<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>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
AIM FUNDS GROUP
- --------------------------------------------------------------------------------
(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 FUNDS GROUP
AIM BALANCED FUND
AIM GLOBAL UTILITIES FUND
AIM HIGH YIELD FUND
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MONEY MARKET FUND
AIM MUNICIPAL BOND FUND
AIM SELECT GROWTH FUND
AIM VALUE 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 Funds Group (the trust) 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 trust's offices at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The trust, a Delaware business trust, consists of the following series
portfolios: AIM Balanced Fund, AIM Global Utilities Fund, AIM High Yield Fund,
AIM Income Fund, AIM Intermediate Government Fund, AIM Money Market Fund, AIM
Municipal Bond Fund, AIM Select Growth Fund and AIM Value Fund. This proxy
statement relates to all of these series portfolios (together, the funds).
The purposes of the meeting are as follows:
(1) To elect ten trustees, 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 AIM High Yield Fund, AIM Income Fund, AIM Intermediate
Government Fund, AIM Money Market Fund and AIM Municipal Bond Fund into new
series portfolios of AIM Investment Securities Funds having the same
investment objectives and policies.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of all funds.
(5) To approve changing the investment objectives of AIM Balanced Fund, AIM
Global Utilities Fund, AIM Income Fund, AIM Intermediate Gov-
<PAGE> 3
ernment Fund, AIM Municipal Bond Fund, AIM Select Growth Fund and AIM Value Fund
and making them non-fundamental.
(6) To approve changing the investment objective of AIM Money Market Fund so
that it is 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 a fund
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 trust 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,
/s/ CAROL F. RELIHAN
Carol F. Relihan
Secretary
March 9, 2000
2
<PAGE> 4
AIM FUNDS GROUP
AIM BALANCED FUND
AIM GLOBAL UTILITIES FUND
AIM HIGH YIELD FUND
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MONEY MARKET FUND
AIM MUNICIPAL BOND FUND
AIM SELECT GROWTH FUND
AIM VALUE 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 Trustees (the Board) of AIM Funds Group (the trust) is sending
you this proxy statement and the enclosed proxy card (or cards) on behalf of the
nine separate series portfolios of the trust listed above (together, the funds).
The Board is soliciting your proxy to vote at the 2000 special meeting of
shareholders of the trust (the meeting).
WHEN AND WHERE WILL THE MEETING BE HELD?
The meeting will be held at the trust'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 trust 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> <C>
1. Electing trustees All funds
2. Approving an Agreement and Plan of AIM High Yield Fund (High Yield), AIM
Reorganization Income Fund (Income), AIM Intermediate
Government Fund (Intermediate
Government), AIM Money Market Fund
(Money Market) and AIM Municipal Bond
Fund (Municipal Bond)
3. Approving a new advisory agreement with All funds
A I M Advisors, Inc.
4. Changing the funds' fundamental All funds
investment restrictions
5. Changing investment objectives and AIM Balanced Fund (Balanced), AIM Global
making them non-fundamental Utilities Fund (Global Utilities),
Income, Intermediate Government,
Municipal Bond, AIM Select Growth Fund
(Select Growth) and AIM Value Fund
(Value)
6. Changing the investment objective of Money Market
Money Market so that it is
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 beneficial interest 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 beneficial interest 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).
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.
2
<PAGE> 6
The Board has named Robert H. Graham, Gary T. Crum and Lewis F. Pennock as
proxies. If you properly fill in your proxy card and send it to the trust 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 trust'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
You may also vote your 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.
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 one-third 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
Agreement and Declaration of Trust of the trust requires the separate approval
of one or more classes or series of the shares of the trust, in which case the
holders of one-third of the shares of each such class or series (or of such
classes or series voting
3
<PAGE> 7
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 trustees 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 High Yield, Income, Intermediate Government, Money Market and
Municipal Bond; approving a new advisory agreement for your fund; changing your
fund's investment restrictions; changing the investment objectives of Balanced,
Global Utilities, Income, Intermediate Government, Municipal Bond, Select Growth
and Value and making them non-fundamental; changing the investment objective of
Money Market so that it is 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
trustees, meaning that the nominees receiving the most votes will be elected
(Proposal 1). In an uncontested election of trustees, the plurality requirement
is not a factor.
The affirmative vote of a majority of the outstanding shares of each
applicable fund entitled to vote at the meeting is required to approve the
Agreement and Plan of Reorganization which provides for the reorganization of
High Yield, Income, Intermediate Government, Money Market and Municipal Bond
into new series portfolios of AIM Investment Securities Funds having the same
investment objectives and policies (Proposal 2). Broker non-votes and
abstentions will not count as votes cast and will have the effect of votes
against Proposal 2.
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 the funds (Proposal
4);
4
<PAGE> 8
- change the investment objectives of Balanced, Global Utilities, Income,
Intermediate Government, Municipal Bond, Select Growth and Value and make
them non-fundamental (Proposal 5); and
- make the investment objective of Money Market 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 TRUSTEES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THE ELECTION OF TRUSTEES?
Proposal 1 applies to all shareholders of all funds.
WHO ARE THE NOMINEES FOR TRUSTEE?
For election of trustees 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 trustee until his or her
successor is elected and qualified.
5
<PAGE> 9
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 trustee. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the trustees who are not interested persons of the trust,
as defined in the 1940 Act (the independent trustees), may recommend.
All of the nominees presently are trustees of the trust. The nominees 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 trustee or nominee is a party
adverse to the trust or any of its affiliates in any material pending legal
proceedings, nor does any trustee or nominee have an interest materially adverse
to the trust.
6
<PAGE> 10
The following table sets forth information concerning the nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING PAST
NAME, ADDRESS AND AGE TRUSTEE SINCE 5 YEARS
- --------------------- ------------------ --------------------------------
<S> <C> <C>
+*Charles T. Bauer (81) May 5, 1993 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) May 5, 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 5, 1993 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 trust, 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 TRUSTEE SINCE 5 YEARS
- --------------------- ------------------ --------------------------------
<S> <C> <C>
+**Carl Frischling (63) May 5, 1993 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 5, 1993 Partner, Pennock & Cooper (law
6363 Woodway, Suite 825 firm).
Houston, TX 77057
+Louis S. Sklar (60) May 5, 1993 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 trust, as defined in the 1940
Act, primarily because of payments received by his law firm from the trust
for services to the independent trustees of the trust.
*** Mr. Graham is an interested person of AIM and the trust, 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.
8
<PAGE> 12
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 trust
for these services and the overall level of the funds' operating expenses.
WHY ARE TRUSTEES BEING ELECTED AT THE PRESENT TIME?
Under the 1940 Act, the Board may fill vacancies on the Board or appoint
new trustees only if, immediately thereafter, at least two-thirds of the
trustees will have been elected by shareholders. Currently, seven of the trust's
ten trustees have been elected by shareholders. As trustees retire, resign or
otherwise cease their service as trustees in the future, the trust may be unable
to fill the vacancies created by such action because three of the trust's ten
trustees have not been elected by shareholders. To provide the Board with the
flexibility to fill vacancies created when trustees cease their service as
trustees, and in light of the fact that only seven of the trust's trustees have
been elected by shareholders, the Board believes it is appropriate for
shareholders to elect trustees at the present time.
HOW LONG CAN TRUSTEES SERVE ON THE BOARD?
Trustees generally hold office until their successors are elected and
qualified. Pursuant to a policy adopted by the Board, each duly elected or
appointed independent trustee may continue to serve as a trustee until December
31 of the year in which the trustee turns 72. Independent trustees who were 65
or older and serving on the board of one or more of the AIM funds when the
policy was initially adopted in 1992 may continue to serve until December 31 of
the year in which the trustee turns 75. A trustee of the trust may resign or be
removed for cause by a vote of the holders of a majority of the outstanding
shares of the trust at any time. A majority of the Board may extend from time to
time the retirement date of a trustee. The Board has agreed to extend the
retirement date of Mr. Daly, who otherwise would have retired on 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 trustee.
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;
9
<PAGE> 13
- 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;
- 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
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 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
- 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.
10
<PAGE> 14
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 trustees as long as the trust maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act;
- reviewing from time to time the compensation payable to the independent
trustees; and
- making recommendations to the Board regarding matters related to
compensation, including deferred compensation plans and retirement plans
for the independent trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, provided (i) that such person
is a shareholder of record at the time he or she submits such names and is
entitled to vote at the meeting of shareholders at which trustees will be
elected, and (ii) that the Nominating 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 December 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. All of the
current trustees and Committee members then serving attended at least 75% of the
meetings of the Board and applicable Committees held during the fiscal year
ended December 31, 1999.
WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES?
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board or any Committee attended. Each trustee who is not also an
officer of the trust is compensated for his or her services according to a fee
schedule which recognizes the fact that such trustee also serves as a director
or trustee of all of the other AIM funds. Each such trustee 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.
11
<PAGE> 15
Set forth below is information regarding compensation paid or accrued for
each trustee:
<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS COMPENSATION
COMPENSATION ACCRUED BY ALL FROM ALL
TRUSTEE FROM THE TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
- ------- ----------------- -------------- ------------
<S> <C> <C> <C>
Charles T. Bauer................ $ 0 $ 0 $ 0
Bruce L. Crockett............... 23,116 37,485 103,500
Owen Daly II.................... 23,116 122,898 103,500
Edward K. Dunn Jr. ............. 21,954 0 103,500
Jack M. Fields.................. 22,660 15,826 101,500
Carl Frischling(4).............. 23,116 97,791 103,500
Robert H. Graham................ 0 0 0
Prema Mathai-Davis.............. 21,474 0 101,500
Lewis F. Pennock................ 23,116 45,766 103,500
Ian W. Robinson(5).............. 5,618 94,442 25,000
Louis S. Sklar.................. 22,664 90,232 101,500
</TABLE>
(1) The total amount of compensation deferred by all trustees of the trust
during the fiscal year ended December 31, 1999, including earnings thereon,
was $176,057.
(2) During the fiscal year ended December 31, 1999, the total amount of expenses
allocated to the trust in respect of such retirement benefits was $54,659.
Data reflects compensation for the calendar year ended December 31, 1999.
Accruals for 1999 are based on actuarial projections from 1998.
(3) Each trustee serves as trustee or director 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 December 31, 1999, the trust paid $93,776 in
legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel
LLP, for services rendered to the independent trustees of the trust.
(5) Mr. Robinson was a trustee until March 12, 1999, when he retired.
A I M Management Group Inc. (AIM Management) has requested proposals from
real estate development firms in the greater Houston area in connection with
exploring possible options upon the expiration of the lease of AIM Management's
current office space, which expires on December 31, 2003. Mr. Sklar is employed
by Hines Interests Limited Partnership (Hines). Two of Hines' affiliates, Hines
Corporate Properties, LLC and Sugarland Properties Incorporated (collectively,
Hines Affiliates), have each submitted office space proposals to AIM Management
for evaluation. Mr. Sklar would have an indirect financial interest, and may
have a direct equity interest, in certain of such proposed options. Since the
Hines Affiliates proposals are among many being evaluated by AIM Management, it
is not possible to determine at present the extent of any such interest, or to
determine whether AIM Management will proceed with negotiations with Hines
Affiliates on any specific proposal.
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<PAGE> 16
AIM Funds Retirement Plan for Eligible Trustees/Directors
Under the terms of the AIM Funds Retirement Plan for Eligible Trustees/
Directors, each trustee (who is not an employee of any of the AIM funds, AIM
Management or any of their affiliates) may be entitled to certain benefits upon
retirement from the Board. Pursuant to such retirement plan, a trustee becomes
eligible to retire and receive full benefits 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
trustee 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 trustee during the twelve-
month period immediately preceding the trustee's retirement (including amounts
deferred under a separate agreement between the applicable AIM funds and the
trustee) and based on the number of such trustee'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 trustee in quarterly
installments. If an eligible trustee dies after attaining the normal retirement
date but before receipt of all benefits under the plan, the trustee's surviving
spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the
amount payable to the deceased trustee for no more than ten years beginning the
first day of the calendar quarter following the date of the trustee'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 trustee 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, Pennock, Robinson and Sklar
and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 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>
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<PAGE> 17
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling, and Sklar and Dr. Mathai-Davis (the
deferring trustees) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring trustees may elect to defer receipt of
up to 100% of their compensation payable by the trust, and such amounts are
placed into a deferral account. Currently, the deferring trustees may select
various AIM funds in which all or part of their deferral accounts shall be
deemed to be invested. Distributions from the deferring trustees' accounts will
be paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the agreement) beginning on the date the
deferring trustee's retirement benefits commence under the plan. The Board, in
its sole discretion, may accelerate or extend the distribution of such deferral
accounts after the deferring trustee's termination of service as a trustee of
the trust. If a deferring trustee dies prior to the distribution of amounts in
his or her deferral account, the balance of the deferral account will be
distributed to his or her designated beneficiary in a single lump sum payment as
soon as practicable after such deferring trustee's death. The agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring trustees have the status of unsecured creditors of the
trust and of each other AIM fund from which they are deferring compensation.
WHAT ARE OFFICERS PAID FOR THEIR SERVICES?
The trust does not pay its officers for the services they provide to the
trust. 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 TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 2: APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION TO REORGANIZE
HIGH YIELD, INCOME,
INTERMEDIATE GOVERNMENT, MONEY MARKET AND
MUNICIPAL BOND
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 2 applies to shareholders of High Yield, Income, Intermediate
Government, Money Market and Municipal Bond.
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<PAGE> 18
WHAT AM I BEING ASKED TO APPROVE?
The Board has approved an Agreement and Plan of Reorganization (the plan),
which provides for a series of transactions to convert five of the series
portfolios of the trust, High Yield, Income, Intermediate Government, Money
Market and Municipal Bond (each a current fund) to a corresponding series (a new
fund) of AIM Investment Securities Funds (collectively, the reorganizations).
Under the plan, each current fund will transfer all its assets to a
corresponding new fund in exchange solely for voting shares of beneficial
interest in the new fund and the new fund's assumption of all the current fund's
liabilities. A form of the plan relating to the proposed reorganizations is in
Appendix B. If Proposal 2 is not approved by the shareholders of one or more
current funds, those funds will continue to operate as series portfolios of the
trust.
The reorganizations are being proposed primarily to simplify the
organizational structure of the AIM funds. The operations of each new fund
following the reorganizations 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 all of the new funds will
conform to the changes proposed in Proposal 4, to the extent that Proposal 4 is
approved; the investment objectives for certain of the new funds will be changed
and made non-fundamental, if applicable, as proposed in Proposal 5, if Proposal
5 is approved; and the investment objective of Money Market will be made
non-fundamental as proposed in Proposal 6, if Proposal 6 is approved.
WHAT ARE THE REASONS FOR THE PROPOSED REORGANIZATIONS?
The reorganizations are being proposed to simplify the organizational
structure of the AIM funds. AIM Investment Securities Funds (AIS) is a Delaware
business trust that operates as an open-end management investment company
registered under the 1940 Act. AIS has two series portfolios, each of which
invests primarily in bonds or other fixed income securities issued by
governments, governmental agencies, corporations or other issuers.
The current funds similarly invest primarily in fixed income securities.
The other investment portfolios of the trust invest primarily in equity
securities. Thus, after the reorganizations, the fixed income portfolios of the
two investment companies will have been consolidated in AIS, with only equity
portfolios remaining in the trust.
Reorganizing the current funds as series portfolios of AIS will have the
effect of consolidating the record-keeping, accounting, financial reporting and
securities law compliance for the fixed income portfolios in a single investment
company. The reorganizations will also have the effect of moving the fiscal
year-end for the current funds from December 31 (the fiscal year-end of the
trust) to July 31 (the fiscal year-end of AIS), which will allow AIM to better
serve the
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<PAGE> 19
two investment companies and their shareholders by distributing its workload
more evenly throughout the year. The reorganizations should create greater
operating efficiencies for both the trust and AIS.
WHAT WILL THE PROPOSED REORGANIZATIONS INVOLVE?
To accomplish the reorganizations, AIS has established five new series
portfolios, each one of which has an investment objective and policies that are
identical to the investment objective and policies of a corresponding current
fund as they may be modified at the meeting. On the closing date, each current
fund will transfer all of its assets to a corresponding new fund in exchange
solely for a number of full and fractional Class A shares, Class B shares, Class
C shares and AIM Cash Reserve Shares, as applicable, of the new fund equal to
the number of full and fractional shares of beneficial interest 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 reorganizations, 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 trust and AIS 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 reorganizations by
action of the Board, notwithstanding the approval of the plan by the
shareholders of the current funds. However, no amendments may be made that would
materially adversely affect the interests of shareholders of any current fund.
The trust and AIS 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 trust to acquire one share of each class of each
new fund and, as the sole shareholder of the new funds prior to the
reorganizations, 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 Proposal 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.
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<PAGE> 20
- 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 trust'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 each new fund a new distribution agreement with A
I M Distributors, Inc. The proposed distribution agreement will provide
for substantially the same distribution services as currently provided by
A I M Distributors, Inc.
- 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 (for Municipal Bond, the custodian
agreement will be with The Bank of New York) 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.
- 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 transfer agent for AIS will establish for each current fund 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 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
reorganizations will represent shares of the corresponding new fund after the
reorganizations. 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.
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<PAGE> 21
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS?
The trust and AIS will receive an opinion of Ballard Spahr Andrews &
Ingersoll, LLP to the effect that each 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 reorganizations. Shareholders of the current funds should
consult their tax advisors regarding the effect, if any, of the reorganizations
in light of their individual circumstances and as to state and local
consequences, if any, of the reorganizations.
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 reorganizations.
HOW WILL AIS COMPARE TO THE TRUST?
Both the trust and AIS are business trusts established under the laws of
the State of Delaware. AIS has established series of its shares of beneficial
interest corresponding to and having identical designations as the shares of the
current funds. AIS has also established classes with respect to each new fund
corresponding to and having 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 or investment objectives. The new funds will not have
any operations prior to the reorganizations. Initially, the trust will be the
sole shareholder of the new funds.
As Delaware business trusts, the operations of the trust and AIS are
governed by their Agreements and Declarations of Trust (trust instruments) and
Bylaws and applicable Delaware law. There are no material differences between
the trust instrument and Bylaws of the trust and the trust instrument and Bylaws
of AIS. The operations of both trusts are also subject to the provisions of the
1940 Act and the rules and regulations thereunder.
WHEN WILL PROPOSAL 2 BE IMPLEMENTED?
Assuming your approval of Proposal 2, the trust currently contemplates that
the reorganizations will close on May 26, 2000. However, the reorganizations may
close on another date if circumstances warrant.
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<PAGE> 22
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 2?
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES,
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 trust for your fund. The Board is asking you to vote on this new
agreement because the trust may amend its advisory agreement only with
shareholder approval. A form of the trust'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;
- adding provisions regarding affiliated brokerage;
- adding certain provisions relating to certain functions to be performed
by AIM in connection with 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
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<PAGE> 23
majority of the independent trustees, 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 TRUST'S TRUSTEES OR EXECUTIVE OFFICERS HOLD POSITIONS WITH AIM?
Charles T. Bauer, Robert H. Graham, Gary T. Crum, Carol F. Relihan, Robert
G. Alley, Stuart W. Coco, Karen Dunn Kelley, Melville B. Cox and Dana R. Sutton,
all of whom are directors and/or executive officers of the trust, 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.
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 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;
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<PAGE> 24
- expenses relating to trustee 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 trustees 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. If, during any fiscal year, AIM has waived or reduced fees, AIM will
retain its ability to be reimbursed for such fee waiver or reduction prior to
the end of such 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 trust. AIM may not change
provisions in the current advisory agreement imposing expense limitations
without shareholder approval.
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
advisory fees (if any) waived by AIM for each fund for the fiscal year ended
December 31, 1999, are in Appendix F.
WHAT ADDITIONAL SERVICES ARE PROVIDED BY AIM AND ITS AFFILIATES?
AIM and its affiliates also provide additional services to the trust and
the funds. AIM provides or arranges for others to provide administrative
services to the funds. A I M Distributors, Inc. serves as the principal
underwriter for each of the funds, 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.
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<PAGE> 25
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 trust;
- 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 relating to certain functions to be performed
by AIM in connection with 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 trust and AIM are parties to a Master Administrative Services Agreement
dated February 28, 1997, as amended on May 1, 1998. The current advisory
agreement states that AIM may provide certain administrative services to the
funds at the 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 trust, 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 trust or the compensation AIM
22
<PAGE> 26
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 trust.
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 trustees
or officers of the trust owe an exclusive duty to the trust. 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 trustees
and officers of the trust 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 divided into two separate provisions: one dealing with AIM and the
other dealing with officers and trustees of the trust.
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 trust
recognizes that AIM's obligations to other clients may adversely affect the
trust'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.
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 rather than solely certain specified advisory services.
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 the
appointment of a sub-advisor, it may do so solely upon approval of the Board.
Under the current
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<PAGE> 27
agreement, any appointment of a sub-advisor would require shareholder approval.
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, rules, interpretations and exemptions.
Securities Lending
If a fund engages in securities lending, AIM will provide the fund
investment advisory services and related administrative services. The proposed
advisory agreement includes a new provision that specifies the administrative
services to be rendered by AIM if a fund engages in securities lending
activities, as well as the compensation AIM may receive for such administrative
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.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the current advisory fee schedule. As
compensation for the related administrative services AIM will provide, 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 such 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.
WHAT FACTORS DID THE TRUSTEES 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 trustees also discussed approval of the proposed advisory agreement
with independent counsel at that meeting. In evaluating the proposed advisory
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<PAGE> 28
agreement, the Board requested and received information from AIM to assist it in
its deliberations.
The Board considered the following factors in determining the
reasonableness and fairness of the proposed changes in the current advisory
agreement with respect to each fund.
- The qualifications of AIM to provide investment advisory services. The
Board reviewed the credentials and experience of the officers and employees of
AIM who provide investment advisory services to the funds, and noted that the
persons providing services to the funds would not change if the new advisory
agreement is approved by shareholders.
- The range of investment advisory services provided by AIM. The Board
reviewed the services to be provided by AIM under the new advisory agreement,
and noted that no changes in the level or type of services provided by AIM would
occur if the new advisory agreement is approved by shareholders, other than the
provision by AIM of certain administrative services if a fund engages in
securities lending.
- The qualifications of AIM to provide a range of management and
administrative services. The Board reviewed the general nature of the non-
investment advisory services performed by AIM and its affiliates, such as
administrative, transfer agency and distribution services, and the fees received
by AIM and its affiliates for performing such services. In addition to reviewing
such services, the Board also considered the organizational structure employed
by AIM and its affiliates to provide those services. The Board reviewed the
proposed elimination from the new advisory agreement of references to the
provision by AIM of administrative services. The Board also reviewed the
proposed form of administrative services agreement, noted that the services to
be provided under the existing and proposed administrative services agreements
are the same, and concluded that the administrative services to be provided by
AIM would not change if all references to administrative services were deleted
from the new advisory agreement.
- The performance record of the funds. The Board determined that AIM has
provided high quality services with respect to each fund, after considering
performance information that it received during the past year from AIM regarding
the funds. The Board also determined that each fund's performance would not have
been affected if the proposed advisory agreement had been in effect during the
past fiscal year, since no changes to advisory fees are being proposed, other
than to permit AIM's receipt of fees for providing administrative services in
connection with securities lending. Such fees would be paid only to the extent
that a fund engages in securities lending, and therefore are not paid if the
fund does not engage in securities lending. The Board noted that the funds do
not currently engage in securities lending, but that such arrangements provide
the opportunity for both the fund and AIM to obtain additional income. The Board
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noted that AIM currently intends to waive its right to receive any fees under
the proposed investment advisory agreement for the administrative services it
may provide in connection with securities lending activities. The Board also
noted that AIM has agreed to seek Board approval prior to its receipt of all or
a portion of such fees.
- The profitability of AIM. The Board reviewed information concerning the
profitability of AIM's (and its affiliates') investment advisory and other
activities and its financial condition. The Board noted that no changes to the
advisory fees were being proposed, other than to permit AIM's receipt of fees
for providing administrative services in connection with securities lending, and
further noted that AIM currently intends to waive its right to receive any such
fees and has agreed to seek Board approval prior to its receipt of all or a
portion of such fees. The Board also noted that, in accordance with an exemptive
order issued by the SEC, before a fund may participate in a securities lending
program, the Board must approve such participation. In addition, the Board must
evaluate the securities lending arrangements annually and determine that it is
in the best interests of the shareholders of the fund to invest in AIM-advised
money market funds any cash collateral a fund receives as security for the
borrower's obligation to return the loaned securities. If a fund invests the
cash collateral in AIM-advised money market funds, AIM will receive additional
advisory fees from these money market funds, because the invested cash
collateral will increase the assets of these funds and AIM receives advisory
fees based upon the assets of these funds. The Board noted that the cash
collateral relates to assets of a fund that have already been invested, and the
investment of the cash collateral is intended to benefit a fund by providing it
with additional income. The Board also noted that an investment of the cash
collateral in an AIM-advised money market fund would have a positive effect on
the profitability of AIM.
- The terms of the proposed agreement. The Board reviewed the terms of the
proposed agreement, including changes being made to clarify non-exclusivity,
delegation and liability provisions, to separate administrative services from
advisory services, to have AIM assist the funds if they engage in securities
lending and to permit AIM to engage in brokerage transactions with affiliates.
The Board determined that these changes reflect the current environment in which
the funds operate, and that AIM should have the flexibility to take advantage of
that environment.
After considering the foregoing factors, 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 trustees have considered what they believe to be in
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your best interests. In so doing, they were advised by independent counsel,
retained by the independent trustees and paid for by the trust, as to the nature
of the matters to be considered and the standards to be used in reaching their
decision.
In accordance with an exemptive order issued by the SEC, before a fund may
participate in a securities lending program, the Board must approve such
participation. In addition, the Board must evaluate the securities lending
arrangements annually, and must determine that it is in the best interests of
the shareholders of the fund to invest in AIM-advised money market funds any
cash collateral a fund receives as security for the borrower's obligation to
return the loaned securities. If a fund invests the cash collateral in
AIM-advised money market funds, AIM will receive additional advisory fees from
these money market funds, because the invested cash collateral will increase the
assets of these funds and AIM receives advisory fees based upon the assets of
these funds.
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 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 TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSALS 4(a) THROUGH 4(l): CHANGES TO THE FUNDAMENTAL INVESTMENT RESTRICTIONS
OF EACH FUND
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.
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,
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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. 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 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 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
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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 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 FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(a) applies to shareholders of all funds.
WHAT IS THE PROPOSED CHANGE?
All Funds Other than Global Utilities
Upon the approval of Proposal 4(a), the existing fundamental restrictions
with regard to issuer diversification for each of the funds, other than Global
Utilities, would be changed 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."
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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. For example,
the exceptions for investments in securities of government agencies or of other
investment companies contained in the current diversification restrictions of
the funds are not identical.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each fund other than Global
Utilities:
"In complying with the fundamental restriction regarding issuer
diversification, the fund will not, with respect to 75% of its total
assets (and for AIM Money Market Fund with respect to 100% 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, except as permitted by Rule 2a-7 under the 1940 Act, or (ii)
the fund would hold more than 10% of the outstanding voting securities
of that issuer. The fund may (i) purchase securities of other
investment companies as permitted by Section 12(d)(1) of the 1940 Act
and (ii) invest its assets in securities of other money market funds
and lend money to other investment companies or their series
portfolios that have AIM or an affiliate of AIM as an investment
advisor (an AIM fund), subject to the terms and conditions of any
exemptive orders issued by the SEC."
If you approve the proposed change, the following non-fundamental
investment restriction will also become effective for Municipal Bond:
"For purposes of the fund's fundamental investment restriction
regarding issuer diversification, the fund will regard each state and
political subdivision, agency or instrumentality, and each multi-state
agency of which such state is a member, as a separate issuer."
Global Utilities
Upon the approval of Proposal 4(a), the fundamental restriction on
portfolio diversification for Global Utilities would be eliminated.
Although Global Utilities will be non-diversified for purposes of the 1940
Act if shareholders approve Proposal 4(a), it will remain subject to the issuer
diversification requirements in the Internal Revenue Code of 1986, as amended,
that is applicable to regulated investment companies. To qualify as a regulated
investment company, Global Utilities must diversify its holdings so that, at the
end of each fiscal quarter: (i) at least 50% of the market value of the fund's
assets is represented by cash and cash items, U.S. Government securities,
securities of
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other regulated investment companies and other securities, with such other
securities limited, with respect to any one issuer, to an amount not greater
than 5% of the fund's total assets and not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the fund's total
assets is invested in the securities (other than U.S. Government securities or
securities of other regulated investment companies) of any one issuer, or of two
or more issuers which the fund controls and which are determined to be engaged
in the same or similar or related trades or businesses.
PROPOSAL 4(b): CHANGE TO FUNDAMENTAL RESTRICTION ON BORROWING MONEY AND ISSUING
SENIOR SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(b) applies to shareholders of all funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(b), the existing fundamental restriction on
borrowing for each of the funds would be changed, the existing fundamental
restriction on issuing senior securities for Balanced, High Yield, Income and
Money Market would be changed, and a new fundamental restriction on issuing
senior securities for each of Global Utilities, Intermediate Government,
Municipal Bond, Select Growth and Value would be added, 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."
In addition, upon the approval of Proposal 4(b), the existing fundamental
restriction on pledging assets for each of the funds (other than Money Market,
which has no such restriction) would be eliminated.
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 trust's shares with respect to the
distribution of its assets or the payment of dividends. Currently, the
fundamental restriction 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.
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However, the Board does not expect this change to have any material impact on
the funds' current operations.
In addition, the funds are not required to have a fundamental restriction
with respect to the pledging of assets. To maximize the funds' flexibility in
this area, the Board believes that the restriction on pledging assets, where it
exists, should be eliminated. 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 of the funds:
"In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The fund may
borrow from banks, broker-dealers or an AIM fund. The fund may not
borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The fund may not purchase
additional securities when any borrowings from banks exceed 5% of the
fund's total assets."
PROPOSAL 4(c): CHANGE TO OR ADDITION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING
SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(c) applies to shareholders of all funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(c), a new fundamental restriction on
underwriting securities would be added for Balanced, and the existing
fundamental restriction on underwriting securities for each of the other 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."
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 an
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underwriter, and would eliminate minor differences in the wording of the funds'
current restrictions on underwriting securities and would add a fundamental
restriction on underwriting securities for Balanced, which currently does not
have such a restriction.
PROPOSAL 4(d): CHANGE TO OR ADDITION OF FUNDAMENTAL RESTRICTION ON INDUSTRY
CONCENTRATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(d) applies to shareholders of all funds.
WHAT IS THE PROPOSED CHANGE?
All Funds Other than Global Utilities
Upon the approval of Proposal 4(d) by shareholders of all funds other than
Global Utilities, the existing fundamental restriction on industry concentration
for each of those 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, (ii) tax-exempt obligations issued by governments
or political subdivisions of governments, or (iii) for AIM Money
Market Fund, bank instruments. In complying with this restriction, the
fund will not consider a bank-issued guaranty or financial guaranty
insurance as a separate security."
The proposed changes in this restriction for all funds other than Global
Utilities would make the fundamental restriction on industry concentration for
those funds no more limiting than required by the 1940 Act laws, interpretations
or exemptions. The proposed change would clarify that for industry concentration
purposes, the funds will not consider a bank-issued guaranty or financial
guaranty insurance as a separate security.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each fund other than Global
Utilities:
"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."
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If shareholders of Municipal Bond approve the proposed change to the
fundamental restriction regarding industry concentration, the following non-
fundamental restrictions will become effective for Municipal Bond:
"The fund: (i) will not invest 25% or more of its assets in securities
whose issuers are located in the same state; (ii) will not invest 25%
or more of its assets in securities the interest upon which is paid
from revenues of similar type projects; and (iii) will not invest 25%
or more of its assets in industrial development bonds. The policy
described in (ii) does not apply, however, if the securities are
subject to a guarantee. For securities subject to a guarantee, the
fund does not intend to purchase any such security if, after giving
effect to the purchase, 25% or more of the fund's assets would be
invested in securities issued or guaranteed by entities in a
particular industry. Securities issued or guaranteed by a bank or
subject to financial guaranty insurance are not subject to the
limitations set forth in the preceding sentence."
Global Utilities
Upon the approval of Proposal 4(d) by shareholders of Global Utilities, a
new fundamental restriction on industry concentration for Global Utilities would
be added to read as follows:
"The fund will concentrate (as such term may be defined or interpreted
by the 1940 Act laws, interpretations and exemptions) its investments
in the securities of domestic and foreign public utility companies."
The proposed addition of the fundamental restriction on industry
concentration for Global Utilities will make explicit the group of industries in
which Global Utilities will concentrate its investments.
If you approve the proposed change, the following non-fundamental
investment restriction will also become effective for Global Utilities:
"For purposes of Global Utilities' fundamental restriction regarding
industry concentration, public utility companies shall consist of
companies that produce or supply electricity, natural gas, water,
sanitary services, and telephone, telegraph, cable, satellite or other
communication or information transmission services, as well as
developing utility technology companies and holding companies which
derive at least 40% of their revenues from utility-related
activities."
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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 to shareholders of all funds.
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 any material impact on the funds' current operations.
PROPOSAL 4(f): CHANGE TO FUNDAMENTAL RESTRICTION ON PURCHASING OR SELLING
COMMODITIES AND ELIMINATION OF FUNDAMENTAL RESTRICTION ON PUTS AND CALLS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(f) applies to shareholders of all funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(f), the existing fundamental restriction on
investing in commodities for each of the funds would be changed 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
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engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
In addition, upon the approval of Proposal 4(f), the 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) for High Yield, Income, Intermediate Government,
Money Market and Municipal Bond, 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 also broadens the exception to the prohibition on buying
and selling physical commodities to cover all financial derivative instruments.
Also, there is no legal requirement that the funds have a fundamental
restriction with regard to investing in puts, calls, straddles, spreads or
combinations thereof. To maximize the funds' flexibility in this area, the Board
believes that this restriction should be eliminated for High Yield, Income,
Intermediate Government, Money Market and Municipal Bond. Money Market does not
intend to invest in puts, calls or any combination thereof. The Board does not
expect these changes to have any material impact on the operations of High
Yield, Income, Intermediate Government, Money Market and Municipal Bond. A
description of the types of transactions and their potential risks in connection
with the options, futures and currency strategies to be used by High Yield,
Income and Intermediate Government is set forth in Appendix J.
If the shareholders of Municipal Bond approve Proposal 4(f), the existing
fundamental restriction on the use of options will be replaced by a policy that
Municipal Bond will not invest in puts, calls, straddles, spreads or any
combination thereof, except that it may purchase and sell options on financial
futures contracts and may sell covered call options. This policy will be
implemented because of the nature of Municipal Bond's investment program.
PROPOSAL 4(g): CHANGE TO FUNDAMENTAL RESTRICTION ON MAKING LOANS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(g) applies to shareholders of all funds.
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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.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"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 to shareholders of all funds.
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
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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 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 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).
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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 restriction with regard to investing
all assets in an open-end fund, the fund may not invest all of its
assets in the securities of a single open-end management investment
company with the same fundamental investment objectives, policies and
restrictions as the fund."
PROPOSAL 4(i): ELIMINATION OF FUNDAMENTAL RESTRICTION ON MARGIN TRANSACTIONS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(i) applies to shareholders of Global Utilities, High Yield,
Income, Intermediate Government, Money Market, Municipal Bond, Select Growth and
Value.
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 above funds would be eliminated.
Discussion:
The funds are not required to have a fundamental restriction with regard to
margin transactions. In order to maximize the funds' flexibility in this area,
the Board believes that the funds' fundamental restrictions with regard to
margin transactions should be deleted. Although the funds would have greater
flexibility to engage in margin transactions, they have no present intention of
doing so.
If shareholders approve Proposal 4(i), Global Utilities, High Yield,
Income, Intermediate Government, Municipal Bond, Select Growth and Value will
not purchase any security on margin, except that each 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. Money Market will not 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 Board does not expect the elimination of the fundamental restrictions
regarding margin transactions to have any material impact on the funds' current
operations.
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PROPOSAL 4(j): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON SHORT SALES OF SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(j) applies to shareholders of all funds.
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:
Each of the funds currently has a fundamental restriction with regard to
selling securities short. For Balanced and High Yield, the fundamental
restriction allows short sales "against the box," which means that the 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 for Balanced and
High Yield 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 with regard to issuing senior securities that shareholders are being
asked to vote on in Proposal 4(b). Therefore, the Board believes that the
current fundamental restriction on short sales of securities that are not
against the box is unnecessary and should be eliminated for Balanced and High
Yield. These funds would retain the ability to engage in short sales against the
box, provided that neither fund may deposit or pledge more than 10% of its total
assets as collateral for such short sales at any one time.
Global Utilities, Income, Intermediate Government, Municipal Bond, Select
Growth and Value currently have fundamental restrictions which prohibit all
short sales, regardless of whether they are against the box. In order to
maximize these funds' flexibility in this area and to allow them to engage in
short sales against the box, the Board believes that their fundamental
restrictions on selling securities short should be eliminated.
If shareholders approve Proposal 4(j), Global Utilities, Income,
Intermediate Government, Municipal Bond, Select Growth and Value will not make
short sales of securities or maintain a short position unless at all times when
a short position is open, the fund owns an equal amount of such securities, or
securities convertible into or exchangeable 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 will any of those funds deposit or pledge
more than 10% of its total assets as collateral for such short sales at any one
time. Money Market will not make short sales of securities or maintain short
positions. The Board does not
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expect the elimination of the fundamental restrictions regarding short sales of
securities to have any material impact on the funds' current operations.
PROPOSAL 4(k): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON INVESTING IN SECURITIES
OTHER THAN MUNICIPAL BONDS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(k) applies to shareholders of Municipal Bond.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(k), Municipal Bond's existing fundamental
restriction that prohibits investing less than 65% of the fund's total assets in
securities other than municipal bonds would be eliminated.
Discussion:
When Municipal Bond was initially organized, the SEC required that a fund
whose name suggested that it would invest primarily in a particular type of
security, industry or industries have an investment policy that required that,
under normal circumstances, at least 65% of the value of its assets be invested
in the indicated type of security or industry. In 1997, the SEC proposed a new
rule concerning the use of names by mutual funds that would raise the percentage
requirement from 65% to 80%. That proposed rule has not yet been finally
adopted.
To enable the Board to respond to future SEC action relating to funds whose
names suggest that they invest in specific types of securities or industries
without incurring the time and expense of an additional shareholder vote, the
Board proposes to eliminate your fund's fundamental restriction on investing any
specified percentage of assets in particular types of securities. In addition,
the fund currently is subject to a non-fundamental investment restriction
requiring that at least 80% of its total assets be invested in investment grade
municipal securities rated by Moody's Investors Service, Inc., Standard & Poor's
Ratings Services or any other nationally recognized statistical rating
organization. This non-fundamental investment restriction will remain in place
if Proposal 4(k) is approved by shareholders of Municipal Bond. Consequently,
the Board does not expect the elimination of this fundamental restriction to
have any material impact on the fund's current operations.
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<PAGE> 45
PROPOSAL 4(l): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON INVESTING IN SECURITIES
WITH UNLIMITED LIABILITY
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4(l) applies to shareholders of Income.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 4(l), Income's fundamental restriction on
investing in securities with unlimited liability would be eliminated.
Discussion:
The fund is not required to have a fundamental restriction with respect to
investing in securities with unlimited liability. In order to achieve its
investment objective the fund invests principally in corporate debt and U.S.
Government securities. These types of securities generally do not subject
holders to risks other than market and interest rate risk, and the possible loss
of the holder's investment. Consequently, the Board believes that the
restriction on investing in securities with unlimited liability has no practical
effect on limiting risks to the fund or its shareholders. The Board does not
expect the elimination of this fundamental restriction to have any material
impact on the fund's current operations.
WHEN WILL PROPOSALS 4(a) THROUGH 4(l) 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(l)?
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS
4(a) THROUGH 4(l).
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<PAGE> 46
PROPOSAL 5: CHANGING THE INVESTMENT OBJECTIVES OF BALANCED, GLOBAL UTILITIES,
INCOME, INTERMEDIATE
GOVERNMENT, MUNICIPAL BOND, SELECT GROWTH AND
VALUE AND MAKING THE INVESTMENT OBJECTIVES
NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 5 applies only to shareholders of Balanced, Global Utilities,
Income, Intermediate Government, Municipal Bond, Select Growth and Value.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
objective as follows: (1) for each of these seven funds, by making the
investment objective non-fundamental; (2) for each of these seven funds, by
eliminating from the investment objective the types of securities the fund
proposes to purchase in seeking to achieve its objective; (3) for Global
Utilities, by changing the investment objective so that the fund would achieve a
high total return rather than primarily a high level of current income; and (4)
for Balanced and Select Growth, by changing the proposed separate investment
policy regarding the types of securities each fund may purchase. 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(s) 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.
Balanced
For Balanced, the investment objective of the fund will not change, but the
investment policy will change. Currently, the fund emphasizes investing in a
broadly diversified portfolio of high-yielding securities in seeking to achieve
its objective. If this proposal is approved, the fund will seek to meet its
objective by investing in a broadly diversified portfolio, including common
stocks, preferred stocks, convertible securities and bonds. The Board is
recommending this change to permit the fund to invest in a broadly diversified
portfolio regardless of whether the securities pay any particular level of
dividends or interest.
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If shareholders of Balanced approve this proposal, the investment objective
of Balanced will read as follows:
"The fund's investment objective is to achieve as high a total return
as possible, consistent with preservation of capital."
Global Utilities
For Global Utilities, the investment objective of the fund will change, but
the investment policy will not change. Currently, the fund seeks to achieve a
high level of current income and, secondarily, growth of capital. The fund's
investment policy is to invest primarily in the common and preferred stocks of
public utility companies. If this proposal is approved by shareholders, its
investment objective will change so that the fund will seek to achieve a high
total return. The Board is recommending this change so that the investment
objective conforms to the investment characteristics of the public utility
company securities currently available in the market place. These securities
have the potential for capital appreciation, but may not be income-producing.
If shareholders of Global Utilities approve this proposal, the investment
objective of Global Utilities will read as follows:
"The fund's investment objective is to achieve a high total return."
Global Utilities will seek to achieve its objective by investing, normally,
at least 65% of its total assets in securities of domestic and foreign public
utility companies. Public utility companies include companies that produce or
supply electricity, natural gas, water, sanitary services, and telephone,
telegraph, cable, satellite or other communication or information transmission
services, as well as developing utility technology companies and holding
companies which derive at least 40% of their revenues from utility-related
activities. The fund will seek to position itself to take advantage of
deregulation in the utility industry, and advances in communications and natural
gas technology.
Income
If shareholders of Income approve this proposal, the investment objective
of Income will read as follows:
"The fund's investment objective is to achieve a high level of current
income consistent with reasonable concern for safety of principal."
Income will also retain the investment policy of investing primarily in
fixed-rate corporate debt and U.S. Government obligations.
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Intermediate Government
If shareholders of Intermediate Government approve this proposal, the
investment objective of Intermediate Government will read as follows:
"The fund's investment objective is to achieve a high level of current
income consistent with reasonable concern for safety of principal."
Intermediate Government will also retain the investment policy of investing
in debt securities issued, guaranteed or otherwise backed by the U.S.
Government.
Municipal Bond
If shareholders of Municipal Bond approve this proposal, the investment
objective of Municipal Bond will read as follows:
"The fund's investment objective is to achieve a high level of current
income exempt from federal income taxes, consistent with the
preservation of principal."
Municipal Bond will also retain the investment policy of investing in a
diversified portfolio of municipal bonds.
Select Growth
For Select Growth, the investment objective of the fund will not change,
but the investment policy will change. Currently, the fund emphasizes investing
primarily in the common stocks of established medium to large-size companies
with prospects for above-average, long-term earnings growth. If this proposal is
approved, the fund will seek to meet its objective by investing primarily in
common stocks with prospects for above-average market returns, without regard to
market capitalization. The Board is recommending this change to permit the fund
to invest in a broader range of common stocks.
If shareholders of Select Growth approve this proposal, the investment
objective of Select Growth will read as follows:
"The fund's investment objective is to achieve long-term growth of
capital."
Value
If shareholders of Value approve this proposal, the investment objective of
Value will read as follows:
"The fund's investment objective is to achieve long-term growth of
capital. Income is a secondary objective."
Value will also retain the investment policy of investing primarily in
equity securities judged by AIM to be undervalued relative to its appraisal of
the current
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<PAGE> 49
or projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities or
relative to the equity markets generally.
The Board expects that you will benefit from the proposed changes 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 TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" THIS PROPOSAL.
PROPOSAL 6: CHANGING THE INVESTMENT OBJECTIVE OF MONEY MARKET SO THAT IT IS
NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 6 applies only to shareholders of Money Market.
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.
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.
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<PAGE> 50
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 TRUSTEES,
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 December 31, 2000 or alternatively, with respect to
High Yield, Income, Intermediate Government, Money Market and Municipal Bond,
for its fiscal year ending July 31, 2000 if the reorganizations of these funds
as described in Proposal 2 is approved by their respective shareholders. 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
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.
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<PAGE> 51
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 7?
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
GENERAL INFORMATION
WHO ARE THE EXECUTIVE OFFICERS OF THE TRUST?
Information about the executive officers of the trust 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
trustees and the executive officers of the trust and by 5% holders of each class
is in Appendix M.
WHO ARE THE INVESTMENT ADVISOR, ADMINISTRATOR AND PRINCIPAL UNDERWRITER OF THE
FUNDS?
A I M Advisors, Inc., whose principal address is 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, serves as the investment advisor and
administrator for the funds.
A I M Distributors, Inc., whose principal address is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, serves as the principal underwriter for
each of the funds.
HAS THE TRUST HIRED A PROXY SOLICITOR?
The trust has engaged the services of Shareholder Communications
Corporation (SCC) to assist it in soliciting proxies for the meeting. The trust
estimates that the aggregate cost of SCC's services will be approximately
$3,280,000. The trust will bear the cost of soliciting proxies. The trust
expects to solicit proxies principally by mail, but either the trust or SCC may
also solicit proxies by telephone, facsimile, the Internet or personal
interview. The trust 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 trust at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a
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<PAGE> 52
shareholders' meeting, the trust 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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APPENDIX A
NUMBER OF SHARES OF AIM FUNDS GROUP
OUTSTANDING ON FEBRUARY 18, 2000
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND (CLASS) FEBRUARY 18, 2000
- -------------------- -----------------
<S> <C>
AIM Balanced Fund
Class A.......................................... 55,786,326.100
Class B.......................................... 36,777,580.678
Class C.......................................... 6,804,158.945
AIM Global Utilities Fund
Class A.......................................... 9,324,811.302
Class B.......................................... 5,616,880.000
Class C.......................................... 333,941.625
AIM High Yield Fund
Class A.......................................... 162,072,692.798
Class B.......................................... 186,280,115.356
Class C.......................................... 16,082,970.872
AIM Income Fund
Class A.......................................... 50,228,129.603
Class B.......................................... 30,801,213.444
Class C.......................................... 3,653,416.723
AIM Intermediate Government Fund
Class A.......................................... 24,571,769.703
Class B.......................................... 23,016,359.259
Class C.......................................... 4,054,588.245
AIM Money Market Fund
AIM Cash Reserve Shares.......................... 1,059,480,486.953
Class B.......................................... 367,233,237.841
Class C.......................................... 47,496,723.280
AIM Municipal Bond Fund
Class A.......................................... 36,879,407.362
Class B.......................................... 8,933,957.361
Class C.......................................... 1,169,785.724
AIM Select Growth Fund
Class A.......................................... 17,526,278.908
Class B.......................................... 24,147,374.684
Class C.......................................... 1,219,074.888
AIM Value Fund
Class A.......................................... 262,614,538.699
Class B.......................................... 308,657,978.422
Class C.......................................... 21,784,758.151
</TABLE>
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<PAGE> 54
APPENDIX B
AIM FUNDS GROUP
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
December 7, 1999, is entered into by and between AIM Funds Group, a Delaware
business trust (the "Company"), acting on behalf of each of its series
portfolios identified on Schedule A to this Agreement, and AIM Investment
Securities Funds, a Delaware business trust (the "Trust"), acting on behalf of
each of its series portfolios 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 beneficial
interest representing interests in nine separate series portfolios. Five of
these series portfolios are listed on Schedule A and are referred to in this
Agreement as "Current Funds."
The Board of Trustees of the Company has designated multiple classes of
shares of beneficial interest 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 Board of Trustees of the Company has determined that it would be in the
best interests of the shareholders of the Current Funds for the Current Funds to
reorganize as investment portfolios of the Trust. In anticipation of such
reorganizations (the "Reorganizations"), the Board of Trustees of the Trust has
established five additional 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 Reorganizations 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 Reorganizations (the "Current Fund Shares"). The Current Fund will then
distribute the New Fund Shares it has received to its shareholders.
The Reorganizations are 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
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the Company, on behalf of the Current Funds, and by the Trust, on behalf of the
New Funds, as a Plan of Reorganizations 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 Reorganizations, 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 five series portfolios
identified on Schedule A.
1.5 "Current Fund Class" shall mean each class of shares 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 Reorganizations.
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
identified on Schedule A, 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> 56
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 REORGANIZATIONS.
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> 57
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
Reorganizations. However, certificates representing Current Fund Shares shall
represent New Fund Shares after the Reorganizations.
2.3 As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to Section 2.2, the Company shall terminate the Current Funds as
separate series of its shares of beneficial interest.
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, 1999, 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
each class of outstanding Current Fund Shares 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 Closing a
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<PAGE> 58
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 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) 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
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earnings and profits accumulated in any taxable year in which the
provisions 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 Reorganizations. The Company does not anticipate dispositions of
those shares at the time of or soon after the Reorganizations 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 the percentage of Shareholder interests,
if any, that will be disposed of as a result of or at the time of the
Reorganizations 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;
(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; and
(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) The Trust is duly registered as an open-end management investment
company under the 1940 Act. At the Effective Time, the New Fund Shares to
be issued pursuant to Section 2.1 of this Agreement shall be duly
registered under the Securities Act of 1933 by a Registration Statement
filed with the SEC.
(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 Reorganizations;
(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 Reorganizations occur;
(i) The Trust, on behalf of the New Funds, has no plan or intention to
issue additional New Fund Shares following the Reorganizations 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 Reorganizations, 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 Reorganizations; and no New
Fund has any plan or intention to sell or otherwise dispose of any of the
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Assets, except for dispositions made in the ordinary course of its business
or 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
Reorganizations) to determine whether to retain or dispose of particular
stocks or securities, including those included in the Assets; and
(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
Reorganizations.
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 Reorganizations, 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 Reorganizations;
(c) The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganizations;
(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 Reorganizations, 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 Reorganizations, and be subject to
the same liabilities that the corresponding Current Fund held or was
subject to immediately prior to the Reorganizations. 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 the Shareholders of the Current Funds (the "Shareholders
Meeting") to consider and act on this Agreement. The Board of Trustees of the
Company shall recommend that Shareholders approve this Agreement and the
transactions contemplated by this Agreement. Approval of this Agreement by the
Shareholders of each Current Fund will authorize the Company, and the Company
hereby agrees, to vote on the matters referred to in Sections 5.2 and 5.3 for
the corresponding New Fund.
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 vote on the matters
referred to in Section 5.3;
5.3 Immediately prior to the Closing, the Trust (on its own behalf and
with respect to each New Fund or each New Fund Class, as appropriate) shall
enter into a Master Investment 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 Trust shall file with the SEC one or more post-effective
amendments to the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended, and the 1940 Act, as amended (the
"Registration Statement"), which will contain such amendments to such
Registration Statement as are determined by the Trust to be necessary and
appropriate to register the New Fund Shares to be issued pursuant to Section 2.1
of this Agreement, and shall use its best efforts to have such post-effective
amendment or amendments to the Registration Statement become effective prior to
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,
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
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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 Current Funds 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 Reorganizations in
accordance with this Agreement, for federal income tax purposes:
(a) The Reorganizations will constitute Reorganizations 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;
(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;
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(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
Reorganizations, 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
Reorganizations; and
(f) A Shareholder's basis for the New Fund Shares of each New Fund to
be received in the Reorganizations 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 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
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.
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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, 2000; 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.
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11.3 The execution and delivery of this Agreement have been authorized by
the Company's and the Trust's trustees, and this Agreement has been executed and
delivered by authorized officers of the Company and 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 Company or the
Trust personally, but shall bind only the assets and property of the Current
Funds and New Funds, as provided in the Company's and the Trust's respective
Agreements and Declarations of Trust.
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 FUNDS GROUP,
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 INVESTMENT SECURITIES 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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SCHEDULE A
<TABLE>
<CAPTION>
CORRESPONDING SERIES OF AIM
SERIES OF AIM FUNDS GROUP INVESTMENT SECURITIES FUNDS
(EACH A "CURRENT FUND") (EACH A "NEW FUND")
------------------------- ---------------------------
<S> <C>
AIM High Yield Fund AIM High Yield Fund
AIM Income Fund AIM Income Fund
AIM Intermediate Government Fund AIM Intermediate Government Fund
AIM Money Market Fund AIM Money Market Fund
AIM Municipal Bond Fund AIM Municipal Bond Fund
</TABLE>
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SCHEDULE B
<TABLE>
<CAPTION>
CLASSES OF EACH CURRENT FUND CORRESPONDING CLASSES OF EACH NEW FUND
- ---------------------------- --------------------------------------
<S> <C>
AIM High Yield Fund AIM High Yield Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Income Fund AIM Income Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Intermediate Government Fund AIM Intermediate Government Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Money Market Fund AIM Money Market Fund
Class B Shares Class B Shares
Class C Shares Class C Shares
AIM Cash Reserve Shares AIM Cash Reserve Shares
AIM Municipal Bond Fund AIM Municipal Bond Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
</TABLE>
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<PAGE> 69
APPENDIX C
AIM FUNDS GROUP
FORM OF MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this day of , , by and
between AIM Funds Group, a Delaware business trust (the "Trust") with respect to
its series of shares shown on the Schedule 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 Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 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 Trust's Amended and Restated Agreement and Declaration of
Trust (the "Declaration of Trust") authorizes the Board of Trustees of the Trust
(the "Board of Trustees") to create separate series of shares of beneficial
interest in the Trust, and as of the date of this Agreement, the Board of
Trustees has created nine separate series portfolios (such portfolios and any
other portfolios hereafter added to the Trust being referred to collectively
herein as the "Funds"); and
WHEREAS, the Trust 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 Trustees. The Advisor shall give the Trust
and the Funds the benefit of its best judgment, efforts and facilities in
rendering its services as investment advisor.
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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 Trustees; and
(e) take, on behalf of the Trust and the Funds, all actions which
appear to the Trust 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 Trustees; (d) prepare appropriate
periodic reports for, and seek appropriate approvals from, the Board of Trustees
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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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 Trustees 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 Trust in any way or otherwise be deemed to be an agent of the
Trust.
6. Control by Board of Trustees. 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 Trustees.
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 Trust, 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 Declaration of Trust, as the same may be
amended from time to time;
(d) the provisions of the by-laws of the Trust, 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; the size of and the difficulty in executing
the order; and the value of the expected contribution of the broker-dealer
to the investment performance of the Funds on a continuing basis.
Accordingly, the price to the Funds
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in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of
the fund execution services offered.
(c) Subject to such policies as the Board of Trustees 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
Trust, 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 Trustees 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 Schedule 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 commis-
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sions, 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 trustee and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Trust 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 Trust 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 Trust has no objection to the Advisor so acting,
provided that whenever the Trust 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 Trust
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 Trust 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 Trust
further understands and agrees that officers or directors of the Advisor may
serve as officers or directors of the Trust, and that officers or trustees of
the Trust 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 Schedule 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 Trustees 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> 74
(b) by the affirmative vote of a majority of the trustees 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 Trust trustees), by votes
cast in person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated as to the Trust 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 Trustees 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 Trust 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 Trust individually but are binding
only upon the assets and property of the Trust 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 Trust 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 any controlling decision of any such court, by rules, regulations or orders
of the
C-6
<PAGE> 75
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 Trust 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 Trust
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 Funds Group
Attest: By:
- --------------------------------------- --------------------------------------
Assistant Secretary President
(SEAL)
A I M Advisors, Inc.
Attest:
By:
- ---------------------------------------
Assistant Secretary --------------------------------------
President
(SEAL)
</TABLE>
C-7
<PAGE> 76
SCHEDULE A
FUNDS AND EFFECTIVE DATES
<TABLE>
<CAPTION>
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
- ------------ ------------------
<S> <C>
AIM Balanced Fund May 26, 2000
AIM Global Utilities Fund May 26, 2000
AIM High Yield Fund May 26, 2000
AIM Income Fund May 26, 2000
AIM Intermediate Government Fund May 26, 2000
AIM Money Market Fund May 26, 2000
AIM Municipal Bond Fund May 26, 2000
AIM Select Growth Fund May 26, 2000
AIM Value Fund May 26, 2000
</TABLE>
C-8
<PAGE> 77
SCHEDULE B
COMPENSATION TO THE ADVISOR
The Trust 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 BALANCED FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $150 million....................................... 0.75%
Over $150 million........................................ 0.50%
</TABLE>
AIM GLOBAL UTILITIES FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $200 million....................................... 0.60%
Next $300 million........................................ 0.50%
Next $500 million........................................ 0.40%
Amount over $1 billion................................... 0.30%
</TABLE>
AIM HIGH YIELD FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $200 million....................................... 0.625%
Next $300 million........................................ 0.55%
Next $500 million........................................ 0.50%
Amount over $1 billion................................... 0.45%
</TABLE>
AIM INCOME FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $200 million....................................... 0.50%
Next $300 million........................................ 0.40%
Next $500 million........................................ 0.35%
Amount over $1 billion................................... 0.30%
</TABLE>
C-9
<PAGE> 78
AIM INTERMEDIATE GOVERNMENT FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $200 million....................................... 0.50%
Next $300 million........................................ 0.40%
Next $500 million........................................ 0.35%
Amount over $1 billion................................... 0.30%
</TABLE>
AIM MONEY MARKET FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $1 billion......................................... 0.55%
Over $1 billion.......................................... 0.50%
</TABLE>
AIM MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $200 million....................................... 0.50%
Next $300 million........................................ 0.40%
Next $500 million........................................ 0.35%
Amount over $1 billion................................... 0.30%
</TABLE>
AIM SELECT GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $150 million....................................... 0.80%
Over $150 million........................................ 0.625%
</TABLE>
AIM VALUE FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $150 million....................................... 0.80%
Over $150 million........................................ 0.625%
</TABLE>
C-10
<PAGE> 79
APPENDIX D
DATES OF ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
DATE LAST SUBMITTED DATE AIM BECAME
DATE OF CURRENT TO A INVESTMENT
NAME OF FUND ADVISORY AGREEMENT VOTE OF SHAREHOLDERS ADVISOR
- ------------ ------------------- -------------------- -----------------
<S> <C> <C> <C>
AIM Balanced Fund February 28, 1997, February 7, 1997* February 27, 1978
as amended May 1,
1998
AIM Global Utilities February 28, 1997, February 7, 1997* June 30, 1992
Fund as amended May 1,
1998
AIM High Yield Fund February 28, 1997, February 7, 1997* June 30, 1992
as amended May 1,
1998
AIM Income Fund February 28, 1997, February 7, 1997* June 30, 1992
as amended May 1,
1998
AIM Intermediate February 28, 1997, February 7, 1997* June 30, 1992
Government Fund as amended May 1,
1998
AIM Money Market Fund February 28, 1997, February 7, 1997* June 30, 1992
as amended May 1,
1998
AIM Municipal Bond February 28, 1997, February 7, 1997* June 30, 1992
Fund as amended May 1,
1998
AIM Select Growth February 28, 1997, February 7, 1997* June 30, 1992
Fund as amended May 1,
1998
AIM Value Fund February 28, 1997, February 7, 1997* June 30, 1992
as amended May 1,
1998
</TABLE>
* The current advisory agreement was last submitted to a vote of public
shareholders of the funds in connection with a merger between A I M
Management Group Inc. and a subsidiary of INVESCO PLC.
D-1
<PAGE> 80
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 POSITIONS WITH AIM PRINCIPAL OCCUPATION
---- ------------------ --------------------
<S> <C> <C>
Charles T. Bauer........ Director and Chairman See trustee table under
Proposal 1
Gary T. Crum............ Director and Senior Vice See Appendix L
President
Robert H. Graham........ Director and President See trustee table under
Proposal 1
Dawn M. Hawley.......... Director, Senior Vice Senior Vice President,
President and Treasurer Chief 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> 81
APPENDIX F
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE FEE
NET FEES WAIVERS
TOTAL NET PAID TO FOR THE
ASSETS FOR THE AIM FOR THE MOST
MOST MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR YEAR
- ------------ -------------------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
AIM Balanced Fund 0.75% of the first $150 $3,184,150,172 $ 13,624,208 0
million; 0.50% of the
excess over $150 million
AIM Global 0.60% of the first $200 387,765,374 1,802,726 0
Utilities Fund million; 0.50% over $200
million up to $500
million; 0.40% over $500
million up to $1 billion;
0.30% of the excess over
$1 billion
AIM High Yield Fund 0.625% of the first $200 3,054,039,754 16,396,698 0
million; 0.55% over $200
million up to $500
million; 0.50% over $500
million up to $1 billion;
0.45% of the excess over
$1 billion
AIM Income Fund 0.50% of the first $200 666,329,320 2,785,338 0
million; 0.40% over $200
million up to $500
million; 0.35% over $500
million up to $1 billion;
0.30% of the excess over
$1 billion
AIM Intermediate 0.50% of the first $200 506,799,475 2,310,621 0
Government Fund million; 0.40% over $200
million up to $500
million; 0.35% over $500
million up to $1 billion;
0.30% of the excess over
$1 billion
AIM Money Market 0.55% of the first $1 1,451,025,249 7,448,373 0
Fund billion; 0.50% of the
excess over $1 billion
</TABLE>
F-1
<PAGE> 82
<TABLE>
<CAPTION>
AGGREGATE FEE
NET FEES WAIVERS
TOTAL NET PAID TO FOR THE
ASSETS FOR THE AIM FOR THE MOST
MOST MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR YEAR
- ------------ -------------------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
AIM Municipal Bond 0.50% of the first $200 376,627,629 1,830,490 0
Fund million; 0.40% over $200
million up to $500
million; 0.35% over $500
million up to $1 billion;
0.30% of the excess over
$1 billion
AIM Select Growth 0.80% of the first $150 1,079,458,334 5,507,389 0
Fund million; 0.625% of the
excess over $150 million
AIM Value Fund 0.80% of the first $150 27,839,018,320 136,059,101 $5,137,356
million; 0.625% of the
excess over $150 million
</TABLE>
F-2
<PAGE> 83
APPENDIX G
FEES PAID TO AIM AND AFFILIATES
IN MOST RECENT FISCAL YEAR
The following chart sets forth the fees paid during the fiscal year ended
December 31, 1999 by the trust to A I M Advisors, Inc. ("AIM") for
administrative services, and to affiliates of AIM. The administrative and other
services provided by AIM and its affiliates will continue to be provided after
the investment advisory contract with AIM is approved.
<TABLE>
<CAPTION>
AIM
(ADMINISTRATIVE A I M A I M FUND
AGREEMENT) DISTRIBUTORS, INC.* SERVICES, INC.
--------------- ------------------- --------------
<S> <C> <C> <C>
AIM FUNDS GROUP
AIM Balanced Fund......... $158,046 $ 9,113,276 $ 1,945,636
AIM Global Utilities
Fund.................... 88,999 938,496 339,533
AIM High Yield Fund....... 177,468 14,820,633 2,941,102
AIM Income Fund........... 111,839 2,159,079 668,106
AIM Intermediate
Government Fund......... 97,900 2,178,052 398,305
AIM Money Market Fund..... 118,024 3,509,630 1,357,559
AIM Municipal Bond Fund... 91,647 700,787 138,338
AIM Select Growth Fund.... 110,205 3,693,669 776,902
AIM Value Fund............ 631,457 95,287,419 20,339,409
</TABLE>
* Net amount received from Rule 12b-1 fees. Excludes amounts reallowed to
brokers, dealers, agents and other service providers.
G-1
<PAGE> 84
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 a similar investment
objective as Balanced.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM V.I. Balanced Fund..... 0.75% of first $150 million; 0.50% $ 48,307,070 Expense limitation --
of the excess over $150 million 1.21%
</TABLE>
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as Global Utilities.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM V.I. Global Utilities
Fund...................... 0.65% of first $250 million; 0.60% $ 39,772,266 N/A
of the excess over $250 million
</TABLE>
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as High Yield.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM V.I. Diversified Income
Fund...................... 0.60% of first $250 million; 0.55% $ 99,508,578 N/A
of the excess over $250 million
AIM V.I. High Yield Fund... 0.625% of first $200 million; $ 25,268,186 Expense limitation --
0.55% of next $300 million; 0.50% 1.11%
of next $500 million; and 0.45% of
excess over $1 billion
AIM High Yield Fund II..... 0.625% of first $500 million; $ 59,124,905 Expense limitation --
0.55% over $500 million up to $1 Class A, 1.00%;
billion; 0.50% of the excess over Class B, 1.75%;
$1 billion Class C, 1.75%
</TABLE>
H-1
<PAGE> 85
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as Income and Intermediate Government, both of which have similar
investment objectives.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM V.I. Government
Securities Fund........... 0.50% of first $250 million; 0.45% $ 70,761,222 N/A
of the excess over $250 million
AIM Floating Rate Fund..... 1.20% of the Portfolio's average $439,522,723 Expense limitation --
daily net assets* Limit total operating
expenses to 1.50%
</TABLE>
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as Money Market.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
Liquid Assets Portfolio.... 0.15% of the average daily net $6,194,495,351 Waive 0.095% of advisory
assets of the Portfolio fee on average net assets
Prime Portfolio............ 0.20% of the first $100 million; $8,724,224,691 N/A
0.15% over $100 million up to $200
million; 0.10% over $200 million
up to $300 million; 0.06% over
$300 million up to $1.5 billion;
0.05% over $1.5 billion
AIM V.I. Money Market
Fund...................... 0.40% of first $250 million; 0.35% $ 95,152,169 N/A
of excess over $250 million
Government & Agency
Portfolio................. 0.10% $ 279,185,112 Limit Net Expenses,
excluding Rule 12b-1
distribution plan fee,
interest expense, taxes
and extraordinary
expenses to, 0.06%
Treasury Portfolio......... 0.15% of first $300 million; 0.06% $5,203,747,106 N/A
over $300 million up to $1.5
billion; 0.05% of the excess over
$1.5 billion
</TABLE>
H-2
<PAGE> 86
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
Treasury TaxAdvantage
Portfolio................. 0.20% of the first $250 million; $ 133,893,290 Limit Net Expenses,
0.15% over $250 million up to $500 excluding Rule 12b-1
million; 0.10% of the excess over distribution plan fee,
$500 million interest expense, taxes
and extraordinary
expenses, to 0.11%
</TABLE>
There are no other funds advised by AIM with investment objectives which
are similar to that of Municipal Bond. However, the following table provides
information with respect to the annual advisory fee rates paid to AIM by certain
other long-term, tax-exempt funds.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM High Income Municipal
Fund...................... 0.60% of the first $500 million; $ 66,436,663 Expense limitation --
0.55% over $500 million up to $1 Class A, 0.60%;
billion; 0.50% over $1 billion; Class B, 1.35%;
0.45% of the excess over $1.5 Class C, 1.35%
billion
AIM Tax-Exempt Bond Fund of
Connecticut............... 0.50% $ 41,439,802 Waive 0.12% of advisory
fee on average daily net
assets
</TABLE>
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as Select Growth.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM Aggressive Growth Fund... 0.80% of the first $150 million; $ 2,840,171,882 N/A
0.625% of the excess over $150
million
AIM Capital Development
Fund........................ 0.75% of the first $350 million; $ 1,084,854,198 N/A
0.625% of the excess over $350
million
AIM Constellation Fund....... 1.00% of the first $30 million; $15,288,481,794 Waive 0.025% of advisory
0.75% over $30 million up to $150 fee on average net assets
million; 0.625% of the excess over in excess of $2 billion
$150 million
</TABLE>
H-3
<PAGE> 87
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM Dent Demographic Trends
Fund........................ 0.85% of the first $2 billion; $ 392,908,501 Waive 0.05% of advisory
0.80% of the excess over $2 fee on average net assets
billion
AIM Large Cap Growth Fund.... 0.75% of the first $1 billion; $ 13,869,426 Waive advisory fee and/or
0.70% over $1 billion up to $2 reimburse expenses on
billion; 0.625% of the excess over Class A, Class B and Class
$2 billion C to extent necessary to
limit expenses (excluding
interest, taxes, dividends
on short sales and
extraordinary expenses) of
Class A shares to 0.85%
AIM Mid Cap Growth Fund...... 0.80% of the first $1 billion; N/A** N/A
0.75% of the excess over $1
billion
AIM Weingarten Fund.......... 1.00% of the first $30 million; $ 9,600,690,471 Waive 0.025% of advisory
0.75% over $30 million up to $350 fee on average net assets
million; 0.625% of the excess over in excess of $2 billion to
$350 million and including $3 billion;
0.05% on average net
assets in excess of $3
billion to and including
$4 billion and 0.075% on
average net assets in
excess of $4 billion
AIM Asian Growth Fund........ 0.95% of the first $500 million; $ 42,497,099 Expense limitation --
0.90% of the excess over $500 Class A, 1.92%;
million Class B, 2.80%;
Class C, 2.80%
AIM European Development
Fund........................ 0.95% of the first $500 million; $ 178,160,567 N/A
0.90% of the excess over $500
million
AIM Global Aggressive Growth
Fund........................ 0.90% of the first $1 billion; $ 1,795,495,057 N/A
0.85% of the excess over $1
billion
AIM Global Growth Fund....... 0.85% of the first $1 billion; $ 845,251,073 N/A
0.80% of the excess over $1
billion
AIM International Equity
Fund........................ 0.95% of the first $1 billion; $ 3,063,733,110 Waive 0.05% of advisory
0.90% of the excess over $1 fee on average net assets
billion in excess of $500 million
AIM V.I. Aggressive Growth
Fund........................ 0.80% of first $150 million; $ 17,325,844 Expense limitation --
0.625% of the excess over $150 1.16%
million
</TABLE>
H-4
<PAGE> 88
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation
Fund........................ 0.65% of first $250 million; 0.60% $ 1,131,217,460 N/A
of the excess over $250 million
AIM V.I. Capital Development
Fund........................ 0.75% of first $350 million; $ 11,034,931 Expense limitation --
0.625% of the excess over $350 1.19%
million
AIM V.I. Dent Demographic
Trends Fund................. 0.85% of first $2 billion; 0.80% $ 999,599 Expense limitation --
of the excess over $2 billion 1.40%
AIM V.I. Growth Fund......... 0.65% of first $250 million; 0.60% $ 704,095,680 N/A
of the excess over $250 million
AIM V.I. International Equity
Fund........................ 0.75% of first $250 million; 0.70% $ 454,059,551 N/A
of excess over $250 million
AIM V.I. Telecommunications
Fund........................ 1.00% $ 108,427,764 N/A
AIM Summit Fund, Inc. ....... 1.00% of the first $10 million; $ 2,624,615,009 Expense limitation --
0.75% of the next $140 million; Class II, 1.50%
0.625% in excess of $150 million
AIM Large Cap Opportunities
Fund........................ Base fee of 1.50%; maximum annual N/A*** N/A
performance adjustment of +/-
1.00%
AIM Mid Cap Opportunities
Fund........................ Base fee of 1.00%; maximum annual $ 4,789,875 Expense limitation --
adjustment of +/- 1.00% Limit total operating
expenses excluding
management fee, Rule 12b-1
distribution plan fee,
interest expense, taxes,
dividend expenses
attributable to securities
sold short and
extraordinary expenses:
Class A, 0.50%;
Class B, 0.52%;
Class C, 0.52%
AIM Small Cap Opportunities
Fund........................ Base fee of 1.00%; maximum annual $ 365,491,330 N/A
adjustment of +/-0.75%
AIM Basic Value Fund......... First $500 million 0.725%; $ 136,276,615 Expense limitation --
Next $500 million 0.70%; Limit Net Expenses:
Next $500 million 0.675%; Class A, 1.75%;
excess over 0.65%* Class B, 2.40%;
Class C, 2.40%
</TABLE>
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<PAGE> 89
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM Euroland Growth Fund..... First $500 million 0.975%; $ 541,308,192 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.65%;
Class C, 2.65%
AIM Japan Growth Fund........ First $500 million 0.975%; $ 304,533,247 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.65%;
Class C, 2.65%
AIM Mid Cap Equity Fund...... First $500 million 0.725%; $ 333,668,281 Expense limitation --
Next $500 million 0.70%; Limit Net Expenses:
Next $500 million 0.675%; Class A, 1.75%;
excess over 0.65% Class B, 2.40%;
Class C, 2.40%
AIM New Pacific Growth Fund.. First $500 million 0.975%; $ 139,121,407 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.65%;
Class C, 2.65%
AIM Small Cap Growth Fund.... First $500 million 0.725%; $ 716,060,823 Expense limitation --
Next $500 million 0.70%; Limit Net Expenses:
Next $500 million 0.675%; Class A, 1.75%;
excess over 0.65%* Class B, 2.40%;
Class C, 2.40%
AIM Global Consumer Products
and Services Fund........... First $500 million 0.975%; $ 184,973,907 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90%* Class B, 2.50%;
Class C, 2.50%
AIM Global Financial Services
Fund........................ First $500 million 0.975%; $ 81,913,285 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90%* Class B, 2.50%;
Class C, 2.50%
AIM Global Health Care Fund.. First $500 million 0.975%; $ 462,669,291 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.50%;
Class C, 2.50%
</TABLE>
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<PAGE> 90
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM Global Infrastructure
Fund........................ First $500 million 0.975%; $ 45,124,457 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90%* Class B, 2.50%;
Class C, 2.50%
AIM Global Resources Fund.... First $500 million 0.975%; $ 35,998,488 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90%* Class B, 2.50%;
Class C, 2.50%
AIM Global Telecommunications
and Technology Fund......... First $500 million 0.975%; $ 1,935,476,632 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.50%;
Class C, 2.50%
AIM Latin American Growth
Fund........................ First $500 million 0.975%; $ 88,788,170 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.50%;
Class C, 2.50%
AIM Global Trends Fund....... First $500 million 0.975%; $ 51,201,676 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.50%;
Class C, 2.50%
</TABLE>
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as Value.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM Blue Chip Fund......... 0.75% of the first $350 million; $ 4,540,673,179 N/A
0.625% of the excess over $350
million
AIM Charter Fund........... 1.00% of the first $30 million; $ 7,360,685,298 Waive 0.025% of advisory
0.75% over $30 million up to $150 fee on average net assets
million; 0.625% of the excess over in excess of $2 billion
$150 million
</TABLE>
H-7
<PAGE> 91
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS AND/OR
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE REIMBURSEMENTS
(BASED ON AVERAGE THE MOST RECENTLY FOR THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- --------------------------
<S> <C> <C> <C>
AIM Large Cap Basic Value
Fund...................... 0.60% of the first $1 billion; $ 1,153,107 Expense limitation --
0.575% over $1 billion up to $2 Class A, 1.25%;
billion; 0.55% of the excess over Class B, 1.93%;
$2 billion Class C, 1.93%
AIM V.I. Blue Chip Fund.... 0.75% of first $350 million; $ 999,604 Expense limitation --
0.625% of the excess over $350 1.30%
million
AIM V.I. Growth and Income
Fund...................... 0.65% of first $250 million; 0.60% $ 2,443,263,980 N/A
of the excess over $250 million
AIM V.I. Value Fund........ 0.65% of first $250 million; 0.60% $ 2,383,366,571 N/A
of the excess over $250 million
AIM Developing Markets
Fund...................... First $500 million 0.975%; $ 207,748,020 Expense limitation --
Next $500 million 0.95%; Limit Net Expenses:
Next $500 million 0.925%; Class A, 2.00%;
excess over 0.90% Class B, 2.50%;
Class C, 2.50%
</TABLE>
* Reflects management and administration fees for both master and feeder
funds.
** AIM Mid Cap Growth Fund commenced operations on November 1, 1999.
*** AIM Large Cap Opportunities Fund commenced operations on December 30, 1999.
H-8
<PAGE> 92
APPENDIX I
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AIM BALANCED FUND
Balanced may not:
(a) With respect to 75% of its total assets, purchase the securities
of any issuer if such purchase would cause more than 5% of the value of its
total assets to be invested in the securities of such issuer (except U.S.
Government securities or 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 or maintain a short position in
securities unless at all times when a short position is open, it owns at
least an equal amount of such securities or owns securities comparable to
or exchangeable for at least an equal amount of such securities.
(d) Purchase or sell commodity contracts, except that the Fund may, as
appropriate and consistent with its investment policies and other
investment restrictions, for hedging purposes, write, purchase or sell
options (including puts, calls and combinations thereof), write covered
call options, enter into futures contracts on securities, securities
indices and currencies, options on such futures contracts, forward foreign
currency exchange contracts, forward commitments and repurchase agreements.
(e) Purchase or sell real estate (except that this restriction does
not preclude investments in companies engaged in real estate activities or
in real estate investment trusts or in securities secured by real estate).
(f) Borrow money or pledge its assets except that the Fund may enter
into reverse repurchase agreements and except, 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 33 1/3% of the value of its total assets (including the amount of
such borrowings) less its liabilities (excluding the amount of such
borrowings) and may pledge amounts of up to 33 1/3% of its total assets to
secure such borrowings. The Fund will not purchase securities while
borrowings in an amount in excess of 5% of its total assets are
outstanding. The Fund may not issue senior securities, except to the extent
permitted by the 1940 Act, including permitted borrowings.
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<PAGE> 93
(g) Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly and
purchased by financial institutions, (b) through the purchase of short-term
obligations (maturing within a year), including repurchase agreements, and
(c) the Fund may lend its portfolio securities, provided that the value of
the securities loaned does not exceed 33 1/3% of the Fund's total assets.
AIM GLOBAL UTILITIES FUND
Global Utilities may not:
(a) 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 that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order.
(b) Purchase the securities of any issuer if such purchase would cause
more than 5% of the voting securities, or more than 10% of the securities
of any class of such issuer, to be held by the Fund, except that the Fund
may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
(c) Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin payments
in connection with transactions in financial futures contracts and options
thereon.
(d) Act as a securities underwriter.
(e) Make loans, except (a) 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 (b) through the purchase of short-
term obligations (maturing within a year), including repurchase agreements,
and (c) the Fund may lend its portfolio securities, provided that the value
of the securities loaned does not exceed 33 1/3% of the Fund's total
assets.
(f) Borrow money or mortgage, pledge, or hypothecate its assets,
except that the Fund may enter into financial futures contracts, and except
that the Fund may borrow from banks to pay for redemptions and for
temporary purposes in an amount not exceeding one-third of the value of its
total assets (including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such borrowings by
pledging up to one-third of the value of its total assets. For the purpose
of this restriction, collateral arrangements with respect to margin for a
financial futures contract are not deemed to be a pledge of assets. The
Fund will not
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purchase securities while borrowings in an amount in excess of 5% of its
total assets are outstanding.
(g) Buy or sell commodities or commodity contracts, although the Fund
may purchase and sell financial futures contracts and options thereon for
hedging purposes.
(h) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
AIM HIGH YIELD FUND
High Yield may not:
(a) Borrow money or issue senior securities or mortgage, pledge, or
hypothecate its assets, except that the Fund may enter into financial
futures contracts, and borrow from banks to pay for redemptions and for
temporary purposes in an amount not exceeding one-third of the value of its
total assets (including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such borrowings by
pledging up to one-third of the value of its total assets. For the purpose
of this restriction, collateral arrangements with respect to margin for a
financial futures contract are not deemed to be a pledge of assets. Secured
temporary borrowings may take the form of reverse repurchase agreements,
pursuant to which the Fund would sell portfolio securities for cash and
simultaneously agree to repurchase them at a specified date for the same
amount of cash plus an interest component. The Fund will not purchase
securities while borrowings in excess of 5% of its total assets are
outstanding.
(b) Make short sales of securities or maintain short positions,
unless, at all times when a short position is open, the Fund owns at least
an equal amount of the securities sold short or owns securities convertible
into or exchangeable for at least an equal amount of such securities sold
short, without the payment of further consideration.
(c) Purchase or sell real estate or interests therein, but the Fund
may purchase and sell (a) securities which are secured by real estate, and
(b) the securities of companies which invest or deal in real estate or
interests therein, including real estate investment trusts.
(d) Act as a securities underwriter.
(e) Purchase or sell commodities or commodity contracts, other than
financial futures contracts and options thereon.
(f) With respect to 75% of the value of its total assets, invest more
than 5% of the market value of its total assets in the securities of any
one issuer, other than obligations of or guaranteed by the U.S. Government
or any of its
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agencies or instrumentalities, except that the Fund may purchase securities
of other investment companies to the extent permitted by applicable law or
exemptive order.
(g) Concentrate 25% or more of the value of its total assets in the
securities of issuers which conduct their principal business activities in
the same industry. Gas, electric, water and telephone companies as well as
banks, credit institutions, and insurance companies will be considered to
be in separate industries.
(h) Make loans, except that the Fund may lend its portfolio securities
provided that the value of the securities loaned does not exceed 33 1/3% of
its total assets, and except that the Fund may enter into repurchase
agreements.
(i) 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 and may make margin payments in connection with
transactions in financial futures contracts and options thereon.
(j) Invest in puts, calls, or any combinations thereof, except,
however, that the Fund may invest in financial futures contracts, purchase
and sell options on financial futures contracts, may acquire and hold puts
which relate to equity securities acquired by the Fund when such puts are
attached to or included in a unit with such equity securities, and may sell
covered call options.
AIM INCOME FUND
Income may not:
(a) 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) Purchase the securities of any issuer if such purchase would cause
more than 5% of the voting securities, or more than 10% of the securities
of any class of such issuer, to be held by the Fund, except that the Fund
may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
(c) Concentrate 25% or more of its investments in a particular
industry.
(d) Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin payments
in
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<PAGE> 96
connection with transactions in financial futures contracts and options
thereon.
(e) Act as a securities underwriter.
(f) Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly and
purchased by financial institutions, (b) through the purchase of short-term
obligations (maturing within a year), including repurchase agreements, and
(c) the Fund may lend its portfolio securities, provided that the value of
the securities loaned does not exceed 33 1/3% of the Fund's total assets.
(g) Borrow, except that the Fund may enter into financial 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 amount of such borrowings) less its liabilities (excluding
the amount of such borrowings) and may secure such borrowings by pledging
up to one-third of the value of its total assets. (For the purposes of this
restriction, collateral arrangements with respect to margin for a financial
futures contract are not deemed to be a pledge of assets.) The Fund will
not purchase securities while borrowings in an amount in excess of 5% of
its total assets are outstanding.
(h) Invest in puts, calls, straddles, spreads or any combination
thereof, except, however, that the Fund may purchase and sell options on
financial futures contracts and may sell covered call options.
(i) Buy or sell commodities or commodity contracts, although the Fund
may purchase and sell financial futures contracts and options thereon.
(j) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
(k) Invest in securities with unlimited liability except for
assessability allowed by statutes with respect to wages.
(l) Issue senior securities except to the extent permitted by the 1940
Act, including permitted borrowing.
AIM INTERMEDIATE GOVERNMENT FUND
Intermediate Government may not:
(a) 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, as described under "Investment
Objectives" in the Prospectus, and except that the Fund may purchase
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<PAGE> 97
securities of other investment companies to the extent permitted by
applicable law or exemptive order).
(b) Purchase the securities of any issuer if such purchase would cause
more than 5% of the voting securities, or more than 10% of the securities
of any class of such issuer, to be held by the Fund (except U.S. Government
securities including securities issued by its agencies and
instrumentalities, as described under "Investment Objectives" in the
Prospectus), and except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order.
(c) Concentrate 25% or more of its investments in a particular
industry.
(d) Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin payments
in connection with transactions in financial futures contracts and options
thereon.
(e) Act as a securities underwriter.
(f) Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly and
purchased by financial institutions, (b) through the purchase of short-term
obligations (maturing within a year), including repurchase agreements, and
(c) the Fund may lend its portfolio securities provided that the value of
the securities loaned does not exceed 33 1/3% of the Fund's total assets.
(g) Borrow money or mortgage, pledge, or hypothecate its assets,
except that the Fund may enter into financial futures contracts, and except
that the Fund may borrow from banks to pay for redemptions and for
temporary purposes in an amount not exceeding one-third of the value of its
total assets (including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such borrowings by
pledging up to one-third of the value of its total assets. For the purpose
of this restriction, collateral arrangements with respect to margin for a
financial futures contract are not deemed to be a pledge of assets. The
Fund will not purchase securities while borrowings in an amount in excess
of 5% of its total assets are outstanding.
(h) Invest in puts, calls, straddles, spreads or any combination
thereof, except, however, that the Fund may purchase and sell options on
financial futures contracts and may sell covered call options.
(i) Buy or sell commodities or commodity contracts, although the Fund
may purchase and sell financial futures contracts and options thereon.
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<PAGE> 98
(j) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
AIM MONEY MARKET FUND
Money Market may not:
(a) 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 (a) U.S. Government securities, including securities
issued by its agencies and instrumentalities, (b) to the extent permitted
by Rule 2a-7 under the 1940 Act, as amended from time to time, and (c) 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, provided that this limitation does not apply to securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities,
and obligations of domestic banks.
(c) Pledge, mortgage or hypothecate more than 33 1/3% of the total
assets of the Fund, except that reverse repurchase agreements and loans of
portfolio securities are not deemed to involve pledging, mortgaging or
hypothecating assets.
(d) Purchase securities on margin or make short sales of securities,
except as is necessary for the clearance of purchases and sales of
securities.
(e) Underwrite securities (except to the extent that the purchase of
securities either directly from the issuer or from an underwriter for an
issuer and the later disposition of such securities may be deemed an
underwriting).
(f) Make loans, except it may purchase instruments and securities
permitted by the investment objectives and policies, it may invest in
reverse repurchase agreements, and it may loan portfolio securities in an
amount equal to one-third of its total assets.
(g) Borrow money or issue senior securities (which term shall not
include delayed delivery and when-issued securities) except as a temporary
measure for extraordinary or emergency purposes and except that the Fund
may enter into reverse repurchase agreements in amounts, inclusive of all
borrowings, up to one-third of the value of the Fund's total assets
(including the amount of such borrowings) less its liabilities (excluding
the amount of such borrowings) at the time it enters into such agreements.
The Fund will not purchase portfolio securities while borrowings in an
amount in excess of 5% of its total assets are outstanding.
(h) Invest in puts or calls or engage in arbitrage transactions.
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<PAGE> 99
(i) Buy or sell commodities or commodity futures contracts.
(j) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate or interests therein.
AIM MUNICIPAL BOND FUND
Municipal Bond may not:
(a) Invest less than 65% of its total assets in securities other than
municipal bonds.
(b) 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). For the purpose of this restriction
and that set forth in restriction [( c )] , the Fund will regard each state
and each political subdivision, agency or instrumentality of such state and
each multi-state agency of which such state is a member as a separate
issuer.
(c) Purchase the securities of any issuer if such purchase would cause
more than 10% of the debt obligations of such issuer to be held by the
Fund.
(d) Purchase securities if such purchase would cause, at the time of
purchase, 25% or more of total Fund assets to be invested in any one
industry. Investment in municipal bonds and obligations issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities does not involve investment in any industry.
(e) Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin payments
in connection with transactions in financial futures contracts and options
thereon and municipal bond index futures contracts.
(f) Act as a securities underwriter except to the extent that it may
be deemed to be an underwriter under the Securities Act of 1933 when
purchasing or selling a portfolio security.
(g) Make loans, except that it may purchase debt instruments,
including repurchase agreements maturing within seven days, as permitted by
the investment objective and policies of the Fund, and except that it may
lend its portfolio securities provided that the value of the securities
loaned does not exceed 33 1/3% of its total assets.
(h) Borrow, except that the Fund may enter into financial futures
contracts and municipal bond index futures contracts and that the right is
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<PAGE> 100
reserved to borrow from banks, provided that no borrowing may exceed one-
third of the value of its total assets (including the amount of such
borrowings) less its liabilities (excluding the amount of such borrowings)
and may secure such borrowings by pledging up to one-third of the value of
its total assets. (For the purposes of this restriction, collateral
arrangements with respect to margin for a financial or a municipal bond
index futures contract are not deemed to be a pledge of assets.) The Fund
will not purchase securities while borrowings in excess of 5% of its total
assets are outstanding.
(i) Invest in puts, calls, straddles, spreads or any combination
thereof, except, however, that the Fund may purchase and sell options on
financial futures contracts and may sell covered call options.
(j) Buy or sell commodities or commodity contracts, although the Fund
may purchase and sell financial futures contracts and options thereon and
municipal bond index futures contracts.
(k) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
AIM SELECT GROWTH FUND
Select Growth may not:
(a) 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) Purchase the securities of any issuer if such purchase would cause
more than 5% of the voting securities, or more than 10% of the securities
of any class of such issuer, to be held by the Fund, except that the Fund
may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
(c) Concentrate 25% or more of its investments in a particular
industry.
(d) Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are 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.
(e) Act as a securities underwriter.
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(f) Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly and
purchased by financial institutions, (b) through the purchase of short-term
obligations (maturing within a year), including repurchase agreements, and
(c) the Fund may lend its portfolio securities, provided that the value of
the securities loaned does not exceed 33 1/3% of the Fund's total assets.
(g) 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 amount of such borrowings) less its liabilities (excluding
the amount of such borrowings) and may secure such borrowings by pledging
up to one-third of the value of its total assets. For the purposes of this
restriction, collateral arrangements with respect to margin for a stock
index futures contract are not deemed to be a pledge of assets. The Fund
will not purchase securities while borrowings in excess of 5% of its total
assets are outstanding.
(h) Buy or sell commodities or commodity contracts, although the Fund
may invest in financial futures and options thereon for hedging purposes.
(i) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
AIM VALUE FUND
Value may not:
(a) 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) Purchase the securities of any issuer if such purchase would cause
more than 5% of the voting securities, or more than 10% of the securities
of any class of such issuer, to be held by the Fund, except that the Fund
may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
(c) Concentrate 25% or more of its investments in a particular
industry.
(d) Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin payments
in
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connection with transactions in stock index futures contracts and options
thereon.
(e) Act as a securities underwriter.
(f) Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly and
purchased by financial institutions, (b) through the purchase of short-term
obligations (maturing within a year), including repurchase agreements, and
(c) the Fund may lend its portfolio securities, provided that the value of
the securities loaned does not exceed 33 1/3% of the Fund's total assets.
(g) 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 amount of such borrowings) less its liabilities (excluding
the amount of such borrowings) and may secure such borrowings by pledging
up to one-third of the value of its total assets. (For the purposes of this
restriction, collateral arrangements with respect to margin for a stock
index futures contract are not deemed to be a pledge of assets.) The Fund
will not purchase securities while borrowings in an amount in excess of 5%
of its total assets are outstanding.
(h) Buy or sell commodities or commodity contracts, although the Fund
may invest in financial futures and options thereon for hedging purposes.
(i) Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
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APPENDIX J
OPTIONS, FUTURES AND CURRENCY STRATEGIES
Introduction
AIM High Yield Fund, AIM Income Fund and AIM Intermediate Government Fund
each 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 from 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.
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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,
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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
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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%.
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APPENDIX K
CURRENT INVESTMENT OBJECTIVES
AIM BALANCED FUND
The fund's investment objective is to achieve as high a total return as
possible, consistent with preservation of capital, by investing in a broadly
diversified portfolio of high-yielding securities, including common stocks,
preferred stocks, convertible securities and bonds.
AIM GLOBAL UTILITIES FUND
The fund's investment objectives are to achieve a high level of current
income and secondarily, growth of capital, by investing primarily in the common
and preferred stocks of public utility companies.
AIM HIGH YIELD FUND
The fund's investment objective is to achieve a high level of current
income by investing primarily in publicly traded, non-investment grade debt
securities.
AIM INCOME FUND
The fund's investment objective is to achieve a high level of current
income consistent with reasonable concern for safety of principal by investing
primarily in fixed-rate corporate debt and U.S. Government obligations.
AIM INTERMEDIATE GOVERNMENT FUND
The fund's investment objective is to achieve a high level of current
income consistent with reasonable concern for safety of principal by investing
in debt securities issued, guaranteed or otherwise backed by the U.S.
Government.
AIM MONEY MARKET FUND
The fund's investment objective is to provide as high a level of current
income as is consistent with the preservation of capital and liquidity.
AIM MUNICIPAL BOND FUND
The fund's investment objective is to achieve a high level of current
income exempt from federal income taxes, consistent with the preservation of
principal, by investing in a diversified portfolio of municipal bonds.
AIM SELECT GROWTH FUND
The fund's investment objective is to achieve long-term growth of capital
by investing primarily in the common stocks of established medium-to large-sized
companies with prospects for above-average, long-term earnings growth.
AIM VALUE FUND
The fund's primary investment objective is to achieve long-term growth of
capital by investing primarily in equity securities judged by the fund's
investment advisor to be undervalued relative to the investment advisor's
appraisal of the current or projected earnings of the companies issuing the
securities, or relative to current market values of assets owned by the
companies issuing the securities or relative to the equity markets generally.
Income is a secondary objective.
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APPENDIX L
EXECUTIVE OFFICERS OF AIM FUNDS GROUP
The following table provides information with respect to the executive
officers of the trust. 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
trust is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME, AGE AND
POSITION PRINCIPAL OCCUPATION(S)
WITH THE TRUST OFFICER SINCE DURING PAST 5 YEARS
- -------------- ------------------ -------------------------------------------
<S> <C> <C>
Charles T. Bauer May 5, 1993 See trustee table under Proposal 1
(81),
Chairman
Robert H. Graham January 1, 1994 See trustee table under Proposal 1
(53),
President
Gary T. Crum (52), September 11, 1993 Director and President, A I M Capital
Senior Vice President Management, Inc.; Director and Executive
Vice President, A I M Management Group
Inc.; Director and Senior Vice President,
A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
Carol F. Relihan August 4, 1994 Director, Senior Vice President, General
(45), Counsel and Secretary, A I M Advisors,
Senior Vice President Inc.; Senior Vice President, General
and Secretary 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.
Robert G. Alley (51), September 11, 1993 Senior Vice President, A I M Capital
Vice President Management, Inc.; and Vice President, A I M
Advisors, Inc.
Stuart W. Coco (44), September 11, 1993 Senior Vice President, A I M Capital
Vice President Management, Inc.; and Vice President, A I M
Advisors, Inc.
Karen Dunn Kelley September 11, 1993 Senior Vice President, A I M Capital
(39), Management, Inc.; and Vice President, A I M
Vice President Advisors, Inc.
Edgar M. Larsen (59), March 12, 1999 Vice President, A I M Capital Management, Inc.
Vice President
Melville B. Cox (56), September 11, 1993 Vice President and Chief Compliance Officer,
Vice President 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, A I M
Vice President and Advisors, Inc.; and Assistant Vice President
Treasurer and Assistant Treasurer, Fund Management
Company.
</TABLE>
L-1
<PAGE> 114
APPENDIX M
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
To the best knowledge of the trust, the following table sets forth certain
information regarding the ownership of the shares of beneficial interest of each
of the funds by the trustees and executive officers of the trust. No information
is given as to a fund or a class if a trustee 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
NAME OF FEBRUARY 18, PERCENT
TRUSTEE/OFFICER FUND (CLASS) 2000 OF CLASS
- --------------- ------------------------------------------------- ------------------ --------------
<S> <C> <C> <C>
Charles T. 15,285.507 *
Bauer............ AIM Balanced Fund (Class A)
AIM High Yield Fund (Class A) 413,499.690(1) *
AIM Money Market Fund (AIM Cash Reserve Shares) 3,405,370.960 *
AIM Municipal Bond Fund (Class A) 28,460.276 *
AIM Value Fund (Class A) 7,804.958 *
Bruce L. 145.963 *
Crockett......... AIM High Yield Fund (Class A)
AIM Select Growth Fund (Class A) 77.083 *
AIM Value Fund (Class A) 40.377 *
Owen Daly II...... AIM Balanced Fund (Class A) 5,896.792 *
AIM High Yield Fund (Class A) 1,041.401 *
Edward K. Owned no shares of any class as of February 18,
Dunn Jr.......... 2000
Jack M. Fields.... AIM Value Fund (Class A) 654.216(2) *
Carl Frischling... AIM Balanced Fund (Class A) 5,818.571 *
AIM Value Fund (Class A) 9,593.604(2) *
Robert H. Graham.. AIM Balanced Fund (Class A) 4,649.871 *
AIM High Yield Fund (Class A) 9,871.133 *
AIM Money Market Fund (AIM Cash Reserve Shares) 1,658,873.620 *
AIM Municipal Bond Fund (Class A) 8,143.032 *
AIM Value Fund (Class A) 8,632.460 *
Prema Mathai-
Davis............ AIM High Yield Fund (Class A) 2,603.263(2) *
AIM Value Fund (Class A) 363.465(2)
Lewis F. 876.118 *
Pennock.......... AIM Balanced Fund (Class A)
AIM High Yield Fund (Class A) 1,250.786 *
AIM Money Market Fund (AIM Cash Reserve Shares) 886.580 *
Louis S. Sklar.... Owned no shares of any class as of February 18,
2000
</TABLE>
M-1
<PAGE> 115
<TABLE>
<CAPTION>
SHARES
OWNED
BENEFICIALLY
AS OF
NAME OF FEBRUARY 18, PERCENT
TRUSTEE/OFFICER FUND (CLASS) 2000 OF CLASS
- --------------- ------------------------------------------------- ------------------ --------------
<S> <C> <C> <C>
All Trustees and
Executive
Officers as a
Group............ AIM Balanced Fund (Class A) 38,747.756 *
AIM Global Utilities Fund (Class A) 425.172 *
AIM High Yield Fund (Class A) 441,439.000 *
AIM Money Market Fund (AIM Cash Reserve Shares) 10,933,988.140 1.03%
AIM Municipal Bond Fund (Class A) 2,030,828.909 5.51%
AIM Select Growth Fund (Class A) 77.083 *
AIM Value Fund (Class A) 32,547.439 *
</TABLE>
* Less than 1% of the outstanding shares of the class.
(1) Includes shares held in a foundation for which Mr. Bauer has shared voting
and investment power.
(2) Certain of these shares may be attributed to shares credited to the
applicable trustee under the trustees' Deferred Compensation Agreements.
M-2
<PAGE> 116
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS
To the best knowledge of the trust, the names and addresses of the holders
of 5% or more of the outstanding shares of each class of shares 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
CLASS
OWNED SHARES PERCENT OF CLASS
NAME AND ADDRESS SHARES OWNED OF OWNED OWNED
FUND (CLASS) OF RECORD OWNER OF RECORD RECORD BENEFICIALLY BENEFICIALLY
- ------------------------ ------------------------ -------------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
AIM Balanced Fund
Class A................ Merrill Lynch Pierce 6,112,371.059 10.96% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
American Express Trust 5,049,324.131 9.05% -0-* -0-*
Co.
FBO American Express
Trust
Retirement Service Plans
1200 Northstar
West P.O. Box 534
Minneapolis, MN
55440-0534
Class B................ Merrill Lynch Pierce 3,982,347.950 10.83% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 1,738,685.153 25.55% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
</TABLE>
M-3
<PAGE> 117
<TABLE>
<CAPTION>
PERCENT
OF
CLASS
OWNED SHARES PERCENT OF CLASS
NAME AND ADDRESS SHARES OWNED OF OWNED OWNED
FUND (CLASS) OF RECORD OWNER OF RECORD RECORD BENEFICIALLY BENEFICIALLY
- ------------------------ ------------------------ -------------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
AIM Global Utilities
Fund
Class B................ Merrill Lynch Pierce 466,159.597 8.30% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 18,273.989 5.47% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
AIM High Yield Fund
Class A................ Merrill Lynch Pierce 9,480,838.164 5.85% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class B................ Merrill Lynch Pierce 25,505,702.140 13.69% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 2,839,138.311 17.65% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Banc One Securities Corp 1,688,153.255 10.50% -0-* -0-*
FBO
The One Investment
Solution
733 Greencrest Drive
Westerville, OH
43081-0000
</TABLE>
M-4
<PAGE> 118
<TABLE>
<CAPTION>
PERCENT
OF
CLASS
OWNED SHARES PERCENT OF CLASS
NAME AND ADDRESS SHARES OWNED OF OWNED OWNED
FUND (CLASS) OF RECORD OWNER OF RECORD RECORD BENEFICIALLY BENEFICIALLY
- ------------------------ ------------------------ -------------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
AIM Income Fund
Class B................ Merrill Lynch Pierce 2,692,901.188 8.74% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 478,619.982 13.10% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
AIM Intermediate
Government Fund
Class A................ Merrill Lynch Pierce 1,918,025.480 7.81% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class B................ Merrill Lynch Pierce 4,764,388.426 20.70% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 887,787.603 21.90% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
</TABLE>
M-5
<PAGE> 119
<TABLE>
<CAPTION>
PERCENT
OF
CLASS
OWNED SHARES PERCENT OF CLASS
NAME AND ADDRESS SHARES OWNED OF OWNED OWNED
FUND (CLASS) OF RECORD OWNER OF RECORD RECORD BENEFICIALLY BENEFICIALLY
- ------------------------ ------------------------ -------------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
AIM Money Market
Fund
AIM Cash Reserve AIM Management Group 54,739,416.61 5.17% -0-* -0-*
Shares............... Inc. and Subsidiaries
11 Greenway Plaza
Suite 1919
Houston, TX 77046
AIM Municipal Bond Fund
Class A................ Gary T. Crum -0- -0- 1,944,225.601(1) 5.27%
11 Greenway Plaza
Suite 1919
Houston, TX 77046
Class B................ Merrill Lynch Pierce 1,048,949.194 11.74% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 267,708.120 22.89% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Chernow Associates LLC 114,925.668 9.82% -0-* -0-*
4 Fox Run Ln.
Westport, CT 06880
Reagan Family Partners 71,599.045 6.12% -0-* -0-*
Robert L. Reagan Gen.
Partner
Dalene C. Reagan Gen.
Partner
125 Crestline Drive
Kerrville, TX 78028
</TABLE>
M-6
<PAGE> 120
<TABLE>
<CAPTION>
PERCENT
OF
CLASS
OWNED SHARES PERCENT OF CLASS
NAME AND ADDRESS SHARES OWNED OF OWNED OWNED
FUND (CLASS) OF RECORD OWNER OF RECORD RECORD BENEFICIALLY BENEFICIALLY
- ------------------------ ------------------------ -------------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
AIM Select Growth Fund
Class B................ Merrill Lynch Pierce 3,786,348.779 15.70% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 179,428.188 14.72% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
AIM Value Fund
Class A................ Merrill Lynch Pierce 29,541,693.359 11.25% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class B................ Merrill Lynch Pierce 44,452,328.797 14.40% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C................ Merrill Lynch Pierce 5,892,794.833 27.05% -0-* -0-*
Fenner & Smith
FBO The Sole Benefit of
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
</TABLE>
* The trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
(1) Includes shares held in a trust for which Mr. Crum serves as trustee and for
which he has sole voting and investment power.
M-7
<PAGE> 121
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM BALANCED FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 122
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group FOR WITHHOLD FOR ALL
each of whom will serve until his or her successor is elected ALL AUTHORITY FOR EXCEPT
and qualified: ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED.
__________________________
2. NOT APPLICABLE.
FOR AGAINST ABSTAIN
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction on [ ] [ ] [ ]
on issuer diversification. making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ] (i) NOT APPLICABLE. [ ] [ ] [ ]
fundamental investment restriction
on underwriting securities.
(d) Change to or addition of [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
fundamental restriction on restriction on short sales of
industry concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate.
(f) Change to fundamental restriction [ ] [ ] [ ] (l) NOT APPLICABLE.
on purchasing or selling
commodities and elimination of
fundamental restriction on puts
and calls. FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Balanced Fund and [ ] [ ] [ ]
making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 123
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM GLOBAL UTILITIES FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 124
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group each FOR WITHHOLD FOR ALL
of whom will serve until his or her successor is elected and qualified: ALL AUTHORITY FOR EXCEPT
ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ___________________________________
2. NOT APPLICABLE.
FOR AGAINST ABSTAIN
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction [ ] [ ] [ ]
on issuer diversification. on making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of the each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental [ ] [ ] [ ]
on underwriting securities. restriction on margin transactions.
(d) Change to or addition of fundamental [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
restriction on industry restriction on short sales of
concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate. (l) NOT APPLICABLE.
(f) Change to fundamental restriction [ ] [ ] [ ]
on purchasing or selling
commodities and elimination of
fundamental restriction on
puts and calls. FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Global Utilities Fund and [ ] [ ] [ ]
making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 125
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM HIGH YIELD FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 126
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group each FOR WITHHOLD FOR ALL
of whom will serve until his or her successor is elected and qualified: ALL AUTHORITY FOR EXCEPT
ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ____________________________
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Reorganization which provides for the [ ] [ ] [ ]
reorganization of AIM Income Fund into a new series portfolio of AIM
Investment Securities Funds having the same investment objective and policies.
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction [ ] [ ] [ ]
on issuer diversification. on making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental [ ] [ ] [ ]
underwriting securities. restriction on margin transactions.
(d) Change to or addition of fundamental [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
restriction on industry restriction on short sales of
concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate.
(f) Change to fundamental restriction [ ] [ ] [ ] (l) Elimination of fundamental [ ] [ ] [ ]
on purchasing or selling restriction on investing in
commodities and elimination of securities with unlimited
fundamental restriction on puts and liability.
calls.
FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Income Fund and [ ] [ ] [ ]
making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 127
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM INCOME FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 128
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group
each of whom will serve until his or her successor is elected and qualified: FOR WITHHOLD FOR ALL
ALL AUTHORITY FOR EXCEPT
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar ALL NOMINEES
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis [ ] [ ] [ ]
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ___________________________________
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Reorganization which provides for the reorganization [ ] [ ] [ ]
of AIM High Yield Fund into a new series portfolio of AIM Investment Securities
Funds having the same investment objective and policies.
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction on [ ] [ ] [ ]
on issuer diversification. making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental [ ] [ ] [ ]
on underwriting securities. restriction on margin transactions.
(d) Change to or addition of fundamental [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
restriction on industry restriction on short sales of
concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate. (l) NOT APPLICABLE.
(f) Change to fundamental restriction [ ] [ ] [ ]
on purchasing or selling
commodities and elimination of
fundamental restriction on puts and
calls
5. NOT APPLICABLE.
6. NOT APPLICABLE.
FOR AGAINST ABSTAIN
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 129
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM INTERMEDIATE GOVERNMENT FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 130
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group FOR WITHHOLD FOR ALL
each of whom will serve until his or her successor is elected and ALL AUTHORITY FOR EXCEPT
and qualified: ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED.____________________________
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Reorganization which provides for the [ ] [ ] [ ]
reorganization of AIM Intermediate Government Fund into a new series portfolio
of AIM Investment Securities Funds having the same investment objective and policies.
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction [ ] [ ] [ ]
on issuer diversification. on making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ] (i) Elimination of fundamental [ ] [ ] [ ]
fundamental investment restriction restriction on margin transactions.
on underwriting securities.
(d) Change to or addition of fundamental [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
restriction on industry restriction on short sales of
concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate.
(f) Change to fundamental restriction [ ] [ ] [ ] (l) NOT APPLICABLE.
on purchasing or selling
commodities and elimination of
fundamental restriction on puts
and calls. FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Intermediate Government [ ] [ ] [ ]
Fund and making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 131
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM MONEY MARKET FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 132
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group each FOR WITHHOLD FOR ALL
of whom will serve until his or her successor is elected and qualified: ALL AUTHORITY FOR EXCEPT
ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ___________________________________
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Reorganization which provides for the [ ] [ ] [ ]
reorganization of AIM Money Market Fund into new series portfolio of AIM
Investment Securities Funds having the same investment objectives and policies.
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund. FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction on [ ] [ ] [ ]
on issuer diversification. making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental [ ] [ ] [ ]
on underwriting securities. restriction on margin transactions.
(d) Change to or addition of fundamental [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
restriction on industry restriction on short sales of
concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate. (l) NOT APPLICABLE.
(f) Change to fundamental restriction [ ] [ ] [ ]
on purchasing or selling
commodities and elimination of
fundamental restriction on
puts and calls. FOR AGAINST ABSTAIN
5. NOT APPLICABLE.
6. To approve changing the investment objective of AIM Money Market Fund so [ ] [ ] [ ]
that it is non-fundamental.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 133
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM MUNICIPAL BOND FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 134
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group each FOR WITHHOLD FOR ALL
of whom will serve until his or her successor is elected and qualified: ALL AUTHORITY FOR EXCEPT
ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ___________________________________
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To approve an Agreement and Plan of Reorganization which provides for the [ ] [ ] [ ]
reorganization of AIM Municipal Bond Fund into a new series portfolio of AIM
Investment Securities Funds having the same investment objective and policies.
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction on [ ] [ ] [ ]
on issuer diversification. making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental [ ] [ ] [ ]
on underwriting securities. restriction on margin transactions.
(d) Change to or addition of fundamental [ ] [ ] [ ] (j) Elimination of fundamental restrict- [ ] [ ] [ ]
restriction on industry concentration. ion on short sales of securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) Elimination of fundamental [ ] [ ] [ ]
on purchasing or selling real restriction on investing in
estate. securities other than municipal bonds.
(f) Change to fundamental restriction [ ] [ ] [ ] (l) NOT APPLICABLE.
on purchasing or selling
commodities and elimination of
fundamental restriction on puts and
calls.
FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Municipal Bond Fund and [ ] [ ] [ ]
making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 135
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM SELECT GROWTH FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 136
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group FOR WITHHOLD FOR ALL
each of whom will serve until his or her successor is elected and qualified: ALL AUTHORITY FOR EXCEPT
ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ______________________________
2. NOT APPLICABLE.
FOR AGAINST ABSTAIN
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction [ ] [ ] [ ]
on issuer diversification. on making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental restric- [ ] [ ] [ ]
on underwriting securities. tion on margin transactions.
(d) Change to or addition of [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
fundamental restriction on restriction on short sales of
industry concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate. (l) NOT APPLICABLE.
(f) Change to fundamental restriction [ ] [ ] [ ]
on purchasing or selling
commodities and elimination of
fundamental restriction on puts and
calls. FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Select Growth Fund and [ ] [ ] [ ]
and making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 137
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
o Please fold and detach card at perforation before mailing o
AIM VALUE FUND PROXY
PROXY SOLICITED BY THE BOARD OF TRUSTEES
OF AIM FUNDS GROUP
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock 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 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 TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
Dated _________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature(s) AFG
<PAGE> 138
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
o Please fold and detach card at perforation before mailing o
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Trustees of AIM Funds Group FOR WITHHOLD FOR ALL
each of whom will serve until his or her successor is elected and qualified: ALL AUTHORITY FOR EXCEPT
ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED. ___________________________
2. NOT APPLICABLE.
FOR AGAINST ABSTAIN
3. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
4. To approve changing the fundamental
investment restrictions of the fund, FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to fundamental restriction [ ] [ ] [ ] (g) Change to fundamental restriction on [ ] [ ] [ ]
on issuer diversification. making loans.
(b) Change to fundamental restriction [ ] [ ] [ ] (h) Approval of a new fundamental [ ] [ ] [ ]
on borrowing money and issuing investment restriction on investing
senior securities. all of each fund's assets in an
open-end fund.
(c) Change to or addition of [ ] [ ] [ ]
fundamental investment restriction (i) Elimination of fundamental [ ] [ ] [ ]
on underwriting securities. restriction on margin transactions.
(d) Change to or addition of [ ] [ ] [ ] (j) Elimination of fundamental [ ] [ ] [ ]
fundamental restriction on restriction on short sales of
industry concentration. securities.
(e) Change to fundamental restriction [ ] [ ] [ ] (k) NOT APPLICABLE.
on purchasing or selling real
estate. (l) NOT APPLICABLE.
(f) Change to fundamental restriction [ ] [ ] [ ]
on purchasing or selling
commodities and elimination of
fundamental restriction on puts and
calls. FOR AGAINST ABSTAIN
5. To approve changing the investment objective of AIM Value Fund and [ ] [ ] [ ]
making it non-fundamental.
6. NOT APPLICABLE.
7. To ratify the selection of KPMG LLP as independent accountants of the fund [ ] [ ] [ ]
for the fiscal year 2000.
8. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
