except securities issued or guaranteed by the
U.S. Government) if, immediately after and as a result of such purchase,
(i) the value of the holdings of the Fund in the securities of such issuer
exceeds 5% of the value of the Fund's total assets, or (ii) the Fund owns
more than 10% of the outstanding voting securities of any one class of
securities of such issuer, except that the Fund may purchase securities of
other investment companies to the extent permitted by applicable law or
exemptive order;
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(b) concentrate its investments; that is, invest 25% or more of the
value of its total assets in issuers who conduct their business operations
in the same industry;
(c) buy or sell commodities or commodity contracts or purchase or sell
real estate or other interests in real estate including real estate limited
partnership interests, except that this restriction does not preclude
investments in marketable securities of companies engaged in real estate
activities or in master limited partnership interests that are traded on a
national securities exchange;
(d) make loans, except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or
purchasing short-term obligations, is not considered to be a loan for
purposes of this restriction, provided that the Fund may lend its portfolio
securities provided the value of such loaned securities does not exceed
33 1/3% of its total assets;
(e) purchase securities on margin, except that the Fund may obtain
such short term credits as may be necessary for the clearance of purchases
or sales of securities, or sell securities short (except against the box
and collateralized by not more than 10% of its net assets);
(f) borrow money or pledge its assets except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian
bank) provided that no borrowing may exceed one-third of the value of its
total assets, including the proceeds of such borrowings, and may secure
such borrowings by pledging up to one-third of the value of its total
assets;
(g) act as an underwriter of securities of other issuers; or
(h) issue bonds, debentures, or senior equity securities.
AIM CHARTER FUND
Charter may not:
(a) purchase the securities of any one issuer (except securities
issued or guaranteed by the U.S. Government) if, immediately after and as a
result of such purchase, (i) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's total
assets, or (ii) the Fund owns more than 10% of the outstanding voting
securities of any one class of securities of such issuers, except that the
Fund may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
(b) concentrate its investments; that is, invest 25% or more of the
value of its assets in any particular industry;
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(c) purchase or sell real estate or other interests in real estate
(except that this restriction does not preclude investments in marketable
securities of companies engaged in real estate activities);
(d) buy or sell physical commodities or physical commodity contracts,
including physical commodities futures contracts, or deal in oil, gas, or
other mineral exploration or development programs;
(e) make loans (except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or
entering into a repurchase agreement, is not considered to be a loan for
purposes of this restriction), provided that the Fund may lend its
portfolio securities provided the value of such loaned securities does not
exceed 33 1/3% of its total assets;
(f) purchase securities on margin or sell short;
(g) borrow money or pledge its assets except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian
bank) amounts of up to 10% of the value of its total assets, and may pledge
amounts of up to 20% of its total assets to secure such borrowings;
(h) invest in companies for the purpose of exercising control or
management, except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order;
(i) act as an underwriter of securities of other issuers;
(j) purchase from or sell to any officer, director or employee of the
Fund, or its advisors or distributor, or to any of their officers or
directors, any securities other than shares of the capital stock of
Charter; or
(k) purchase or retain the securities of any issuer if those officers
and directors of the Company, its advisors or distributor owning
individually more than 1/2 of 1% of the securities of such issuer, together
own more than 5% of the securities of such issuer.
AIM CONSTELLATION FUND
Constellation may not:
(a) invest for the purpose of exercising control over or management of
any company, except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order;
(b) engage in the underwriting of securities of other issuers;
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(c) purchase and sell real estate or commodities or commodity
contracts;
(d) make loans, except by the purchase of a portion of an issue of
publicly distributed bonds, debentures or other obligations, provided that
the Fund may lend its portfolio securities provided the value of such
loaned securities does not exceed 33 1/3% of its total assets;
(e) invest in interests in oil, gas or other mineral exploration or
development programs; or
(f) invest 25% or more of the value of its total assets in securities
of issuers all of which conduct their principal business activities in the
same industry.
In addition, Constellation may borrow money to a limited extent from banks
(including the Fund's custodian bank) for temporary or emergency purposes or to
purchase or carry securities. The Fund may borrow funds from a bank (including
its custodian bank) to purchase or carry securities only if, immediately after
such borrowing, the value of the Fund's assets, including the amount borrowed,
less its liabilities, is equal to at least 300% of the amount borrowed, plus all
outstanding borrowings. For the purpose of determining this 300% asset coverage
requirement, the Fund's liabilities will not include the amount borrowed but
will include the market value, at the time of computation, of all securities
borrowed by the Fund in connection with short sales. The amount of borrowing
will also be limited by the applicable margin limitations imposed by the Federal
Reserve Board. If at any time the value of the Fund's assets should fail to meet
the 300% asset coverage requirement, the Fund will, within three days, reduce
its borrowings to the extent necessary. The Fund may be required to eliminate
partially or totally its outstanding borrowings at times when it may not be
desirable for it to do so. Any investment gains made by the Fund with the
borrowed monies in excess of interest paid by the Fund will cause the net asset
value of the Fund's shares to rise faster than would otherwise be the case. On
the other hand, if the investment performance of the additional securities
purchased with the proceeds of such borrowings fails to cover the interest paid
on the money borrowed by the Fund, the net asset value of the Fund will decrease
faster than would otherwise be the case. This speculative factor is known as
"leveraging."
AIM LARGE CAP GROWTH FUND
Large Cap Growth may not:
(a) issue bonds, debentures or senior equity securities;
(b) concentrate its investments; that is, invest 25% or more of the
value of its assets in issuers which conduct their business operations in
the same industry;
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(c) invest in real estate, except that this restriction does not
preclude investments in real estate investment trusts;
(d) make loans, except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or
purchasing short-term obligations, is not considered to be a loan for
purposes of this restriction, provided that the Fund may lend its portfolio
securities provided the value of such loaned securities does not exceed
33 1/3% of its total assets;
(e) purchase securities on margin, except that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
or sales of securities;
(f) borrow money or pledge its assets except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian
bank) amounts of up to 10% of the value of its total assets, and may pledge
amounts of up to 20% of its total assets to secure such borrowings;
(g) act as an underwriter of securities of other issuers; or
(h) purchase physical commodities.
AIM WEINGARTEN FUND
Weingarten may not:
(a) issue bonds, debentures or senior equity securities;
(b) underwrite securities of other companies or purchase restricted
securities ("letter stock");
(c) invest in real estate, except that the Fund may purchase
securities of real estate investment trusts;
(d) lend money, except in connection with the acquisition of a portion
of an issue of publicly distributed bonds, debentures or other corporate or
governmental obligations, provided that the Fund may lend its portfolio
securities provided the value of such loaned securities does not exceed
33 1/3% of its total assets;
(e) purchase securities on margin, except that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities;
(f) purchase shares in order to control management of a company,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order;
(g) buy or sell physical commodities or physical commodity contracts,
including physical commodities futures contracts;
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(h) invest 25% or more of the value of its total assets in securities
of issuers all of which conduct their principal business activities in the
same industry; or
(i) borrow money or pledge its assets, except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian
bank) amounts of up to 10% of the value of its total assets, and may pledge
amounts of up to 20% of its total assets to secure such borrowings.
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APPENDIX J
OPTIONS, FUTURES AND CURRENCY STRATEGIES
Introduction
Each fund may use forward contracts, futures contracts, options on
securities, options on indices, options on currencies, and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with each fund's investments. These
instruments are often referred to as "derivatives," which may be defined as
financial instruments whose performance is derived, at least in part, from the
performance of another asset (such as a security, currency or an index of
securities).
General Risks of Options, Futures and Currency Strategies
The use by the funds of options, futures contracts and forward currency
contracts involves special considerations and risks, as described below. Risks
pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to
correctly predict the direction of changes in the value of the applicable
markets and securities, contracts and/or currencies. While AIM is experienced in
the use of these instruments, there can be no assurance that any particular
hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between
the price movements of an instrument (such as an option contract) and the price
movements of the investments being hedged. For example, if a "protective put" is
used to hedge a potential decline in a security and the security does decline in
price, the put option's increased value may not completely offset the loss in
the underlying security. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as changing
interest rates, market liquidity, and speculative or other pressures on the
markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements in the
investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any
particular option, futures contract, forward contract or option thereon at any
particular time.
(5) As described below, a fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
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positions in instruments involving obligations to third parties. If a fund were
unable to close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. The requirements might impair the fund's ability to
sell a portfolio security or make an investment at a time when it would
otherwise be favorable to do so, or require that the fund sell a portfolio
security at a disadvantageous time.
(6) There is no assurance that a fund will use hedging transactions. For
example, if a fund determines that the cost of hedging will exceed the potential
benefit to the fund, the fund will not enter into such transaction.
Cover
Transactions using forward contracts, futures contracts and options (other
than options purchased by a fund) expose a fund to an obligation to another
party. A fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, forward contracts or futures contracts or (2) cash, liquid assets
and/or short-term debt securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. Each fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities. To the extent that a
futures contract, forward contract or option is deemed to be illiquid, the
assets used to "cover" the fund's obligation will also be treated as illiquid
for purposes of determining the fund's maximum allowable investment in illiquid
securities.
Even though options purchased by the funds do not expose the funds to an
obligation to another party, but rather provide the funds with a right to
exercise, the funds intend to "cover" the cost of any such exercise. To the
extent that a purchased option is deemed illiquid, the fund will treat the
market value of the option (i.e., the amount at risk to the fund) as illiquid,
but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding
forward contract, futures contract or option is open, unless they are replaced
with other appropriate assets. If a large portion of a fund's assets is used for
cover or otherwise set aside, it could affect portfolio management or the fund's
ability to meet redemption requests or other current obligations.
Writing Call Options
Each of the funds may write (sell) covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
call option, a fund would have the obligation to deliver the underlying
security, cash or currency (depending on the type of derivative) to the holder
(buyer) at a specified price (the exercise price) at any time until (American
style) or on
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(European style) a certain date (the expiration date). So long as the obligation
of a fund continues, it may be assigned an exercise notice, requiring it to
deliver the underlying security, cash or currency against payment of the
exercise price. This obligation terminates upon the expiration of the call
option, or such earlier time at which a fund effects a closing purchase
transaction by purchasing an option identical to that previously sold.
When writing a call option a fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security,
contract or currency above the exercise price, and retains the risk of loss
should the price of the security, contract or currency decline. Unlike one who
owns securities, contracts or currencies not subject to an option, a fund has no
control over when it may be required to sell the underlying securities,
contracts or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that a fund has written expires, it
will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security, contract or
currency during the option period. If the call option is exercised, a fund will
realize a gain or loss form the sale of the underlying security, contract or
currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option.
Closing transactions may be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security, contract or currency
from being called or to permit the sale of the underlying security, contract or
currency. Furthermore, effecting a closing transaction will permit the fund to
write another call option on the underlying security, contract or currency with
either a different exercise price or expiration date, or both.
Writing Put Options
Each of the funds may write (sell) covered put options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
put option, a fund would have the obligation to buy the underlying security,
contract or currency (depending on the type of derivative) at the exercise price
at any time until (American style) or on (European style) the expiration date.
This obligation terminates upon the expiration of the put option, or such
earlier time at which a fund effects a closing purchase transaction by
purchasing an option identical to that previously sold.
A fund would write a put option at an exercise price that, reduced by the
premium received on the option, reflects the lower price it is willing to pay
for the underlying security, contract or currency. The risk in such a
transaction would be
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that the market price of the underlying security, contract or currency would
decline below the exercise price less the premium received.
Purchasing Put Options
Each of the funds may purchase covered put options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a put
option, a fund would have the right to sell the underlying security, contract or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. A fund may enter into closing sale
transactions with respect to such options, exercise such option or permit such
option to expire.
A fund may purchase a put option on an underlying security, contract or
currency ("protective put") owned by the fund in order to protect against an
anticipated decline in the value of the security, contract or currency. Such
hedge protection is provided only during the life of the put option. The premium
paid for the put option and any transaction costs would reduce any profit
realized when the security, contract or currency is delivered upon exercise of
said option. Conversely, if the underlying security, contract or currency does
not decline in value, the option may expire worthless and the premium paid for
the protective put would be lost.
A fund may also purchase put options on underlying securities, contracts or
currencies against which it has written other put options. For example, where a
fund has written a put option on an underlying security, rather than entering a
closing transaction of the written option, it may purchase a put option with a
different exercise price and/or expiration date that would eliminate some or all
of the risk associated with the written put. Used in combinations, these
strategies are commonly referred to as "put spreads." Likewise, a fund may write
call options on underlying securities, contracts or currencies against which it
has purchased protective put options. This strategy is commonly referred to as a
"collar."
Purchasing Call Options
Each of the funds may purchase covered call options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a call
option, a fund would have the right to purchase the underlying security,
contract or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A fund may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by a fund for the purpose of acquiring the
underlying security, contract or currency for its portfolio. Utilized in this
fashion, the purchase of call options would enable a fund to acquire the
security, contract
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or currency at the exercise price of the call option plus the premium paid. So
long as it holds such a call option, rather than the underlying security or
currency itself, the fund is partially protected from any unexpected decline in
the market price of the underlying security, contract or currency and, in such
event, could allow the call option to expire, incurring a loss only to the
extent of the premium paid for the option.
Each of the funds may also purchase call options on underlying securities,
contracts or currencies against which it has written other call options. For
example, where a fund has written a call option on an underlying security,
rather than entering a closing transaction of the written option, it may
purchase a call option with a different exercise price and/or expiration date
that would eliminate some or all of the risk associated with the written call.
Used in combinations, these strategies are commonly referred to as "call
spreads."
Over-The-Counter Options
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (i.e., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time. Although a fund will enter
into OTC options only with dealers that are expected to be capable of entering
into closing transactions with it, there is no assurance that the fund will in
fact be able to close out an OTC option position at a favorable price prior to
expiration. In the event of insolvency of the dealer, a fund might be unable to
close out an OTC option position at any time prior to its expiration.
The staff of the SEC considers purchased OTC options (i.e., the market
value of the option) to be illiquid securities. A fund may also sell OTC options
and, in connection therewith, segregate assets or cover its obligations with
respect to OTC options written by it. The assets used as cover for OTC options
written by the fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
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be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
Index Options
Puts and calls on indices are similar to puts and calls on securities or
futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
movements in individual securities or futures contracts. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call or put times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will not be
perfectly correlated with the value of the index.
Limitations on Options
A fund will not write options if, immediately after such sale, the
aggregate value of securities or obligations underlying the outstanding options
exceeds 20% of the fund's total assets. A fund will not purchase options if, at
the time of the investment, the aggregate premiums paid for the options will
exceed 5% of the fund's total assets.
Interest Rate, Currency and Stock Index Futures Contracts
Each of the funds may enter into interest rate, currency or stock index
futures contracts (collectively, "Futures" or "Futures Contracts") as a hedge
against changes in prevailing levels of interest rates, currency exchange rates
or stock price levels, respectively, in order to establish more definitely the
effective return on securities or currencies held or intended to be acquired by
it. A fund's hedging may include sales of Futures as an offset against the
effect of expected increases in interest rates, and decreases in currency
exchange rates and stock prices, and purchases of Futures as an offset against
the effect of expected declines in interest rates, and increases in currency
exchange rates or stock prices.
J-6
<PAGE> 103
A Futures Contract is a two party agreement to buy or sell a specified
amount of a specified security or currency (or delivery of a cash settlement
price, in the case of an index future) for a specified price at a designated
date, time and place. A stock index future provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading on the contract and the price agreed upon in the Futures Contract; no
physical delivery of stocks comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Future is outstanding.
The funds will only enter into Futures Contracts that are traded (either
domestically or internationally) on futures exchanges and are standardized as to
maturity date and underlying financial instrument. Futures exchanges and trading
thereon in the United States are regulated under the Commodity Exchange Act and
by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges
and trading thereon are not regulated by the CFTC and are not subject to the
same regulatory controls.
Closing out an open Future is effected by entering into an offsetting
Future for the same aggregate amount of the identical financial instrument or
currency and the same delivery date. There can be no assurance, however, that a
fund will be able to enter into an offsetting transaction with respect to a
particular Future at a particular time. If a fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Future.
A fund's Futures transactions will be entered into for hedging purposes
only; that is, Futures will be sold to protect against a decline in the price of
securities or currencies that the fund owns, or Futures will be purchased to
protect the fund against an increase in the price of securities or currencies it
has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be
deposited by a fund in order to initiate Futures trading and maintain its open
positions in Futures. A margin deposit made when the Futures Contract is entered
("initial margin") is intended to ensure the fund's performance under the
Futures Contract. The margin required for a particular Future is set by the
exchange on which the Future is traded and may be significantly modified from
time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which a fund entered into the Futures Contract will
be made on a daily basis as the price of the underlying security, currency or
index fluctuates making the Futures more or less valuable, a process known as
marking-to-market.
If a fund were unable to liquidate a Future or an option on a Futures
position due to the absence of a liquid secondary market or the imposition of
price limits,
J-7
<PAGE> 104
it could incur substantial losses. The fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Options on Futures Contracts
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account.
Forward Contracts
A forward contract is an obligation, usually arranged with a commercial
bank or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. A fund either
may accept or make delivery of the currency at the maturity of the forward
contract. A fund may also, if its contra party agrees prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
contract. Forward contracts are traded over-the-counter, and not on organized
commodities or securities exchanges. As a result, it may be more difficult to
value such contracts, and it may be difficult to enter into closing
transactions.
Each of the funds may engage in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in exchange rates. A
fund may enter into forward contracts with respect to a specific purchase or
sale of a security, or with respect to its portfolio positions generally. When a
fund purchases a security denominated in a foreign currency for settlement in
the near future, it may immediately purchase in the forward market the currency
needed to pay for and settle the purchase. By entering into a forward contract
with respect to the specific purchase or sale of a security denominated in a
foreign currency, the fund can secure an exchange rate between the trade and
settlement dates for that purchase or sale transaction. This practice is
sometimes referred to as "transaction hedging." Position hedging is the purchase
or sale of foreign currency with respect to portfolio security positions
denominated or quoted in a foreign currency.
The cost to a fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of
forward
J-8
<PAGE> 105
contracts does not eliminate fluctuations in the prices of the underlying
securities a fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while forward contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
Limitations on Use of Futures, Options on Futures and Certain Options on
Currencies
To the extent that a fund enters into Futures Contracts, options on Futures
Contracts and options on foreign currencies traded on a CFTC-regulated exchange,
in each case other than for bona fide hedging purposes (as defined by the CFTC),
the aggregate initial margin and premiums required to establish those positions
(excluding the amount by which options are "in-the-money") will not exceed 5% of
the total assets of the fund, after taking into account unrealized profits and
unrealized losses on any contracts it has entered into. This guideline may be
modified by the Board, without a shareholder vote. This limitation does not
limit the percentage of the fund's assets at risk to 5%.
J-9
<PAGE> 106
APPENDIX K
CURRENT INVESTMENT OBJECTIVES
AIM AGGRESSIVE GROWTH FUND
The fund's investment objective is to achieve long-term growth of capital
by investing primarily in common stocks of companies whose earnings the fund's
portfolio managers expect to grow more than 15% per year.
AIM BLUE CHIP FUND
The fund's primary investment objective is long-term growth of capital with
a secondary objective of current income.
AIM CAPITAL DEVELOPMENT FUND
The fund's investment objective is long-term growth of capital.
K-1
<PAGE> 107
APPENDIX L
EXECUTIVE OFFICERS OF AIM EQUITY FUNDS, INC.
The following table provides information with respect to the executive
officers of the company. Each executive officer is elected by the Board and
serves until his or her successor is chosen and qualified or until his or her
resignation or removal by the Board. The business address of all officers of the
company is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATION(S)
WITH THE COMPANY OFFICER SINCE DURING PAST 5 YEARS
- ---------------------- ------------- -----------------------
<S> <C> <C>
Charles T. Bauer (81), May 2, 1992 See director table under Proposal 1
Chairman
Robert H. Graham (53), January 1, 1994 See director table under Proposal 1
President
Gary T. Crum (52), September 11, 1993 Director and President, A I M Capital
Senior Vice Management, Inc.; Director and
President Executive Vice President, A I M
Management Group Inc.; Director and
Senior Vice President, A I M Advisors,
Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
Carol F. Relihan (45), August 4, 1994 Director, Senior Vice President,
Senior Vice General Counsel and Secretary, A I M
President Secretary Advisors, Inc.; Senior Vice President,
General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice
President and General Counsel, Fund
Management Company; Vice President and
General Counsel, A I M Fund Services,
Inc; and Vice President, A I M Capital
Management, Inc. and A I M
Distributors, Inc.
Melville B. Cox (56), March 5, 1992 Vice President and Chief Compliance
Vice President Officer, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund Management
Company
Dana R. Sutton (41), September 11, 1993 Vice President and Fund Controller,
Vice President A I M Advisors, Inc.; and Assistant
Treasurer Vice President and Assistant
Treasurer, Fund Management Company.
Edgar M. Larsen (59), March 12, 1999 Vice President, A I M Capital
Vice President Management, Inc.
</TABLE>
L-1
<PAGE> 108
APPENDIX M
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the ownership
of the shares of common stock of each of the funds by the directors and
executive officers of the company. No information is given as to a fund or a
class if a director or officer held no shares of any or all classes of such fund
as of February 18, 2000.
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AS OF PERCENT
NAME OF DIRECTOR/OFFICER FUND (CLASS) FEBRUARY 18, 2000 OF CLASS
------------------------ ------------ ------------------ --------
<S> <C> <C> <C>
Charles T. Bauer..........................
Bruce L. Crockett.........................
Owen Daly II..............................
Edward K. Dunn Jr.........................
Jack M. Fields............................
Carl Frischling...........................
Robert H. Graham..........................
Prema Mathai-Davis........................
Lewis F. Pennock..........................
Louis S. Sklar............................
Gary T. Crum..............................
Carol F. Relihan..........................
Melville B. Cox...........................
Dana R. Sutton............................
Edgar M. Larsen...........................
All Directors and Officers as a Group.....
</TABLE>
* Less than 1% of the outstanding shares of the class.
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS
To the best knowledge of the company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each fund as of
February 18, 2000, and the amount of the outstanding shares owned of record or
beneficially by such holders, are set forth below.
<TABLE>
<CAPTION>
PERCENT OF
FUND NAME AND ADDRESS SHARES OWNED PERCENT OF CLASS SHARES OWNED CLASS OWNED
(CLASS) OF RECORD OWNER OF RECORD OWNED OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------- ---------------- ---------------- --------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
-- --
-- --
-- --
</TABLE>
* The company has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
M-1
<PAGE> 109
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM AGGRESSIVE GROWTH FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Aggressive Growth Fund, a portfolio of AIM Equity
Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 110
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 111
4. To approve a proposal to change AIM Aggressive Growth Fund's
fundamental investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental FOR AGAINST ABSTAIN
Investment Restriction on Investing All of Each Fund's [ ] [ ] [ ]
Assets in an Open-End Fund
(i) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(j) Elimination of Fundamental Restriction on Short FOR AGAINST ABSTAIN
Sales of Securities [ ] [ ] [ ]
(k) THIS PROPOSAL IS NOT APPLICABLE TO AIM
AGGRESSIVE GROWTH FUND.
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM
AGGRESSIVE GROWTH FUND.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM
AGGRESSIVE GROWTH FUND.
</TABLE>
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM AGGRESSIVE GROWTH FUND
6. To approve changing the investment objective of AIM Aggressive Growth
Fund and making it non-fundamental.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 112
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Aggressive Growth Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 113
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM BLUE CHIP FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Blue Chip Fund, a portfolio of AIM Equity Funds,
Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 114
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 115
4. To approve a proposal to change AIM Blue Chip Fund's fundamental
investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental Investment Restriction FOR AGAINST ABSTAIN
on Investing All of Each Fund's Assets in an [ ] [ ] [ ]
Open-End Fund
(i) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(j) Elimination of Fundamental Restriction on Short FOR AGAINST ABSTAIN
Sales of Securities [ ] [ ] [ ]
(k) THIS PROPOSAL IS NOT APPLICABLE TO AIM BLUE
CHIP FUND.
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM BLUE
CHIP FUND.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM BLUE
CHIP FUND.
</TABLE>
5. To approve a proposal to change the investment objective of AIM Blue
Chip Fund so that it is non-fundamental.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM BLUE CHIP FUND.
<PAGE> 116
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Blue Chip Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 117
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM CAPITAL DEVELOPMENT FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Capital Development Fund, a portfolio of AIM
Equity Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND
"FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 118
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 119
4. To approve a proposal to change AIM Capital Development Fund's
fundamental investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental Investment Restriction FOR AGAINST ABSTAIN
on Investing All of Each Fund's Assets in an [ ] [ ] [ ]
Open-End Fund
(i) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(j) Elimination of Fundamental Restriction on Short FOR AGAINST ABSTAIN
Sales of Securities [ ] [ ] [ ]
(k) THIS PROPOSAL IS NOT APPLICABLE TO AIM CAPITAL
DEVELOPMENT FUND.
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM CAPITAL
DEVELOPMENT FUND.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM CAPITAL
DEVELOPMENT FUND.
</TABLE>
5. To approve a proposal to change the investment objective of AIM Capital
Development Fund so that it is non-fundamental.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM CAPITAL DEVELOPMENT FUND.
<PAGE> 120
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Capital Development Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 121
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM CHARTER FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Charter Fund, a portfolio of AIM Equity Funds,
Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 122
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 123
4. To approve a proposal to change AIM Charter Fund's fundamental
investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental Investment Restriction FOR AGAINST ABSTAIN
on Investing All of Each Fund's Assets in an [ ] [ ] [ ]
Open-End Fund
(i) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(j) Elimination of Fundamental Restriction on Short FOR AGAINST ABSTAIN
Sales of Securities [ ] [ ] [ ]
(k) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Investing for the Purpose of Control [ ] [ ] [ ]
(l) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Purchasing Securities of Issuers in which Officers [ ] [ ] [ ]
and Directors of the Company and its Affiliates Own
Securities
(m) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Transactions with Officers and Directors of Charter [ ] [ ] [ ]
in Securities Other Than Capital Stock of Charter
</TABLE>
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM CHARTER FUND.
<PAGE> 124
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM CHARTER FUND.
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Charter Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 125
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM CONSTELLATION FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Constellation Fund, a portfolio of AIM Equity
Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 126
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 127
4. To approve a proposal to change AIM Constellation Fund's fundamental
investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental Investment Restriction FOR AGAINST ABSTAIN
on Investing All of Each Fund's Assets in an [ ] [ ] [ ]
Open-End Fund
(i) THIS PROPOSAL IS NOT APPLICABLE TO AIM
CONSTELLATION FUND.
(j) THIS PROPOSAL IS NOT APPLICABLE TO AIM
CONSTELLATION FUND.
(k) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Investing for the Purpose of Control [ ] [ ] [ ]
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM
CONSTELLATION FUND.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM
CONSTELLATION FUND.
</TABLE>
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM CONSTELLATION FUND.
<PAGE> 128
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM CONSTELLATION FUND.
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Constellation Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 129
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM DENT DEMOGRAPHIC TRENDS FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Dent Demographic Trends Fund, a portfolio of AIM
Equity Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND
"FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 130
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 131
4. THIS PROPOSAL IS NOT APPLICABLE TO AIM DENT DEMOGRAPHIC TRENDS FUND.
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM DENT DEMOGRAPHIC TRENDS FUND.
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM DENT DEMOGRAPHIC TRENDS FUND.
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Dent Demographic Trends Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 132
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM LARGE CAP BASIC VALUE FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Large Cap Basic Value Fund, a portfolio of AIM
Equity Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND
"FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 133
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 134
4. THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE CAP BASIC VALUE FUND.
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE CAP BASIC VALUE FUND.
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE CAP BASIC VALUE FUND.
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Large Cap Basic Value Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 135
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM LARGE CAP GROWTH FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Large Cap Growth Fund, a portfolio of AIM Equity
Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 136
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 137
4. To approve a proposal to change AIM Large Cap Growth Fund's fundamental
investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental Investment Restriction FOR AGAINST ABSTAIN
on Investing All of Each Fund's Assets in an [ ] [ ] [ ]
Open-End Fund
(i) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(j) THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE
CAP GROWTH FUND.
(k) THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE
CAP GROWTH FUND.
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE
CAP GROWTH FUND.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE
CAP GROWTH FUND.
</TABLE>
<PAGE> 138
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE CAP GROWTH FUND.
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM LARGE CAP GROWTH FUND.
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Large Cap Growth Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 139
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM MID CAP GROWTH FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Mid Cap Growth Fund, a portfolio of AIM Equity
Funds, Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 140
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 141
4. THIS PROPOSAL IS NOT APPLICABLE TO AIM MID CAP GROWTH FUND.
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM MID CAP GROWTH FUND.
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM MID CAP GROWTH FUND.
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Mid Cap Growth Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 142
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY PROXY
AIM WEINGARTEN FUND
PROXY SOLICITED BY THE BOARD
OF AIM EQUITY FUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, 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 Special
Meeting of Shareholders of AIM Weingarten Fund, a portfolio of AIM Equity Funds,
Inc., on May 3, 2000, at 3:00 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" EACH DIRECTOR AND "FOR" THE
APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign. When
signing as executor, administrator, attorney,
director 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)
Dated
--------------------------------------------
<PAGE> 143
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Equity Funds,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve an Agreement and Plan of Reorganization which provides for
the reorganization of AIM Equity Funds, Inc. as a Delaware business
trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 144
4. To approve a proposal to change AIM Weingarten Fund's fundamental
investment restrictions.
<TABLE>
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental FOR AGAINST ABSTAIN
Restriction on Issuer Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restrictions on Borrowing FOR AGAINST ABSTAIN
Money and Issuing Senior Securities [ ] [ ] [ ]
(c) Change to Fundamental Restriction on FOR AGAINST ABSTAIN
Underwriting Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Real Estate [ ] [ ] [ ]
(f) Change to Fundamental Restriction on Purchasing FOR AGAINST ABSTAIN
or Selling Commodities [ ] [ ] [ ]
(g) Change to Fundamental Restriction on Making FOR AGAINST ABSTAIN
Loans [ ] [ ] [ ]
(h) Approval of a New Fundamental Investment Restriction FOR AGAINST ABSTAIN
on Investing All of Each Fund's Assets in an [ ] [ ] [ ]
Open-End Fund
(i) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(j) THIS PROPOSAL IS NOT APPLICABLE TO AIM
WEINGARTEN FUND.
(k) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Investing for the Purpose of Control [ ] [ ] [ ]
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM
WEINGARTEN FUND.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM
WEINGARTEN FUND.
</TABLE>
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM WEINGARTEN FUND.
6. THIS PROPOSAL IS NOT APPLICABLE TO AIM WEINGARTEN FUND.
<PAGE> 145
7. To ratify the selection of KPMG LLP as independent accountants for AIM
Weingarten Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 146
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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 DIRECTOR NAMED
IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL OTHER PROPOSALS INDICATED ON THE
CARDS. IN ORDER TO AVOID THE ADDITIONAL EXPENSES 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 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............................................. John 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
Corporate Accounts
(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>