<PAGE> PAGE 1
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<PAGE> PAGE 2
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<PAGE> PAGE 5
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<PAGE> PAGE 7
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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<PAGE> PAGE 21
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<PAGE> PAGE 22
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<PAGE> PAGE 23
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<PAGE> PAGE 24
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<PAGE> PAGE 25
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<PAGE> PAGE 26
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<PAGE> PAGE 27
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<PAGE> PAGE 28
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<PAGE> PAGE 29
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<PAGE> PAGE 30
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<PAGE> PAGE 31
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<PAGE> PAGE 32
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<PAGE> PAGE 33
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<PAGE> PAGE 34
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<PAGE> PAGE 35
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<PAGE> PAGE 36
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<PAGE> PAGE 37
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<PAGE> PAGE 38
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<PAGE> PAGE 39
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<PAGE> PAGE 40
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<PAGE> PAGE 41
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<GROSS-EXPENSE> 2126
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<PER-SHARE-NAV-END> 8.16
<EXPENSE-RATIO> 2.55
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<AVG-DEBT-PER-SHARE> 0.003
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> AIM GROWTH SERIES
<SERIES>
<NUMBER> 033
<NAME> AIM INTERNATIONAL GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NET-GAINS> 19005
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26336
<NET-ASSETS> 193777
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<INTEREST-INCOME> 323
<OTHER-INCOME> 172
<EXPENSES-NET> (2119)
<NET-INVESTMENT-INCOME> 737
<REALIZED-GAINS-CURRENT> 15659
<APPREC-INCREASE-CURRENT> 7824
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<NUMBER-OF-SHARES-SOLD> 2272
<NUMBER-OF-SHARES-REDEEMED> (2279)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (10673)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<AVG-DEBT-OUTSTANDING> 73
<AVG-DEBT-PER-SHARE> 0.003
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> AIM GROWTH SERIES
<SERIES>
<NUMBER> 041
<NAME> AIM JAPAN GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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<INVESTMENTS-AT-VALUE> 66503
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<SENIOR-EQUITY> 0
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<ACCUMULATED-NII-CURRENT> (82)
<OVERDISTRIBUTION-NII> 0
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<ACCUM-APPREC-OR-DEPREC> (14417)
<NET-ASSETS> 68378
<DIVIDEND-INCOME> 311
<INTEREST-INCOME> 474
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<EXPENSES-NET> (908)
<NET-INVESTMENT-INCOME> (82)
<REALIZED-GAINS-CURRENT> (3939)
<APPREC-INCREASE-CURRENT> 4451
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<NUMBER-OF-SHARES-REDEEMED> (13392)
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<NET-CHANGE-IN-ASSETS> (30806)
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<PER-SHARE-NAV-BEGIN> 8.96
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<EXPENSE-RATIO> 1.97
<AVG-DEBT-OUTSTANDING> 98
<AVG-DEBT-PER-SHARE> 0.001
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> AIM GROWTH SERIES
<SERIES>
<NUMBER> 042
<NAME> AIM JAPAN GROWTH FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 82998
<INVESTMENTS-AT-VALUE> 66503
<RECEIVABLES> 6245
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<PAYABLE-FOR-SECURITIES> 173
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<SENIOR-EQUITY> 0
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<ACCUMULATED-NII-CURRENT> (82)
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<ACCUM-APPREC-OR-DEPREC> (14417)
<NET-ASSETS> 68378
<DIVIDEND-INCOME> 311
<INTEREST-INCOME> 474
<OTHER-INCOME> 41
<EXPENSES-NET> (908)
<NET-INVESTMENT-INCOME> (82)
<REALIZED-GAINS-CURRENT> (3939)
<APPREC-INCREASE-CURRENT> 4451
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (30806)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1029
<AVERAGE-NET-ASSETS> 89286
<PER-SHARE-NAV-BEGIN> 8.67
<PER-SHARE-NII> (0.04)
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<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.71
<EXPENSE-RATIO> 2.62
<AVG-DEBT-OUTSTANDING> 98
<AVG-DEBT-PER-SHARE> 0.001
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> AIM GROWTH SERIES
<SERIES>
<NUMBER> 043
<NAME> AIM JAPAN GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NII-CURRENT> (82)
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<ACCUM-APPREC-OR-DEPREC> (14417)
<NET-ASSETS> 68378
<DIVIDEND-INCOME> 311
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<EXPENSES-NET> (908)
<NET-INVESTMENT-INCOME> (82)
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<APPREC-INCREASE-CURRENT> 4451
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<NUMBER-OF-SHARES-SOLD> 1123
<NUMBER-OF-SHARES-REDEEMED> (4265)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (30806)
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 1029
<AVERAGE-NET-ASSETS> 89286
<PER-SHARE-NAV-BEGIN> 9.05
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<PER-SHARE-NAV-END> 9.13
<EXPENSE-RATIO> 1.62
<AVG-DEBT-OUTSTANDING> 98
<AVG-DEBT-PER-SHARE> 0.001
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 051
<NAME> AIM NEW PACIFIC GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NET-GAINS> (65853)
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<ACCUM-APPREC-OR-DEPREC> (29633)
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<DIVIDEND-INCOME> 2353
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<EXPENSES-NET> (1911)
<NET-INVESTMENT-INCOME> 903
<REALIZED-GAINS-CURRENT> (17605)
<APPREC-INCREASE-CURRENT> (11561)
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<NUMBER-OF-SHARES-REDEEMED> (115780)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (68823)
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<GROSS-EXPENSE> 2309
<AVERAGE-NET-ASSETS> 173986
<PER-SHARE-NAV-BEGIN> 6.48
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (1.50)
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<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.01
<EXPENSE-RATIO> 1.92
<AVG-DEBT-OUTSTANDING> 2178
<AVG-DEBT-PER-SHARE> 0.072
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 052
<NAME> AIM NEW PACIFIC GROWTH FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NII-CURRENT> 903
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<ACCUMULATED-NET-GAINS> (65853)
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<ACCUM-APPREC-OR-DEPREC> (29633)
<NET-ASSETS> 124293
<DIVIDEND-INCOME> 2353
<INTEREST-INCOME> 316
<OTHER-INCOME> 145
<EXPENSES-NET> (1911)
<NET-INVESTMENT-INCOME> 903
<REALIZED-GAINS-CURRENT> (17605)
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<NUMBER-OF-SHARES-SOLD> 14719
<NUMBER-OF-SHARES-REDEEMED> (16021)
<SHARES-REINVESTED> 0
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<AVERAGE-NET-ASSETS> 173986
<PER-SHARE-NAV-BEGIN> 6.28
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<PER-SHARE-NAV-END> 4.84
<EXPENSE-RATIO> 2.57
<AVG-DEBT-OUTSTANDING> 2178
<AVG-DEBT-PER-SHARE> 0.072
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> G.T. GLOBAL GROWTH SERIES
<SERIES>
<NUMBER> 053
<NAME> AIM NEW PACIFIC GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
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<AVG-DEBT-PER-SHARE> 0.072
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
SEMI-ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000202032
<NAME> AIM GROWTH SERIES
<SERIES>
<NUMBER> 061
<NAME> AIM WORLDWIDE GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
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<NAME> G.T. GLOBAL GROWTH SERIES
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<NAME> G.T. GLOBAL GROWTH SERIES
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[DESCRIPTION]DEFS14A
<PAGE>
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:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
G.T. INVESTMENT FUNDS, INC.
- - ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
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:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
G.T. GLOBAL GROWTH SERIES
- - ------------------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
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:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
G.T. INVESTMENT PORTFOLIOS, INC.
- - ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
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:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
G.T. GLOBAL SERIES TRUST
- - ------------------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
G.T. INVESTMENT FUNDS, INC.
G.T. GLOBAL GROWTH SERIES
G.T. INVESTMENT PORTFOLIOS, INC.
GT GLOBAL SERIES TRUST
SPECIAL MEETING OF SHAREHOLDERS
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CA 94111
MARCH 31, 1998
DEAR SHAREHOLDER:
As you may be aware, the financial industry has seen many mergers and
acquisitions over the last few years. A number of well-known, high profile
organizations have recently combined to build even stronger companies with
greater resources. These same strategic objectives motivated the pending
acquisition of GT Global and its sister divisions--including LGT Asset
Management and Chancellor LGT Asset Management, collectively known as the Asset
Management Division of Liechtenstein Global Trust--by AMVESCAP PLC, the parent
corporation of A I M Management Group and INVESCO. A special meeting of Fund
Shareholders regarding the acquisition ("Special Meeting") will be held on May
20, 1998.
Attached are the Notice and Proxy Statement for the Special Meeting which
describe a number of matters on which you, the Shareholder, are being asked to
vote: (i) election of each Fund's Board of Trustees/Directors; (ii) approval of
a new investment management and administration agreement and a sub-advisory and
sub-administration agreement for the Fund; (iii) approval of replacement Rule
12b-1 plans of distribution for the Fund; (iv) approval of changes to the
fundamental investment restrictions of the Fund; (v) approval of an agreement
and plan of conversion and termination for the Fund; and (vi) ratification of
the selection of independent accountants. THE FUND'S BOARD UNANIMOUSLY
RECOMMENDS THAT YOU APPROVE THESE PROPOSALS.
The proposed acquisition of GT Global by AMVESCAP offers the following
opportunities for Shareholders of the Fund:
- Continuity of the Fund's objectives, policies and investment style.
- An extended family of funds, including both U.S. and global products.
- Expanded investment team strength to manage your investments.
- Business synergies between the two organizations, including increased
product diversification, global brand enhancement and broadened geographic
coverage.
Your vote is important. Please take a moment now to sign and return your
proxy card(s) in the enclosed postage-paid envelope. If we do not hear from you
after a reasonable amount of time, you may receive a telephone call from our
proxy solicitor, Shareholder Communications Corporation, reminding you to vote
your shares. If you have any questions concerning the proposals to be considered
at the Special Meeting on May 20, 1998, please contact GT Global Client Services
at 1-800-223-2138.
Sincerely,
[LOGO]
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
IMPORTANT NEWS FOR GT GLOBAL SHAREHOLDERS
We encourage you to read the attached proxy statement in full; however, the
following questions and answers represent some typical concerns that
shareholders might have regarding this proxy statement.
WHY IS GT GLOBAL SENDING ME THIS PROXY?
As you may know, AMVESCAP PLC, the parent company of AIM Funds and INVESCO
Funds, has entered into an agreement to acquire GT Global and Chancellor LGT
Asset Management, Inc. ("Chancellor LGT"), the GT Global Funds' investment
manager. As part of this acquisition, some changes are being recommended with
respect to the GT Global Funds.
WHAT AM I BEING ASKED TO VOTE ON?
The proposals you are being asked to vote on are:
1. Election of the Board Members;
2(a). Approval of a new investment management and administration agreement;
2(b). Approval of a sub-advisory and sub-administration agreement;
3. Approval of replacement Rule 12b-1 plans of distribution;
4. Approval of changes to the fundamental investment restrictions;
5. Reorganization of the Funds to conform to the organization of certain
AIM Funds;
6. Reorganization of the portfolios in which certain Funds invest into
Delaware business trusts; and
7. Ratification of the selection of independent public accountants.
HOW WILL THE ACQUISITION OF GT GLOBAL BY AMVESCAP AFFECT ME?
The Boards of the GT Global Funds believe that the acquisition will be
beneficial to shareholders for a number of reasons, including:
- AIM's performance record as an investment manager and reputation in the
fund industry, and AMVESCAP's investment resources and commitment to the
fund industry
- Access to a wider selection of investment choices for shareholders,
including approximately 33 funds in The AIM Family of Funds
- Additional shareholder services provided by the larger organization
WILL THE INVESTMENT OBJECTIVE OF MY FUND CHANGE?
The investment objective of your Fund will not change.
WHAT IS THE BENEFIT OF CONVERTING A FUND TO A DELAWARE BUSINESS TRUST?
The conversion is being proposed primarily to modernize the organizational
documents under which the Fund operates; the conversion will not substantially
affect the way your Fund operates. The Board Members believe that the Delaware
business trust organizational form offers a number of advantages over the Fund's
current organizational form, including greater flexibility to conduct business.
Also, since several AIM Funds are organized as Delaware business trusts,
administrative efficiencies and consistency among the Funds would be achieved.
i
<PAGE>
HOW WILL THE EXPENSES FOR MY FUND BE AFFECTED?
The fees and expenses payable by your Fund are not expected to increase as a
result of any of the changes you are voting on. In fact, it is possible that
expenses may be lowered due to increased sales and reduced redemptions.
HOW DO BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
The Board Members recommend that you vote FOR all of the proposals on the
enclosed proxy card.
HOW DO I VOTE?
You may indicate your vote on the enclosed proxy card and return it in the
enclosed postage-paid envelope.
OR
You may fax the proxy card to Shareholder Communications Corporation, our
proxy solicitor, at 1-800-733-1885
OR
You may call in your vote to Shareholder Communications Corporation at
1-800-733-8481 Ext. 465
WHY ARE MULTIPLE PROXY CARDS ENCLOSED?
You have been sent a proxy card for each Fund and class of shares you own,
because each requires a separate vote. Please sign, date and return each proxy
card in the enclosed postage-paid envelope.
WHEN IS THE DEADLINE FOR VOTING?
All votes must be received prior to the Special Meeting, which will be held
at 1:00 p.m. on May 20, 1998. However, to prevent additional costs from being
incurred, it is important that you cast your vote as soon as possible. If we do
not hear from you, you may receive a call from Shareholder Communications
Corporation requesting that you vote your shares.
ii
<PAGE>
G.T. INVESTMENT FUNDS, INC.
G.T. GLOBAL GROWTH SERIES
G.T. INVESTMENT PORTFOLIOS, INC.
GT GLOBAL SERIES TRUST
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1998
TO THE SHAREHOLDERS:
Notice is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of each of the above-listed investment companies ("Companies") will be
held at 50 California Street, 26th Floor, San Francisco, California, on May 20,
1998, at 1:00 p.m., Pacific time, for the following purposes:
(1) To elect each Company's Board of Trustees/Directors;
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series
of each Company (each, a "Fund," and collectively, the "Funds");
(3) To approve replacement Rule 12b-1 plans of distribution with respect to
Class A and B Shares of each Fund and Class C Shares of Series Trust;
(4) To approve changes to the fundamental investment restrictions of each
Fund;
(5) To approve an agreement and plan of conversion and termination for each
Company;
(6) To approve the conversion of the portfolios in which certain Funds
invest to Delaware business trusts;
(7) To ratify the selection of Coopers & Lybrand L.L.P. as each Company's
independent public accountants; and
(8) To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 17, 1998, are
entitled to notice of, and to vote at, the Special Meeting. Your attention is
called to the accompanying Proxy Statement. Whether or not you attend the
Special Meeting, we urge you to PROMPTLY COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD, so that a quorum will be present and a maximum number of shares may
be voted.
BY ORDER OF THE BOARDS,
[LOGO]
HELGE KRIST LEE
SECRETARY
SAN FRANCISCO, CALIFORNIA
MARCH 31, 1998
YOUR VOTE IS VERY IMPORTANT. PLEASE COMPLETE, SIGN, AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY.
<PAGE>
PROXY STATEMENT
G.T. INVESTMENT FUNDS, INC.
G.T. GLOBAL GROWTH SERIES
G.T. INVESTMENT PORTFOLIOS, INC.
GT GLOBAL SERIES TRUST
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 20, 1998
------------------------
This Proxy Statement is being furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors or Board of Trustees of
each of the above-listed investment companies ("Companies"). These proxies are
to be used at the Special Meeting of Shareholders and at any adjournment thereof
(the "Special Meeting" or "Meeting") to be held at the offices of the Companies,
50 California Street, 26th Floor, San Francisco, California 94111, on May 20,
1998, at 1:00 p.m. Pacific time. Only shareholders of record at the close of
business on March 17, 1998 ("Shareholders"), are entitled to notice of and to
vote at the Meeting. Copies of this Proxy Statement and the accompanying
materials will first be mailed to Shareholders on or about April 3, 1998.
Each Company is composed of one or more separate series or portfolios, each
of which is referred to herein as a "Fund." Each Fund has multiple classes of
shares. The terminology used by the Companies varies, but for simplicity and
clarity each Company's shares of beneficial interest or shares of common stock
are referred to as "Shares." Each Company's Board of Directors or Board of
Trustees is referred to as a "Board" and the Trustees and Directors of each
Company are "Board Members." Each outstanding full Share of each class of each
Fund is entitled to one vote, and each outstanding fractional Share of each
class of each Fund is entitled to a proportionate share of one vote, with
respect to each proposal to be voted upon by the Shareholders of that Company,
that Fund or that class, as appropriate. Information about the vote necessary
with respect to each proposal is discussed below in connection with the
proposal. Set forth below is a list reflecting the formal name of each Fund and
the short-hand name as used in this proxy statement and the proposals to be
voted by the Shareholders of the Funds.
1
<PAGE>
G.T. INVESTMENT FUNDS, INC.
<TABLE>
<CAPTION>
NAME AS USED PROPOSALS APPLICABLE
FUND NAME IN THIS PROXY STATEMENT TO FUND
- - ------------------------------------------------ ------------------------------------ -------------------------
<S> <C> <C>
GT Global Consumer Products and Services Fund Consumer Products and All Proposals
Services Fund
GT Global Financial Services Fund Financial Services Fund All Proposals
GT Global Health Care Fund Health Care Fund All Proposals except 6
GT Global Infrastructure Fund Infrastructure Fund All Proposals
GT Global Natural Resources Fund Natural Resources Fund All Proposals
GT Global Telecommunications Fund Telecommunications Fund All Proposals except 6
GT Global Developing Markets Fund Developing Markets Fund All Proposals except 6
GT Global Emerging Markets Fund Emerging Markets Fund All Proposals except 6
GT Global Latin America Growth Fund Latin America Growth Fund All Proposals except 6
GT Global Growth & Income Fund Growth & Income Fund All Proposals except 6
GT Global Government Income Fund Government Income Fund All Proposals except 6
GT Global High Income Fund High Income Fund All Proposals
GT Global Strategic Income Fund Strategic Income Fund All Proposals except 6
</TABLE>
G.T. GLOBAL GROWTH SERIES
<TABLE>
<CAPTION>
NAME AS USED PROPOSALS APPLICABLE
FUND NAME IN THIS PROXY STATEMENT TO FUND
- - ------------------------------------------------ ------------------------------------ -------------------------
<S> <C> <C>
GT Global New Pacific Growth Fund Pacific Fund All Proposals except 6
GT Global Europe Growth Fund Europe Fund All Proposals except 6
GT Global Japan Growth Fund Japan Fund All Proposals except 6
GT Global International Growth Fund International Fund All Proposals except 6
GT Global Worldwide Growth Fund Worldwide Fund All Proposals except 6
GT Global America Mid Cap Growth Fund America Mid Cap Fund All Proposals except 6
GT Global America Small Cap Growth Fund America Small Cap Fund All Proposals
GT Global America Value Fund America Value Fund All Proposals
</TABLE>
G.T. INVESTMENT PORTFOLIOS, INC.
<TABLE>
<CAPTION>
NAME AS USED PROPOSALS APPLICABLE
FUND NAME IN THIS PROXY STATEMENT TO FUND
- - ------------------------------------------------ ------------------------------------ -------------------------
<S> <C> <C>
GT Global Dollar Fund Dollar Fund All Proposals except 6
</TABLE>
GT GLOBAL SERIES TRUST
<TABLE>
<CAPTION>
NAME AS USED PROPOSALS APPLICABLE
FUND NAME IN THIS PROXY STATEMENT TO FUND
- - ------------------------------------------------ ------------------------------------ -------------------------
<S> <C> <C>
GT Global New Dimension Fund New Dimension Fund All Proposals except 6
</TABLE>
If the accompanying proxy card is properly executed and returned by a
Shareholder in time to be voted at the Special Meeting, the Shares covered
thereby will be voted in accordance with the instructions marked thereon by the
Shareholder. Executed proxies that are unmarked will be voted in favor of the
nominees for Board Members; in accordance with the recommendation of your Board
as to all other proposals described in this Proxy Statement and relating to your
Fund and class thereof; and, at the discretion of the proxyholders, on any other
matter that may properly have come before the Special Meeting or any
adjournments thereof. Any proxy given pursuant to this solicitation may be
revoked at any
2
<PAGE>
time before its exercise by giving written notice to the Secretary of your
Company or by the issuance of a subsequent proxy. To be effective, such
revocation must be received by the Secretary of your Company prior to the
Special Meeting. In addition, a Shareholder may revoke a proxy by attending the
Meeting and voting in person. The solicitation of proxies will be made primarily
by mail but also may be made by telephone, telegraph, telecopy and personal
interviews. Authorization to execute proxies may be obtained by telephonic or
electronically transmitted instructions.
The presence in person or by proxy of Shareholders of a Company entitled to
cast a majority of all the votes entitled to be cast at the Meeting shall
constitute a quorum at the Meeting with respect to that Company. If a quorum is
not present at the Meeting or if a quorum is present but sufficient votes to
approve any of the proposals described in the Proxy Statement are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those Shares represented at the Meeting in
person or by proxy. A Shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
Broker non-votes are Shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as Shares present
for purposes of determining whether a quorum is present, but will not be voted
for or against any proposal or for or against any adjournment to permit further
solicitation of proxies. Accordingly, abstentions and broker non-votes
effectively will be a vote against adjournment or against any proposal where the
required vote is a percentage of the Shares present or outstanding. In addition,
abstentions and broker non-votes will not be counted as votes cast for purposes
of determining whether sufficient votes have been received to approve a
proposal.
Information as to the number of outstanding Shares of each Company and each
Fund as of the record date, March 17, 1998 ("Record Date"), is set forth in
Exhibit A. To the knowledge of the Companies' management, as of the Record Date,
there were no owners of 5% or more of the outstanding shares of any class of a
Fund, except as set forth in Exhibit A.
PROPOSAL NO. 1:
ELECTION OF BOARD MEMBERS
RELEVANT FUNDS. Proposal 1 applies to all Funds.
PROPOSAL. It is the intention of each proxyholder named on the accompanying
proxy card to vote FOR the election of the nominees listed below unless the
Shareholder specifically indicates on his or her proxy card a desire to withhold
authority to vote for any nominee. The Boards do not contemplate that any of the
nominees who have consented to being nominated will be unable to serve as Board
Members for any reason, but if that should occur prior to the Meeting, the
proxies will be voted for such other nominee(s) as the Boards may recommend. If
elected, each nominee will hold office until his/her successor is duly elected
and qualified.
Each Board Member currently serves as a Board Member of each Company. Each
Board Member has served as a Board Member for GT Global Series Trust ("Series
Trust") since August 11, 1997, shortly after its organization. Mr. Anderson has
served as a Board Member for each of the other Companies since May 30, 1987. Mr.
Bayley has served as a Board Member for G.T. Investment Funds, Inc. ("Investment
Funds") and G.T. Investment Portfolios, Inc. ("Investment Portfolios") since May
30, 1987 and for G.T. Global Growth Series ("Growth Series") since July 30,
1985. Mr. Patterson has served as a Board Member for each of the other Companies
except Series Trust since November 30, 1988. Miss Quigley has served as a Board
Member for Investment Fund and Investment Portfolios since May 30, 1987 and for
Growth Series since January 18, 1977. Mr. Guilfoyle, President of GT Global,
Inc., the principal distributor of the Funds
3
<PAGE>
("GT Global"), has served as a Board Member of each of the other Companies
except Series Trust since February 19, 1997.
INFORMATION REGARDING NOMINEES FOR ELECTION AT THE SPECIAL MEETING
<TABLE>
<CAPTION>
POSITION(S) WITH
NAME, AGE, AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS EACH COMPANY
- - --------------------------------------------------------------------------------------------- ------------------
<S> <C>
William J. Guilfoyle, Age 39*................................................................ Board Member
Mr. Guilfoyle is President, GT Global since 1995; Director, GT Global since 1991; Senior Vice and Chairman of
President and Director of Sales and Marketing, GT Global from May 1992 to April 1995; the Board and
Director, Liechtenstein Global Trust AG (holding company of the various international LGT President of the
companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency ("G.T. Company
Insurance") since 1992; President and Chief Executive Officer, G.T. Insurance since 1995;
Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April 1993 to
November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992 to 1993. Mr.
Guilfoyle is also a director or trustee of each of the other investment companies registered
under the 1940 Act that is managed or administered by Chancellor LGT.
C. Derek Anderson, Age 56.................................................................... Board Member
Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment partnership);
Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking firm); Director,
Anderson Capital Management, Inc., since 1988; Director, PremiumWear, Inc. (formerly
Munsingwear, Inc.) (a casual apparel company); and Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a director or trustee of each of the other investment
companies registered under the 1940 Act that is managed or administered by Chancellor LGT.
Frank S. Bayley, Age 58...................................................................... Board Member
Mr. Bayley is a partner of the law firm of Baker & McKenzie; and Director and Chairman, C.D.
Stimson Company (a private investment company). Mr. Bayley also is a director or trustee of
each of the other investment companies registered under the 1940 Act that is managed or
administered by Chancellor LGT.
Arthur C. Patterson, Age 54.................................................................. Board Member
Mr. Patterson is a Managing Partner, Accel Partners (a venture capital firm). He also serves
as a director of Viasoft and PageMart, Inc. (both public software companies), as well as
several other privately held software and communications companies. Mr. Patterson also is a
director or trustee of each of the other investment companies registered under the 1940 Act
that is managed or administered by Chancellor LGT.
Ruth H. Quigley, Age 63...................................................................... Board Member
Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley also is a director
or trustee of each of the other investment companies registered under the 1940 Act that is
managed or administered by Chancellor LGT.
</TABLE>
- - ------------------------
* Mr. Guilfoyle is deemed to be an "interested person" of the Companies, as
defined in the Investment Company Act of 1940, as amended ("1940 Act"), by
virtue of his associations with GT Global and Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), the Companies' investment manager and
administrator, and their affiliates and of his office with the Companies.
4
<PAGE>
The above information provides each Board Member's business experience
during at least the past five years. Corresponding information with respect to
the executive officers of the Companies is provided below. See "Other
Information--Executive Officers of the Companies."
To the knowledge of each Company's management, as of the record date, the
Board Members and officers of each Company owned, as a group, less than 1% of
the outstanding shares of each Fund. A table indicating each nominee's ownership
of Fund shares is attached as Exhibit B.
There were eight meetings of the Boards held during the Investment Funds'
fiscal year ended October 31, 1997 and during Growth Series' and Investment
Portfolio's fiscal year ended December 31, 1997. There were four meetings of the
Board held during Series Trust's initial fiscal period ended December 31, 1997.
Each Board has an Audit Committee comprised of Miss Quigley and Messrs.
Anderson, Bayley and Patterson. The purpose of the Audit Committee is to oversee
the annual audit of each Company and review the performance of the Companies'
independent accountants. During each Company's last completed fiscal year, the
Audit Committee met once. Each Board Member of each Company attended at least
75% of the total number of meetings of the Board and the Audit Committee.
Each Board Member serves in total as a director or trustee of 12 registered
investment companies managed or administered by Chancellor LGT ("Fund Complex").
Each Company pays each Board Member, who is not a director, officer or employee
of Chancellor LGT, or any affiliated company, an annual fee plus a meeting fee
for each Board or committee meeting attended by such Board Member and reimburses
travel and other out-of-pocket expenses incurred in connection with attending
such meetings. The table below summarizes the compensation of the Companies'
Board Members for the fiscal year ended October 31, 1997 for Investment Funds
and December 31, 1997 for Growth Series and Investment Portfolios and the
estimated compensation of the Board Members for Series Trust for the fiscal year
ending December 31, 1998. The table also provides the total compensation of the
Board Members by the Fund Complex for the 1997 calendar year.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL COMPENSATION
INVESTMENT INVESTMENT SERIES FROM THE COMPANIES
NAME OF PERSON(1)(2) FUNDS GROWTH SERIES PORTFOLIOS TRUST AND THE FUND COMPLEX
- - ---------------------------------- ------------ ------------- ---------- ----------- ---------------------
<S> <C> <C> <C> <C> <C>
C. Derek Anderson................. $ 40,901.56 $ 25,701.06 $ 3,587.63 $8,600.00 $ 103,653.66
Frank S. Bayley................... $ 39,944.68 $ 26,725.84 $ 3,715.73 $8,600.00 $ 106,555.73
Arthur C. Patterson............... $ 27,850.00 $ 21,800.00 $ 3,100.00 $8,600.00 $ 89,700.00
Ruth H. Quigley................... $ 38,755.62 $ 24,270.40 $ 3,408.79 $8,600.00 $ 98,037.50
</TABLE>
- - ------------------------
(1) Mr. Guilfoyle received no compensation from any of the Companies.
(2) The Board Members do not receive any pension or retirement benefits as
compensation for their services to the Companies.
REQUIRED VOTE. With respect to each Company, a plurality of all the votes
cast at the meeting is required to elect each nominee.
EACH BOARD RECOMMENDS
THAT YOU VOTE "FOR" THE BOARD MEMBERS LISTED IN PROPOSAL 1
5
<PAGE>
PROPOSALS NO. 2(A) AND 2(B):
APPROVAL OF INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENTS AND
SUB-ADVISORY AND SUB-ADMINISTRATION AGREEMENTS
RELEVANT FUNDS. Proposal 2 applies to all Funds.
BACKGROUND. On January 30, 1998, Liechtenstein Global Trust, AG ("LGT"),
the indirect parent organization of Chancellor LGT and GT Global, Inc.
(together, "GT Global") and LGT Holding (International) AG, Zurich, entered into
an agreement (the "Purchase Agreement") with AMVESCAP PLC ("AMVESCAP") and AMD
Acquisition Corp., pursuant to which AMVESCAP will acquire LGT's Asset
Management Division, which includes GT Global and certain other affiliates (the
"Purchase"). As a result of the Purchase, the Current Management Contracts will
automatically terminate. Accordingly, shareholders of the Funds are being asked
to approve new Investment Management and Administration Contracts (collectively,
the "New Management Agreements") and new Sub-Advisory and Sub-Administration
Contracts (collectively, the "New Sub-Advisory Agreements") (the New Management
Agreements and the New Sub-Advisory Agreements are collectively referred to as
the "New Agreements"). Under the New Agreements, A I M Advisors, Inc. ("AIM"), a
wholly owned subsidiary of AMVESCAP, would serve as investment manager and
administrator, and Chancellor LGT (whose name would be changed following
consummation of the Purchase) would serve as sub-adviser and sub-administrator,
to each of the Funds. See "Information Concerning AMVESCAP, AIM and Chancellor
LGT." Forms of the New Agreements are attached hereto as Exhibits C and D. The
Board of each Company has approved the New Management Agreement and New
Sub-Advisory Agreement with respect to each Fund, subject to the approval of its
respective Shareholders.
At a meeting held on March 24, 1998, the Boards of each Company, including a
majority of the Board Members who are not "interested persons" of the Company
(as defined in the 1940 Act) ("Independent Board Members"), approved the New
Agreements, subject to shareholder approval. A description of the New Agreements
is provided below under "Terms of the New Agreements." Such description is only
a summary and is qualified by reference to the attached Exhibits C and D. A
summary of the Boards' considerations is provided below under "Board
Considerations."
In approving the New Agreements, the Boards took into account that, except
for the change in the investment manager and the establishment of sub-advisory
relationships, there are no material differences between the provisions of the
Current Management Contracts and the New Agreements. The Boards also noted that
the costs and expenses associated with the Purchase will be paid for by the
Buyer and the Sellers and not by the Funds or their Shareholders. Further, based
on the representations of AIM and Chancellor LGT regarding their intentions, the
Boards do not anticipate currently that there will be substantial changes in the
way in which the Funds are managed or operated, except as noted below. Following
the Closing Date, as defined below, AIM intends to carefully study the
investment performance of each of the Funds, as well as the combined resources
of AMVESCAP and Chancellor LGT, in order to determine what steps, if any, may be
taken to ensure strong investment performance of the Funds into the future. It
is anticipated that as a result of such study, AIM may recommend, among other
things, various actions such as reorganizations or mergers involving certain
Funds, as well as changes in or adjustments to the investment personnel assigned
to manage certain Funds. Any proposals along these lines would be presented to
the Boards for their approval. Moreover, implementation of certain of these
proposals may require shareholder approval.
If the conditions set forth in the Purchase Agreement are not met or waived
or if the Purchase Agreement is terminated, the Purchase will not be
consummated, and the Current Management Contracts will remain in effect. If the
New Agreements are approved, and the Purchase is thereafter consummated, the New
Agreements will be executed and become effective on or about the Closing Date.
SHAREHOLDER APPROVAL REQUIREMENTS. Approval of the New Management Agreement
and New Sub-Advisory Agreement on behalf of each Fund requires the affirmative
vote of a "majority of the outstanding voting securities" of that Fund, which
for this purpose means the affirmative vote of the lesser of (i) more
6
<PAGE>
than 50% of the outstanding shares of the Fund or (ii) 67% or more of the shares
of the Fund present at the meeting if more than 50% of the outstanding shares of
such Fund are represented at the meeting in person or by proxy. For each Fund,
each of the New Management Agreement and the New Sub-Advisory Agreement is
completely contingent upon the approval of the other, and neither will be
implemented unless both are approved. If the New Agreements are not approved
with respect to any Fund and the Purchase is consummated, the Board of the
relevant Company will determine what further action to take. Because the
Purchase is not contingent on the approval of the New Agreements, it is possible
that the Purchase will be consummated even if one or more Funds do not approve
the New Agreements. In such case, GT Global (including Chancellor LGT) would be
acquired by AMVESCAP and the Current Management Contracts would automatically
terminate. As a result, for any Fund or Funds that had not approved the New
Agreements, the Board would need to make new arrangements for obtaining advisory
services. Such steps could include the hiring of AIM and GT Global to provide
services on an interim basis, and AMVESCAP has indicated its willingness to
permit AIM and GT Global to provide such services if so requested.
Under a structure commonly referred to as "master-feeder," each of America
Small Cap Growth Fund, America Value Fund, Consumer Products and Services Fund,
Financial Services Fund, High Income Fund, Infrastructure Fund, and Natural
Resources Fund invests all of its investable assets in a corresponding Portfolio
(each, a "Portfolio" and collectively, the "Portfolios"). Each Portfolio
directly acquires securities and its corresponding Fund acquires an indirect
interest in those securities. Under this arrangement, investment management and
sub-advisory services are rendered to the Portfolios and not the Funds, but
Shareholders of the Funds are afforded the same rights to vote on the New
Management Agreements and New Sub-Advisory Agreements of the Portfolios as they
would have if the Funds invested directly in portfolio securities.
Under the master-feeder structure, on behalf of each Fund as an
interestholder in the applicable Portfolio, the Board will vote the Fund's
interest in the same proportion as Shareholders of the Fund cast their votes at
the Shareholder meeting. As with the Funds that are not organized in a
master-feeder arrangement, in order for the New Agreements to be approved, a
"majority of the interests in a Portfolio" must approve the agreement. For this
purpose, a "majority of the interests in a Portfolio" requires the affirmative
vote of the lesser of (i) more than 50% of the outstanding interests of the
Portfolio or (ii) 67% of the interests of the Portfolio present or represented
at an interestholders meeting at which the holders of more than 50% of the
outstanding interests of the Portfolio are represented at the meeting in person
or by proxy.
In the interests of simplicity and clarity, references herein to a "Fund" or
the "Funds" include, where appropriate, the corresponding "Portfolio" or
"Portfolios."
PURCHASE OF LGT'S ASSET MANAGEMENT DIVISION BY AMVESCAP. On January 30,
1998, LGT and LGT Holding (International) AG, Zurich (together, the "Sellers")
entered into the Purchase Agreement with AMVESCAP and AMD Acquisition Corp., a
wholly owned subsidiary of AMVESCAP (the "Buyer"), pursuant to which the Buyer
will purchase the global asset management business of the Sellers by acquiring
the shares of, and equity interests in, the subsidiaries of the Sellers that
conduct such business (the "Transferred Companies"). Under the Purchase
Agreement, the Buyer shall pay the Sellers $1.3 billion, which shall be (i)
reduced (or increased) to the extent that the closing tangible net worth of the
Transferred Companies at closing is less than (or greater than) zero, (ii)
reduced to the extent that annualized asset management fees (without giving
effect to market and currency fluctuations) of the Transferred Companies at
closing, in respect of which client consents have been obtained, are less than
92.5% of base investment management fees and (iii) adjusted in respect of
certain transaction-related fees and expenses (including, among other things,
mutual fund shareholder and other client consent costs). Thus, failure by
Shareholders of the Companies to approve the New Agreements may result in the
Buyer paying, and the Sellers receiving, a lower amount for the sale of the
Transferred Companies, but will not necessarily preclude a closing of the
Purchase.
7
<PAGE>
The closing is expected to occur on or about May 29, 1998 (the "Closing
Date") subject to the satisfaction or waiver of certain conditions that include,
among other things: (i) the annualized asset management fees (without giving
effect to market and currency fluctuations) being at least 60% of base
management fees; (ii) approval of the Purchase by AMVESCAP shareholders; (iii)
certain governmental approvals and other third party consents having been
received; (iv) representations and warranties made by the parties being true and
correct in all material respects at the closing; and (v) no party being subject
to any order prohibiting the consummation of the Purchase.
The Purchase Agreement may be terminated at any time prior to the Closing
Date (i) by the mutual consent of the Buyer and LGT; (ii) by written notice by
any party after September 30, 1998; (iii) by the Sellers if, by a specified
date, AMVESCAP's shareholders have not approved the transaction; or (iv) under
the other circumstances set forth in the Purchase Agreement.
BOARD CONSIDERATIONS. At a series of meetings with the Boards,
representatives of AMVESCAP, the INVESCO Global operating group of AMVESCAP
("INVESCO"), AIM, Chancellor LGT and GT Global discussed with the Boards the
anticipated effects of the Purchase on the advisory, sub-advisory and related
relationships with the Funds. At a series of meetings held in February and March
1998, these representatives provided information to Board Members concerning the
specific terms of the Purchase Agreement, the anticipated advisory and
sub-advisory relationships with the Funds, and the proposed plans for ongoing
management, distribution and operation of the Funds. Throughout this period, the
Boards and their counsel requested and received additional information from AIM,
GT Global and their counsel, and held telephone conferences regarding the
Purchase and its potential impact on the Funds and their shareholders.
In connection with their review, the Boards obtained substantial information
regarding: the management, financial position and business of AMVESCAP and AIM
and their affiliates, including INVESCO; the history of AIM's and its
affiliates' business and operations; the performance of the investment companies
advised by AIM, INVESCO and their respective affiliates; the impact of the
Purchase on the Funds and their shareholders; the plans of AMVESCAP and its
affiliates with respect to GT Global and the Funds; performance and financial
information about each of the Funds; and information about other funds and their
fees and expenses. The Boards also received information regarding the terms of
the Purchase and comprehensive financial information including: AMVESCAP's plans
for financing the Purchase; the impact of the financing on AIM; AMVESCAP's plans
for the compensation and retention of personnel currently employed by GT Global
and the Transferred Companies who currently provide services to the Companies,
including an employee stabilization plan being implemented at GT Global; and
information concerning employment contracts with senior management of GT Global.
In connection with their deliberations, the Boards evaluated the
above-referenced information and considered, among other things, the following
factors (the order of which is no indication of the importance given to each):
(1) the expectation that the investment objectives, policies and management
strategies of the Funds after the Purchase will not materially change; (2) the
expectation that substantially the same investment teams and management
personnel will manage the Funds on a day-to-day basis through Chancellor LGT as
sub-adviser to the Funds, which will be supported where appropriate by
investment and other personnel of AMVESCAP, INVESCO, AIM and their affiliates
who are experienced in managing and administering similar investment products;
(3) the expectation that the investment expertise available to the Funds will be
enhanced by the combined AMVESCAP/Chancellor LGT management team and, in
particular, that AIM's depth and experience in managing U.S. equity funds and
money market funds will complement Chancellor LGT's traditional strength in
managing global and foreign funds and that INVESCO's depth and experience in
managing global and foreign funds also will be available to Chancellor LGT;
(4) the continued employment of and retention incentives for senior management
of GT Global and the continued maintenance of investment personnel by Chancellor
LGT and its affiliates in multiple locations throughout the world; (5) the
ability of AMVESCAP to provide sufficient capital to support the operations of
AIM and GT Global and AMVESCAP's commitment to paying compensation adequate to
attract and retain top quality personnel; (6) the fact that Fund Shareholders
will have access to a more diversified mutual fund product line through the
anticipated
8
<PAGE>
exchange privileges with the AIM Funds, including access to 33 funds in The AIM
Family of Funds, as defined below, which include several funds with investment
objectives and policies not currently available to shareholders within the GT
Fund complex; (7) the enhanced distribution potential for the Funds through AIM
Distributors' extensive sales network and the multiple class structure utilized
by AIM Distributors (implementation of which is reflected in Proposals 3 and 5
herein); (8) the commitment of AIM to maintain the Funds' current expense caps
for at least two years, and the expectation that the expense ratios of the Funds
may be reduced to the extent assets increase through increased sales and reduced
redemption levels; (9) the additional administrative and shareholder services
which can be provided by a larger organization such as AIM; (10) the overall
advantages of being managed and distributed by the AMVESCAP organization which
will have approximately $250 billion under management and operations throughout
the world following the closing, especially in light of increasingly competitive
conditions in the financial services industry, including the increasing presence
in the industry of large and well-capitalized companies which are spending
substantial amounts to engage personnel and to provide services to competing
investment companies; (11) the increases in sales charges on purchases of shares
of the Funds that in certain cases would result from conforming the schedule of
sales charges of the GT Global Funds to those of the AIM Funds; and (12) the
continuity of experience offered by the Companies' Boards.
In reaching their determinations, the Boards also considered the fact that
the new advisory and sub-advisory relationships are intended to conform to the
safe harbor provided by Section 15(f) of the 1940 Act for new advisory and other
arrangements arising from the sale of fund management businesses such as
Chancellor LGT's. Under the Purchase Agreement, AMVESCAP has agreed to conduct
its business and to use its reasonable best efforts to cause each of its
affiliates to conduct its business so as to assure that, insofar as is within
AMVESCAP's or its affiliates' control (i) for a period of three years after the
closing of the Purchase, at least 75% of the members of the Boards of the
Companies would be Independent Board Members; and (ii) for a period of two years
after the closing of the Purchase, there would not be imposed on the Funds an
"unfair burden" (as defined in the 1940 Act) as a result of the Purchase.
The Boards also evaluated the New Management Agreements and the New
Sub-Advisory Agreements. The Boards assured themselves that the New Agreements
for each of the Funds, including the terms relating to the services to be
provided and the fees and expenses payable by each such Fund, are not materially
different from the Current Management Contracts for each such Fund, except that
AIM rather than Chancellor LGT will be the investment manager and administrator
for each Fund and Chancellor LGT will be the sub-adviser and sub-administrator
for each Fund.
At the Board meetings held during February and March, 1998, the Boards
received presentations by AMVESCAP, AIM, INVESCO, Chancellor LGT, and GT Global,
Inc. and considered each of the foregoing factors. During this time period, the
Independent Board Members also met separately and conferred with their counsel,
who is not counsel to the Funds, AMVESCAP or its affiliates or Chancellor LGT or
its affiliates. Based upon these considerations, on March 24, 1998 the Boards
unanimously approved the New Management Agreements and the New Sub-Advisory
Agreements for the Funds and recommended approval by the Shareholders.
TERMS OF THE NEW AGREEMENTS. If the New Agreements are approved by
Shareholders as described herein, upon the closing of the Purchase, AIM will
serve as the investment manager and administrator to the Funds. With the
exception of the replacement of Chancellor LGT by AIM as the investment manager
and administrator, the New Management Agreements are substantially the same as
the Current Management Contracts in all material respects, except: (1) the New
Agreements are governed by Delaware law, while the Current Management Contracts
are governed by California law; (2) the New Management Agreement includes a
license provision that governs the use of the "AIM" name; the Current Management
Contracts contain no such provision; (3) the provision in Current Management
Contracts addressing oversight of Fund pricing and computation of net asset
value has been deleted from the New Agreements, since AIM and Chancellor LGT
will perform these functions directly; (4) a provision has been added to the New
Agreements allowing their amendment without shareholder approval when permitted
by the 1940 Act; (5) the New Management Agreements remove the state expense
limitation provisions found in
9
<PAGE>
the Current Management Agreements for each Company except Series Trust to
reflect recent changes in governing federal and state laws; and (6) the date of
effectiveness which, assuming Shareholder approval, would be on or about the
Closing Date.
AIM will be contractually obligated to provide the same services to each
Fund as are currently provided to each Fund by Chancellor LGT, in return for the
same advisory fees as are currently in place. AIM has further agreed that, for a
period of two years from the Closing Date, it will continue to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rates noted on Exhibit E. As a result, the maximum
expense ratios borne by each Fund will remain capped at current levels for two
years following the closing of the Purchase.
Pursuant to the New Sub-Advisory Agreements, Chancellor LGT will serve as
sub-adviser and sub-administrator to the Funds upon approval of the
Shareholders. Chancellor LGT would provide substantially all of the services for
the Funds that it currently provides. It would be paid sub-advisory fees by AIM,
not by the Fund.
Forms of the New Management Agreements and New Sub-Advisory Agreements are
attached hereto as Exhibits C and D. The descriptions of the New Agreements set
forth herein are qualified in their entirety by reference to Exhibits C and D.
Although the Current Management Contracts have not terminated and the New
Agreements have not become effective, the New Agreements are described below as
if they were both in effect.
Under the New Management Agreements, AIM will:
(a) subject to the supervision of each Company's Board, provide a continuous
investment program for each Fund, including investment research and
management with respect to all securities and investments and cash
equivalents of each Fund;
(b) determine from time to time what securities and other investments will be
purchased, retained or sold by each Fund, and the brokers and dealers
through whom trades will be executed;
(c) oversee the maintenance of all books and records with respect to the
securities transactions of the Funds, and furnish the Board with such
periodic and special reports as the Board reasonably may request; and
(d) provide administrative services for each Fund subject to the supervision of
the Board. In this regard, AIM will supervise all aspects of the operations
of each Fund, including the oversight of custodial and other services. At
AIM's expense, AIM will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination of each Fund's prospectus, statement of
additional information, proxy material, tax returns and required reports
with or to the Fund's shareholders, the Securities and Exchange Commission
("SEC") and other appropriate federal or state regulatory authorities. AIM
will provide the Companies and the Funds with, or obtain for them, adequate
office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
In performing its obligations under the New Management Agreements, AIM is
required to comply with all applicable laws. AIM shall not be liable and each
Fund shall indemnify AIM and its directors, officers and employees, for any
costs or liabilities arising from any error of judgment or mistake of law or any
loss suffered by the Funds or the Companies in connection with the matters to
which the New Management Agreements relate except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of AIM in the performance
by AIM of its duties or from reckless disregard by AIM of its obligations and
duties under the New Management Agreements. Any person, even though also an
officer, director, employee or agent of AIM, who may be or become an officer,
Board Member, employee or agent of a Company shall be deemed, when rendering
services to a Fund or a Company or acting with respect to any business of a Fund
or a Company, to be rendering such service to or acting solely for the Fund or
the Company and not as an officer, partner, employee, or agent or one under the
control or direction of AIM even though paid by it.
10
<PAGE>
The New Management Agreements provide that all of the ordinary business
expenses not specifically assumed by AIM incurred in the operations of each of
the Funds and the offering of each of its Shares shall be paid by each such
Fund. These expenses include but are not limited to brokerage commissions,
taxes, legal, accounting, auditing or governmental fees, custodian, transfer
agent and shareholder service agent costs. AIM will assume the cost of any
compensation received by the officer of a Company and by the Board Members of
the Company who are not Independent Board Members for services provided to the
Company.
Under the New Management Agreement with respect to New Dimension Fund, AIM
will be responsible for, and will delegate to Chancellor LGT, the daily
allocation and periodic rebalancing of the assets of New Dimension Fund among
several other Funds. AIM will receive no compensation for its services under the
New Management Agreement with respect to New Dimension Fund and also will bear
all expenses of New Dimension Fund other than expenses received pursuant to New
Dimension Fund's Rule 12b-1 plan and non-recurring extraordinary expenses until
such time as the Fund enters into an agreement whereby certain expenses may be
borne by the Funds in which it invests.
The New Management Agreements for all Funds provide that, subject to the
approval of the Board of the applicable Company and the Shareholders of the
applicable Fund, AIM may delegate any and all of its duties to a sub-adviser or
sub-administrator, provided that AIM shall continue to supervise the performance
of any such sub-adviser or sub-administrator. In this regard, AIM will enter
into New Sub-Advisory Agreements with Chancellor LGT. Pursuant to the New
Sub-Advisory Agreements, AIM intends to delegate all of its duties under the New
Management Agreements to Chancellor LGT. The New Sub-Advisory Agreements are
substantially the same in all material respects to the New Management
Agreements, and the description above of the duties and services to be performed
by AIM will apply to Chancellor LGT as Sub-Adviser and Sub-Administrator to the
Funds.
Information with regard to the fees payable under each of the New Agreements
is set forth in Exhibit E.
With respect to any Fund, the New Management Agreement and the New
Sub-Advisory Agreement may be terminated at any time without penalty by vote of
the applicable Board or by a vote of a majority of the outstanding voting
securities of the applicable Fund, on 60 days' written notice to AIM or
Chancellor LGT, respectively, or by AIM or Chancellor LGT, respectively. Each of
the New Agreements will terminate automatically in the event of any assignment,
as defined by the 1940 Act. The New Agreements continue automatically for
successive periods not to exceed twelve months each, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of the Independent Board Members, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the applicable Fund.
ADDITIONAL SERVICES PROVIDED BY AIM AND ITS AFFILIATES. In addition to
AIM's investment management and administrative responsibilities under the New
Management Agreement, it is anticipated that a number of AIM affiliates will
provide services to the Funds if this Proposal 2 is approved by Shareholders.
A I M Distributors, Inc. ("AIM Distributors"), a wholly owned subsidiary of
AIM, would serve as the principal underwriter for each of the Funds and would,
if Proposal 2 is approved by Shareholders, offer Shares of the Funds. If this
Proposal 2 is approved by Shareholders, the sales charge schedule applicable on
purchases of Class A Shares would be modified as set forth in Exhibit G, in
order to conform with the sales charge schedule imposed by comparable funds
distributed by AIM Distributors. As a result of this change, the sales charge
schedule for Class A Shares would generally be higher than it currently is for
the following funds--Europe Fund, Growth and Income Fund, International Fund,
Japan Fund, Pacific Fund, Worldwide Fund, America Mid Cap Fund, America Small
Cap Fund, and America Value Fund--with the maximum sales charge increasing from
4.75% to 5.50% of the amount of the purchase. The maximum applicable sales
charge for Class A Shares of the remaining Funds would remain at 4.75%, but
because the breakpoints for sales loads of all Funds will be modified, Class A
Shares purchased in amounts above $100,000 generally would incur sales charges
somewhat higher than those previously in effect. In addition, a contingent
deferred sales charge of 1% would be applied to purchases of Class A Shares of
$1,000,000 or
11
<PAGE>
more that are purchased without a front-end sales charge and are redeemed within
18 months of the date of purchase. The changes in initial sales charges will
apply only to purchases of Class A Shares after the Closing Date. See Exhibit G.
The schedule of sales load waivers would also change somewhat for new purchases
of Class A, Class B, and Class C (of New Dimension Fund) Shares. Existing
Shareholders would continue to pay any applicable CDSCs to AIM Distributors for
shares that were sold by or attributable to the distribution efforts of GT
Global. The offering of Advisor Class Shares would not be affected by the
proposed new arrangements, except that AIM Distributors would become the
distributor of such Shares and would plan on adjusting the eligible persons for
Advisor Class Shares. Of course, the public offering arrangements for each Class
of Shares of the Funds are subject to revision at any time.
If Proposal 3 is approved by Shareholders, each of the Funds will have a new
distribution plan under Rule 12b-1 of the 1940 Act (each, a "Proposed Plan")
with respect to certain of its classes of shares. Pursuant to each Proposed
Plan, each such Fund will make payments to AIM Distributors in connection with
the distribution of the appropriate Class of the Fund's Shares and the provision
of ongoing services to shareholders. The annualized fees will be calculated as a
percentage of the average daily net assets attributable to a class of Shares.
AIM Distributors will pay a portion of the Rule 12b-1 fees that it receives to
the brokers, dealers, agents and other service providers with whom it has
entered into agreements and who offer Shares of the Funds for sale or provide
customers or clients certain continuing services.
The amounts payable by a Fund under each Proposed Plan need not be directly
related to the expenses actually incurred by AIM Distributors on behalf of each
Fund. Thus, even if AIM Distributors' actual expenses exceed the fee payable to
AIM Distributors thereunder at any given time, the Funds will not be obligated
to pay more than that fee. If AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Based on
representations provided by AIM Distributors, the Boards expect that AIM
Distributors will incur expenses for its service and distribution activities
that will exceed the maximum fees payable by the Funds under each Proposed Plan.
For more complete information, see Proposal 3 below.
The agreements pursuant to which GT Global, Inc. serves as principal
underwriter for the Funds will terminate as a result of the Purchase. The Boards
have approved new agreements, consistent with the description above, pursuant to
which AIM Distributors would serve as principal underwriter for the Funds' Class
A, Class B, Class C and Advisor Class Shares. Under the 1940 Act, such
agreements do not require the approval of Shareholders before they become
effective. Such agreements will become effective on or about the Closing Date if
this Proposal 2 is approved by Shareholders.
It is currently anticipated that during September, 1998, A I M Fund
Services, Inc. ("AIM Services"), a wholly owned subsidiary of AIM, would
commence serving as transfer agent for the Funds. GT Global Investor Services,
Inc. will continue to serve as transfer agent for the Funds until AIM Services
assumes that role.
The agreements pursuant to which Chancellor LGT serves as accounting and
pricing agent for the Funds will also terminate as a result of the Purchase. It
is anticipated that the Boards will be asked to approve new fund accounting and
pricing agent agreements, through which AIM will serve as fund accounting and
pricing agent. AIM intends to delegate substantially all of its responsibilities
as fund accounting and pricing agent to Chancellor LGT. Under the 1940 Act, such
agreements do not require the approval of shareholders before they become
effective. If approved by the Boards, such agreements will become effective on
or about the Closing Date if this Proposal 2 is approved by Shareholders.
INFORMATION CONCERNING AMVESCAP, AIM AND CHANCELLOR LGT. AMVESCAP, along
with its subsidiaries, is one of the largest independent investment management
organizations in the world. The AMVESCAP group of companies (through the AIM and
INVESCO brand names) offers a broad array of investment products and services to
institutions and individuals. As of December 31, 1997, AMVESCAP and its
subsidiaries had approximately $192 billion under management. AMVESCAP's
worldwide investment team consists of approximately 330 investment professionals
located in major financial centers, and includes larger investment teams in
Atlanta, Boston, Dallas, Denver, Hong Kong, Houston, London, Louisville, Miami,
Portland (Oregon), and Tokyo. The expertise, personnel, data and systems of
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AMVESCAP's worldwide investment team, as well as the ongoing resources of
Chancellor LGT, will be available to AIM and Chancellor LGT in their management
and administration of the Funds. The corporate headquarters of AMVESCAP are
located at 11 Devonshire Square, London EC2M 4YR, England.
AIM was organized in 1976 and, together with its affiliates, currently
advises over 50 investment company portfolios (the "AIM Funds"). As of December
31, 1997, the total assets of the AIM Funds were approximately $83 billion. The
advisory fee schedule for the AIM Funds is set forth in Exhibit F. AIM is a
wholly owned subsidiary of A I M Management Group Inc. ("AIM Management").
Certain of the Directors and officers of AIM are also Trustees/Directors and
executive officers of the AIM Funds. The address of AIM, all of the Directors of
AIM, AIM Distributors, AIM Services, and AIM Management, is 11 Greenway Plaza,
Suite 100, Houston, TX 77046-1173.
Chancellor LGT currently provides investment management and/or
administration services to the Funds. Chancellor LGT and its worldwide asset
management affiliates have provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969. As of December 31, 1997, Chancellor LGT and its worldwide affiliates
managed approximately $54 billion in assets. In the United States, as of
December 31, 1997, Chancellor LGT managed or administered approximately $8
billion of assets of the Funds and several other registered investment
companies, including three closed-end funds, and sub-advised one other
registered investment company. In addition to the investment resources of its
San Francisco and New York offices, Chancellor LGT draws upon the expertise,
personnel, data and systems of other investment offices of LGT's Asset
Management Division in Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Funds, Chancellor LGT generally employs a team
approach, taking advantage of its investment resources around the world in
seeking each Fund's investment objective. The U.S. offices of Chancellor LGT are
located at 50 California Street, 27th Floor, San Francisco, CA 94111 and 1166
Avenue of the Americas, New York, NY 10036.
Chancellor LGT and its worldwide affiliates, including LGT Bank in
Liechtenstein, compose Liechtenstein Global Trust. Liechtenstein Global Trust is
a provider of global asset management and private banking products and services
to individual and institutional investors. Liechtenstein Global Trust is
controlled by the Prince of Liechtenstein Foundation, which serves as the parent
organization for the various business enterprises of the Princely Family of
Liechtenstein. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
Proposal 2(a) asks Shareholders to approve the New Management Agreement, and
Proposal 2(b) asks Shareholders to approve the New Sub-Advisory Agreement.
Proposals 2(a) and 2(b) are completely interdependent, and the failure to
approve either Proposal 2(a) or 2(b) will mean that neither Proposal will be
implemented.
EACH BOARD RECOMMENDS THAT YOU VOTE "FOR"
PROPOSALS 2(A) AND 2(B).
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PROPOSAL NO. 3:
APPROVAL OF REPLACEMENT RULE 12B-1 PLANS OF DISTRIBUTION
RELEVANT FUNDS. Proposal 3 applies to Class A and Class B Shares of each
Fund and Class C Shares of New Dimension Fund.
BACKGROUND. Each Company has adopted plans of distribution pursuant to Rule
12b-1 under the 1940 Act with respect to the Class A and Class B Shares of each
Fund, and Series Trust has also adopted a plan of distribution pursuant to Rule
12b-1 under the 1940 Act with respect to the Class C Shares of New Dimension
Fund (the "Existing Plans"). Investment Funds, Investment Portfolios, and Growth
Series, adopted their Existing Plans with respect to Class A and Class B Shares
on October 22, 1992, March 31, 1993, and March 31, 1993, respectively, and each
most recently amended their Existing Plans on July 7, 1993. Series Trust adopted
its Existing Plans with respect to Class A and Class B Shares on September 10,
1997 and with respect to Class C Shares on December 31, 1997. The Existing Plans
are intended to promote the sales of shares of the respective classes of each
Fund and to permit the Funds' current distributor, GT Global, to pay third
parties that distribute Shares and provide ongoing services to Shareholders and
that otherwise facilitate the administration and servicing of shareholder
accounts.
On March 24, 1998, each Company's Board approved the Proposed Plans and
authorized their submission to Class A and Class B Shareholders of each Fund and
also to Class C Shareholders of Series Trust for approval. The Proposed Plans
are substantially identical to the plans adopted by The AIM Family of Funds, a
group of 33 investment company portfolios for which AIM Distributors provides
shareholder and distribution services, which have Rule 12b-1 plans and which
have exchange privileges ("The AIM Family of Funds"). Nonetheless, the nature of
the shareholder services and distribution services for each Class of each Fund
and the payments for those services by the Fund under the Proposed Plans are, in
most respects, generally similar to the Existing Plans. The three main
differences between the Proposed Plans and the Existing Plans are that (1) AIM
Distributors, instead of GT Global, would provide, or arrange for third parties
to provide, shareholder and distribution services to the Funds and their
shareholders and would receive payments for those services, (2) the Proposed
Plans are compensation-type plans, rather than reimbursement-type plans as is
the case for the Existing Plans, and (3) each of the Proposed Plans for Class B
Shares provides for the continuation of payments to the distributor with respect
to that portion of a Fund's Class B Shares that were sold by or attributable to
the distribution efforts of AIM Distributors (or its predecessor, GT Global),
unless there is a "complete termination" of the Proposed Plan. Under a
reimbursement plan, a distributor receives payment for distribution and
service-related expenses to the extent that the expenses are actually incurred,
and the distributor often may carry forward unreimbursed, reimbursable expenses
to be paid in subsequent years. By contrast, a distributor under a compensation
plan receives payment for its shareholder and distribution services as a stated
percentage of the net assets of a Class without matching expenses incurred with
payments received. These changes are more fully described below. A fourth
difference between the Proposed Plans and Existing Plans is related to Class B
Shares and pertains to arrangements which facilitate the financing for payments
made by AIM Distributors to dealers upon the sale of Class B Shares.
The changes are proposed primarily so that the Class A, Class B, and Class C
(Series Trust only) distribution arrangements for the Funds, and the services
provided to their Class A, Class B, and Class C Shareholders, can be made
comparable to the arrangements for, and level of services provided to The AIM
Family of Funds. The Proposed Plans would allow Shareholders to benefit from AIM
Distributors' broader distribution network and would give Shareholders greater
access to AIM Distributors' resources for providing shareholder services. AIM
Distributors has over 450 employees dedicated to marketing funds with Class A,
Class B, and Class C Shares, and total sales of these funds have averaged over
$13 billion annually over the past two years. In addition, with the adoption of
the Proposed Plans, Fund Class A and Class C (for New Dimension Fund only),
Shareholders would be in position to obtain exchange privileges with the
corresponding class of The AIM Family of Funds at approximately the time of the
closing; and Class B Shareholders would be in position to obtain exchange
privileges with Class B Shares of The AIM
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Family of Funds at approximately the same time that AIM Services begins serving
as transfer agent for the Funds. Such exchange privileges would be unavailable
to Class B Shareholders of the Funds if the Proposed Plans are not adopted
because of requirements imposed by lenders to AIM Distributors which provide
financing for sales of Class B Shares.
Copies of the Proposed Plans are attached to this Proxy Statement as
Exhibits H and I.
THE EXISTING PLANS. To promote Fund sales and the administration and
servicing of shareholder accounts, each Fund, under the Existing Plans,
reimburses GT Global for its expenses incurred for its service and distribution
activities on behalf of such Fund.
With respect to Class A Shares, the maximum aggregate annual fees, expressed
as a percentage of average daily net assets of Class A Shares, for which GT
Global is reimbursed for its service and distribution activities are as follows:
0.25% with respect to Dollar Fund; 0.35% with respect to Government Income Fund,
Strategic Income Fund, High Income Fund, Growth & Income Fund, Pacific Fund,
Europe Fund, Japan Fund, International Fund, Worldwide Fund, America Mid Cap
Fund, America Small Cap Fund, and America Value Fund; and 0.50% with respect to
Health Care Fund, Latin America Growth Fund, Telecommunications Fund, Financial
Services Fund, Emerging Markets Fund, Consumer Products and Services Fund,
Natural Resources Fund, Infrastructure Fund, and New Dimension Fund. Each Fund
reimburses GT Global at an annual rate of up to 0.25% of the average daily net
assets of Class A Shares for expenditures incurred in connection with GT
Global's shareholder service activities ("service fee"). Each Fund also
reimburses GT Global for expenditures incurred in connection with GT Global's
distribution activities ("distribution fee"). The service and distribution fees
combined may not exceed the maximum aggregate annual fee described above. GT
Global may be reimbursed for expenses incurred with respect to Class A Shares
for up to one year. During the fiscal year ended December 31, 1997, GT Global
did not seek reimbursement of expenses with respect to Dollar Fund.
Under each Existing Plan for Class B Shares of the Funds and for Class C
Shares of New Dimension Fund, each Fund reimburses GT Global at the annual rate
of up to 0.25% of the average daily net assets of Class B Shares or Class C
Shares, as appropriate, for expenditures incurred in connection with GT Global's
shareholder service activities. Each Fund also reimburses GT Global for
expenditures incurred in connection with GT Global's distribution activities at
the annual rate of up to 0.75% of the average daily net assets of Class B Shares
or Class C Shares, as appropriate. Expenses incurred with respect to Class B
Shares and Class C Shares in excess of 1.00% annually may be carried forward for
reimbursement in subsequent years as long as the Existing Plan continues in
effect. Reimbursable expenses with respect to Class B Shares and Class C Shares,
however, are reduced by the proceeds from contingent deferred sales charges
received by GT Global. During the fiscal year ended December 31, 1997, GT Global
limited reimbursement of expenses with respect to Dollar Fund to an aggregate
annual rate of 0.75% of the average daily net assets of Class B Shares of Dollar
Fund.
With respect to Class B Shares and Class C Shares (for New Dimension Fund),
each Fund treats as an expense all amounts accrued under the Existing Plans
during a year whether or not paid to reimburse GT Global during the same year so
that such accruals will be available to reimburse GT Global for expenditures in
subsequent periods. Expenditures in excess of amounts paid by the Fund during a
year are not charged as an expense for such year but are charged in subsequent
years as and if accrued and paid by the Fund. Therefore, shareholders who
purchase shares after the expenses have been incurred will nevertheless
contribute to payment thereof to the extent there remain such carryover
expenses, while shareholders who held shares when the expenses were incurred but
redeemed thereafter will not contribute to the reimbursement of any carryover
expenses outstanding at the date of redemption. If amounts are accrued prior to
purchase of shares by a shareholder and utilized before a shareholder redeems,
such shareholder will have contributed to distribution expenditures not actually
incurred while a shareholder.
Since the Existing Plans went into effect, GT Global has received from each
Class of a Fund reimbursement at the maximum levels permitted under the Existing
Plans except as noted above with
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respect to Dollar Fund. The dollar amounts of the payments by each Fund and
Class thereof to GT Global are set out in Exhibit J. In addition, as of December
31, 1997, the Funds had carried forward reimbursable amounts with respect to
Class B Shares. The Funds also had reimbursable carryforward expenses for all
Funds with respect to Class A Shares, and it is anticipated that New Dimension
Fund will have carryforward expenses for its Class C Shares. Upon termination of
the Existing Plans with respect to Class B Shares (and to Class C Shares of New
Dimension Fund), the Board may consider the appropriateness of having Class B
Shares (and Class C Shares of New Dimension Fund) reimburse GT Global for the
then outstanding carryforward expenses plus interest thereon to the extent
permitted by applicable law from the effective date of the Existing Plan. GT
Global has indicated that it will not seek reimbursement for carryforward
expenses with respect to Class B Shares (or to Class C Shares of New Dimension
Fund), nor, to the extent that it has any rights to carryforward expenses with
respect to Class A Shares, will it seek reimbursement of such expenses. However,
the Funds will continue to pay distribution and service fees, and the existing
shareholders will continue to pay CDSCs, to AIM Distributors for Class B Shares
(and Class C Shares of New Dimension Fund) that were sold by or attributable to
distribution efforts of GT Global.
APPROVAL AND TERMINATION PROVISIONS. Under its terms, each Existing Plan
will continue in effect with respect to each Class for so long as it is
specifically approved at least annually by a majority of a Company's Board,
including a majority of those Board Members who are not "interested persons" of
the Company as defined in the 1940 Act, and who have no direct or indirect
financial interest in the operation of the Existing Plan or any agreement
related to the Existing Plan ("Plan Directors"), unless terminated by vote of a
majority of the Plan Directors, or by vote of a majority of the outstanding
voting securities of that class of the Fund. Each Existing Plan may not be
amended to increase materially the limit upon reimbursement of expenses
described above unless approved by a majority of the Board and of the Plan
Directors and by a majority of the outstanding voting securities of the
applicable class of the Fund, and no other material amendment to an Existing
Plan may be made unless approved by a majority of the entire Board and the Plan
Directors. Any agreements related to the Existing Plans must be approved by a
vote of a majority of a Company's entire Board and of the Plan Directors. While
the Existing Plans are in effect, the selection and nomination of Board Members
who are not interested persons of the Company, as defined in the 1940 Act, will
be at the discretion of the Board Members who are not interested persons of the
Company.
THE PROPOSED PLANS. As noted above, the Proposed Plans differ from the
Existing Plans in four principal respects. First, under the distribution
agreements between the Funds and AIM Distributors, AIM Distributors would
succeed GT Global as each Fund's distributor. Second, the Proposed Plans are
compensation-type plans rather than reimbursement-type plans. Under each
Proposed Plan, Class A and Class B Shares of each Fund, and Class C Shares of
New Dimension Fund, would pay AIM Distributors, as compensation for service and
distribution activities, a fee at the same annual rate as has been paid to GT
Global by, and as is set as the maximum rate for, each class under each Existing
Plan. However, the amounts payable by each Fund under the Proposed Plans would
no longer be directly matched with the expenses actually incurred by AIM
Distributors. With respect to Dollar Fund, AIM Distributors intends to limit for
a period of at least two years the fees it receives in the same manner that GT
Global has limited the amount of its reimbursements. Third, each of the Proposed
Plans for Class B Shares provides for the continuation of payments to the
distributor with respect to that portion of a Fund's Class B Shares that were
sold by or attributable to the distribution efforts of AIM Distributors (or its
predecessor, GT Global), unless there is a "complete termination" of the
Proposed Plan. A "complete termination" would occur if: (i) the Plan Directors,
in making their determination to terminate the Fund's Proposed Plan for the
Class B Shares, have acted in good faith and have determined that the
termination is in the best interest of the Fund and its Shareholders; (ii) the
Fund does not alter the terms of the contingent deferred sales charges ("CDSCs")
applicable to Class B Shares at the time of such termination; and (iii) unless
AIM Distributors is in material breach of its distribution agreement at the time
the Class B Shares Proposed Plan is terminated, no payments under the Proposed
Plan will be paid to anyone (other than AIM
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Distributors) with respect to Class B Shares previously sold. Moreover, the
termination of a Proposed Plan with respect to Class B Shares would not affect
the Fund's obligation to withhold and pay CDSCs.
Finally, in connection with its distribution arrangements for The AIM Family
of Funds, AIM Distributors has entered into agreements with third parties to
provide shareholder and other services to The AIM Family of Funds and to provide
financing for AIM Distributors' distribution activities with respect to Class B
Shares of The AIM Family of Funds. AIM Distributors has expressed its desire to
enter into similar agreements with respect to the Funds and to enter into
similar financing arrangements with respect to the Class B Shares of the Funds.
Without such financing arrangements with respect to the Funds' Class B Shares,
AIM Distributors would not be able to provide the same level of distribution
services to the Funds as it is able to provide to The AIM Family of Funds.
Moreover, the absence of financing arrangements would preclude the Class B
Shareholders of the Funds from having exchange privileges with Class B Shares of
The AIM Family of Funds.
The Proposed Plans would promote consistency between the Funds and The AIM
Family of Funds, which have a distribution structure similar to the structure in
place for the Funds. Eliminating significant differences between the
distribution plans of The AIM Family of Funds and those of the Funds will create
substantial uniformity in the distribution network for The AIM Family of Funds
and the Funds. Such uniformity would make it easier for AIM Distributors to
provide comparable shareholder and distribution services both to the Funds and
to The AIM Family of Funds. Fund shareholders could benefit from the potential
asset growth and retention facilitated by AIM Distributors' broader distribution
network, especially combined with the distribution network and shareholder base
already familiar with the GT Funds.
The proposed compensation plans would provide other benefits as well,
including greater flexibility and ease of administration and accounting than
reimbursement plans. Under reimbursement plans, all expenses must be
specifically accounted for and attributed to the investment company under the
plan for purposes of reimbursement. Compensation plans require quarterly general
reporting to a Board of the amounts accrued and paid under the plan and of the
expenses actually borne by the distributor during the same period. Generally,
however, there need be no matching of expenses paid for reimbursements and no
carryforward of such amounts, as under reimbursement plans. Thus, the accounting
for such compensation plans is simplified.
Compensation plans also could enhance a distributor's ability to provide
services without regard to the precise timing of the services, which would not
necessarily be the case under reimbursement plans. Under a compensation plan, a
distributor has more latitude to determine the timing of expenditures in order
to provide the greatest benefit to the funds.
Because AIM Distributors will receive its fees for distribution activities
and service activities at the rates described above irrespective of its actual
expenditures incurred in connection with its distribution and service
activities, AIM Distributors could realize a profit if its expenses were less
than the amounts it received. On the other hand, if AIM Distributors' expenses
were greater than the amounts it received, AIM Distributors could realize a
loss. The Proposed Plans thus present the possibility that AIM Distributors may
profit from its activities on behalf of a Fund. AIM Distributors has
represented, however, that in the past for The AIM Family of Funds, it has spent
substantially more than it has received for the distribution of shares of The
AIM Family of Funds. It also has represented that it fully expects to spend more
on shareholder servicing and distribution than it would receive under the
Proposed Plans. The Boards expect that the type of services that AIM
Distributors will provide and oversee will remain essentially the same as under
the Existing Plans and that the level of services is likely to be enhanced
compared to the Existing Plans. The Boards also expect that the type and level
of expenses AIM Distributors will incur on behalf of a Fund will remain
essentially the same as under the Existing Plans and that the amounts actually
paid by each Fund to AIM Distributors will be the same as the payments made to
GT Global.
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Each Class of each Fund would pay AIM Distributors, as compensation for
service activities, a fee at the annual rate of 0.25% of the average daily net
assets of the Fund attributable to such Class. In addition, each Class of each
Fund would pay AIM Distributors, as compensation for distribution activities, a
fee that, combined with the 0.25% service fee, would equal the maximum aggregate
annual fee payable under the Existing Plans.
The Proposed Plans, if approved by Shareholders, will remain in effect for
one year from the date of such approval, and thereafter from year to year so
long as they are approved by a majority of a Company's Board, including a
majority of the Plan Directors, unless sooner terminated according to its terms.
As described above, there are special provisions with respect to the termination
of each of the Proposed Plans for the Class B Shares of the Funds.
BOARD CONSIDERATIONS. The Boards' chief consideration in recommending the
Proposed Plans is that the AIM Funds currently use substantially identical plans
and that the Proposed Plans would therefore promote uniformity among the
combined AIM/GT Global Funds. Such uniformity would provide the Funds with
access to a broader and successful distribution network and to enhanced
shareholder services, including exchange privileges with The AIM Family of Funds
at approximately the Closing Date for Class A Shares and Class C Shares (Series
Trust only) and at approximately such time as AIM Services becomes transfer
agent to the GT Global Funds for Class B Shares. Also as part of the
consideration of the Proposed Plans, GT Global presented a survey of the fund
industry which indicated the prevalence of compensation-type plans over
reimbursement-type plans and identified the benefits of flexibility in timing
when distribution expenses are incurred and simplification of plan
administration and accounting that would be provided under the Proposed Plans.
The Boards also considered the fact that the Proposed Plans will not increase
the rate at which payments are made by the Funds for these services, since the
current distributor, GT Global, has been reimbursed at the maximum rates under
the Existing Plans since those plans were established. Based on representations
provided by AIM Distributors, the Boards also expect that, under the Proposed
Plans, AIM Distributors will spend more on shareholder servicing and
distribution than it would receive under the Proposed Plans. Following their
consideration of the foregoing and other factors, the Boards, including the Plan
Directors, concluded that each of the Proposed Plans is in the best interest of
each of the Funds and is reasonably likely to benefit each Fund's Shareholders.
REQUIRED VOTE. Except as described below, Class A and Class B Shares of
each Fund, and Class C Shares of New Dimension Fund, will vote separately on the
applicable Proposed Plan for that Fund and Class. Approval of a Proposed Plan
with respect to a Class of a Fund requires the favorable vote of a majority of
the outstanding voting securities of that Class. As defined by the 1940 Act, a
majority of the outstanding voting securities means the lesser of (a) 67% of the
shares present at a meeting of shareholders if the owners of more than 50% of
the shares then outstanding are present in person or by proxy or (b) more than
50% of the outstanding shares.
Class B Shares of New Dimension Fund convert to Class A Shares approximately
seven years after issuance. Due to this conversion feature, holders of Class B
Shares of New Dimension Fund have an interest in the Proposed Plan for Class A
Shares, as well as in the Proposed Plan for Class B Shares. The Proposed Plan
for Class A Shares will require the approval of the holders of a majority of
Class B Shares of New Dimension Fund. Accordingly, for this purpose, a vote by
holders of Class B Shares of New Dimension Fund on this Proposal will be treated
as a vote on both the Proposed Plan for Class B Shares as well as the Proposed
Plan for Class A Shares.
IF PROPOSAL 3 IS NOT APPROVED BY A CLASS OF A FUND, THE EXISTING PLAN WILL
REMAIN IN EFFECT FOR THAT CLASS AND THE APPLICABLE BOARD WILL CONSIDER WHAT
OTHER ACTION, IF ANY, TO TAKE.
EACH BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3
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PROPOSAL NO. 4:
APPROVAL OF CHANGES TO CERTAIN FUNDAMENTAL INVESTMENT
RESTRICTIONS OF EACH FUND
RELEVANT FUNDS. Changes are proposed to the fundamental investment
restrictions ("fundamental restrictions") of all Funds, but some of the proposed
changes apply only to certain Funds. See "Proposed Changes," below, for listings
of the Funds to which each specific change applies.
BACKGROUND. Pursuant to the 1940 Act, each Fund has adopted certain
fundamental restrictions, which may be changed only with Shareholder approval.
Restrictions and policies that a Fund has not specifically designated as being
fundamental are considered to be "non-fundamental" and may be changed by the
appropriate Company's Board without Shareholder approval.
Several of the fundamental restrictions that the Funds have adopted reflect
regulatory, business or industry conditions, practices or requirements that are
no longer in effect. 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 Funds have been
created over a period of 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 Boards have approved revisions to the Funds' fundamental
restrictions in order to simplify, modernize and make more uniform those
restrictions that are required to be fundamental. In several instances, existing
fundamental restrictions that are eliminated because they are not required to be
fundamental would be re-classified as non-fundamental restrictions. In addition,
in several other instances, Funds already have similar non-fundamental
restrictions, for which no change is proposed. However, non-fundamental
restrictions may be changed by the Boards without shareholder approval.
The Boards believe 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 its Board decides to make
future changes to its investment policies. Although the proposed changes in
fundamental restrictions will allow the Funds greater investment flexibility to
respond to future investment opportunities, the Boards do not anticipate that
the changes, individually or in the aggregate, will result at this time in a
material change in the level of investment risk associated with an investment in
any Fund or the manner in which any Fund is currently managed.
As noted previously, Financial Services Fund, Infrastructure Fund, Natural
Resources Fund, Consumer Products and Services Fund, High Income Fund, America
Small Cap Fund, and America Value Fund each seeks its investment objective by
investing all of its investable assets in another Portfolio. Each of these Funds
and its corresponding Portfolio have identical fundamental restrictions. A vote
to approve changes in the investment limitations of these Funds also would be a
vote to approve changes to the identical investment limitations for the
Portfolios.
PROPOSED CHANGES. The following is the text and a summary description of
the proposed changes to the Funds' fundamental restrictions, together with the
text of those non-fundamental restrictions that would be adopted in connection
with the elimination of certain of the Funds' current fundamental restrictions.
The text below also describes those fundamental restrictions that are being
eliminated for which no corresponding non-fundamental restriction is being
proposed. Any non-fundamental restriction may be modified or eliminated by the
appropriate Board at any future date without any further approval of
shareholders. Shareholders may request from the Funds a copy of the Funds'
Statements of Additional
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Information for the text of the Funds' existing fundamental restrictions, by
calling 1-800-824-1580. Shareholders should note that for some Funds certain of
the fundamental restrictions that are treated separately below currently are
combined within a single existing fundamental restriction.
With respect to each Fund and each existing or proposed 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.
A. MODIFICATION OF FUNDAMENTAL RESTRICTION ON PORTFOLIO DIVERSIFICATION.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except Latin America Growth
Fund, Growth & Income Fund, Government Income Fund, Strategic Income Fund, High
Income Fund and Developing Markets Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on portfolio diversification for each of the above-referenced Funds
would be modified as follows:
"The Fund will not purchase securities of any one issuer if, as a
result, more than 5% of the Fund's total assets would be invested in
securities of that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
Fund's total assets may be invested without regard to this limitation, and
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities or to
securities issued by other investment companies."
DISCUSSION: The Funds to which this change would apply are "diversified"
funds under the 1940 Act and, accordingly, must have a policy or fundamental
restriction establishing percentage limitations with respect to investments in
the securities of any one issuer. These Funds have stated their diversification
restriction in several different ways. For example, the current diversification
restriction of certain Funds does not reflect the statutory exceptions for
investments in securities of government agencies or of other investment
companies. The proposed changes to the Funds' fundamental restriction on
portfolio diversification would eliminate minor inconsistencies in the wording
of the Funds' current restrictions but would not change the Funds' existing
restriction substantially.
B. MODIFICATION OF FUNDAMENTAL RESTRICTION ON CONCENTRATION.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except Consumer Products and
Services Fund, Financial Services Fund, Health Care Fund, Infrastructure Fund,
Natural Resources Fund, Telecommunications Fund and New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on concentration for each of the above-referenced Funds would be
modified as follows:
"The Fund will not purchase any security if, as a result of that
purchase, 25% or more of the Fund's total assets would be invested in
securities of issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities."
DISCUSSION: The proposed changes to the above-referenced Funds' fundamental
restriction on concentration would eliminate minor inconsistencies in the
wording of the Funds' current restrictions on concentration.
C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUING SENIOR SECURITIES AND
BORROWING MONEY.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
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PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on issuing senior securities and borrowing money for each Fund would
be modified as follows:
"The Fund will not issue senior securities or borrow money, except as
permitted under the 1940 Act and then not in excess of 33 1/3% of the Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes."
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 investment company's shares
of common stock or beneficial interest 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. The current
fundamental restriction for Growth & Income Fund, Latin America Growth Fund and
Government Income Fund prohibits each of those Funds from borrowing except for
temporary or emergency purposes. The current fundamental restriction for Growth
& Income Fund and Latin American Growth Fund also prohibits those Funds from
purchasing any security while borrowings in excess of 5% of each Fund's total
assets are outstanding. In addition, the current fundamental restriction for
Government Income Fund limits borrowing to 30% of the Fund's total assets and
prohibits the Fund from purchasing any security while any borrowings are
outstanding.
The proposed changes would make the Funds' restriction on borrowing money or
issuing senior securities no more limiting than required by the 1940 Act. The
Boards believe that changing the Funds' fundamental restrictions in this manner
will provide flexibility for future contingencies. However, the Boards do not
intend the change to affect the Funds' current operations. Accordingly, the
fundamental limitation of Government Income Fund, Latin America Growth Fund and
Growth & Income Fund that prohibits these Funds from borrowing except for
temporary or emergency purposes will continue in effect as a non-fundamental
policy. Moreover, the fundamental limitation of Latin America Growth Fund and
Growth & Income Fund that prohibits these Funds from purchasing portfolio
securities when borrowings exceed 5% of total assets will continue as a
non-fundamental policy. The non-fundamental policy for Government Income Fund
would be modified to permit it to purchase securities while borrowings of up to
5% of the Fund's total assets are outstanding. This change would give Government
Income Fund more flexibility to borrow in order to meet redemption requests. The
proposed change would also result in immaterial wording changes to New Dimension
Fund's fundamental restriction on borrowing.
Strategic Income Fund and High Income Fund each may borrow for investment
purposes. The proposed change to these Funds' fundamental restriction on
borrowing will not affect their ability to borrow for investment purposes but
will eliminate minor differences in the wording of these Funds' current
restriction. In addition, the fundamental restriction of Dollar Fund currently
states that the Fund "may not issue senior securities." Although this
fundamental restriction will be changed as described above, it is not currently
contemplated that Dollar Fund will borrow money.
Government Income Fund, Strategic Income Fund, High Income Fund, Growth &
Income Fund and Latin America Growth Fund, as part of their fundamental
restriction on borrowing, include as part of their restriction an undertaking
that they will reduce their borrowings within three days if the asset coverage
for each Fund's borrowings falls below 300%. The proposed fundamental
restriction eliminates this undertaking. Nevertheless, the 1940 Act will
continue to impose this requirement on all of the Funds.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION ON MAKING LOANS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except New Dimension Fund.
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PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on making loans for each Fund would be modified as follows:
"The Fund will not make loans, except through loans of portfolio
securities or through repurchase agreements, provided that for purposes of
this limitation, the acquisition of bonds, debentures, other debt securities
or instruments, or participations or other interests therein and investments
in government obligations, commercial paper, certificates of deposit,
bankers' acceptances or similar instruments will not be considered the
making of a loan."
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 the Funds may purchase that do not constitute
the making of a loan.
In addition, Dollar Fund's current fundamental restriction on loans contains
an exception for loans "pursuant to contracts providing for the compensation of
service provided by compensated balances." This exception applies to an
arrangement whereby a fund reduces its custodian expenses through its securities
lending activities. In order to make the Funds' fundamental restrictions more
uniform, this language will be deleted. Deletion of this language is not
intended to affect the ability of Dollar Fund to engage the activity covered by
the language. Similarly, this restriction is not intended to affect the ability
of each Fund to engage in this activity.
E. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING SECURITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on underwriting securities for each Fund would be modified as
follows:
"The Fund will not engage in the business of underwriting securities of
other issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities."
DISCUSSION: The proposed changes to this fundamental restriction would
eliminate minor differences in the wording of the Funds' current restriction on
underwriting securities.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENTS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on real estate investments for each Fund would be modified as
follows:
"The Fund will not purchase or sell real estate, except that investments
in securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation,
and except that the Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner."
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 interests.
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Consumer Products and Services Fund, Financial Services Fund, Infrastructure
Fund, Natural Resources Fund, Telecommunications Fund, Latin America Growth
Fund, Growth & Income Fund, Government Income Fund, Strategic Income Fund, High
Income Fund and Developing Markets Fund currently may not "purchase or sell real
estate, including real estate limited partnerships." The proposed restriction
eliminates the reference to real estate limited partnerships. Thus, if the
proposed change is approved, all of the Funds would be able to invest in real
estate limited partnerships. However, for various tax reasons, the Funds do not
intend to invest in real estate limited partnerships. If such investments become
available in the future, they still would have to comply with a Fund's
investment objective, policies and limitations.
G. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on investing in commodities for each Fund would be modified as
follows:
"The Fund will not purchase or sell physical commodities, but the Fund
may purchase, sell or enter into financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments."
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
restriction on investing in commodities. Furthermore, the proposed restrictions
would allow the Funds to respond to the rapid and continuing development of
derivative products. The proposed restriction broadens the exception to the
prohibition on buying and selling physical commodities to cover all financial
derivative instruments rather than only financial futures and currency
instruments.
The current fundamental restriction for Dollar Fund prohibits the Fund from
engaging in option transactions. If Proposal 4 is approved, this restriction
will be deleted and the Fund would have greater flexibility to engage in option
transactions. Dollar Fund, however, has no present intention of engaging in
option transactions. Moreover, Dollar Fund is subject to regulation as a money
market fund under Rule 2a-7 under the 1940 Act, which imposes significant
restrictions on the types of securities in which Dollar Fund can invest.
H. ELIMINATION OF FUNDAMENTAL RESTRICTION ON MARGIN TRANSACTIONS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on engaging in margin transactions for each Fund would be eliminated
and each Fund would become subject to the following non-fundamental restriction:
"The Fund will not purchase securities on margin, provided that the Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Fund may
make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments."
DISCUSSION: The Funds are not required to have a fundamental restriction on
margin transactions. Accordingly, it is proposed that the Funds' existing
fundamental restriction be replaced with a non-fundamental restriction. The
proposed non-fundamental restriction makes minor changes in wording from the
existing fundamental restriction and expands the list of margin transactions
excepted from the
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prohibition to include margin deposits in connection with financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
As discussed in Item S below, the current fundamental restriction on margin
transactions for Worldwide Fund, International Fund, Pacific Fund, Europe Fund,
America Mid Cap Fund, Japan Fund, America Small Cap Growth, America Value Fund,
Dollar Fund and Health Care Fund is combined with a restriction on short sales
that prohibits those Funds from making short sales or maintaining short
positions except in connection with their use of options, futures contracts and
options on futures contracts. If Proposal 4 is approved, this restriction will
be deleted and the Funds would have greater flexibility to engage in short
sales. These Funds, however, have no present intention of engaging in short
sales. The current fundamental restriction on margin transactions for Dollar
Fund prohibits purchasing securities on margin. If Proposal 4 is approved, this
restriction will be deleted and the Fund would have greater flexibility to
engage in margin transactions. Dollar Fund, however, has no present intention of
engaging in margin transactions.
I. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN FUTURES CONTRACTS.
FUNDS TO WHICH THIS CHANGE APPLIES: Government Income Fund and Strategic
Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on engaging in futures contracts for Government Income Fund and
Strategic Income Fund would be eliminated and these Funds would become subject
to the following non-fundamental restriction:
"The Fund will not enter into a futures contract, if, as a result
thereof, more than 5% of the Fund's total assets (taken at market value at
the time of entering into the contract) would be committed to margin on such
futures contracts."
DISCUSSION: There is no legal requirement that Government Income Fund or
Strategic Income Fund have a fundamental restriction on this subject.
Accordingly, the Board believes that it should be made non-fundamental. The
non-fundamental restriction would be identical to the fundamental restriction
proposed to be eliminated and, thus, is not expected to have any impact on the
operations of the Funds. Establishing the restriction as non-fundamental,
however, would enable the Board to change this restriction in the future without
shareholder approval.
J. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN ILLIQUID SECURITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: Health Care Fund, Growth & Income Fund
and Government Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on investing in illiquid securities for the above-referenced Funds
would be eliminated and these Funds would become subject to the following
non-fundamental restriction:
"The Fund will not purchase securities for which there is no readily
available market, or enter into repurchase agreements or purchase time
deposits maturing in more than seven days, or purchase OTC options or hold
assets set aside to cover OTC options written by the Fund, if immediately
after and as a result, the value of such securities would exceed, in the
aggregate, 15% of the Fund's net assets."
DISCUSSION: There is no legal requirement that these Funds have a
fundamental restriction on this subject. Accordingly, the Board believes that it
should be made non-fundamental. With respect to Growth & Income Fund and
Government Income Fund, the non-fundamental restriction would be identical to
the fundamental restriction proposed to be eliminated, except that the limit on
investing in illiquid securities would increase from 10% to 15% of each Fund's
net assets. Moreover, Health Care Fund's current policy prohibits the Fund from
investing more than 10% of its total assets in securities
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"which cannot be readily resold to the public because of legal or contractual
restrictions" in addition to securities for which there is no readily available
market. Increasing the percentage of illiquid securities that each Fund may hold
from 10% to 15% should have only a minimal effect, if any, on the Funds'
liquidity. The non-fundamental restriction of Health Care Fund would change the
wording to make it consistent with the other Funds. This change is not expected
to have a significant impact on operations of the Fund. Establishing the
restriction as non-fundamental, however, would enable the Board to change this
restriction in the future without shareholder approval.
K. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PLEDGING ASSETS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except Developing Markets
Fund and New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on pledging assets for each Fund would be eliminated and the Funds
would become subject to the following non-fundamental restriction:
"The Fund will not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral arrangements in
connection with permissible activities."
DISCUSSION: The Funds are not required to have a fundamental restriction
with respect to the pledging of assets. In order to maximize the Funds'
flexibility in this area, the Boards believe that the Funds' restriction on
pledging assets should be made non-fundamental. The non-fundamental restriction
would be similar to the fundamental restriction proposed to be eliminated.
Dollar Fund's non-fundamental restriction will no longer refer to an exception
for "borrowings as disclosed in the Prospectus" since this exception would be
covered under the uniform non-fundamental restriction. The Boards do not expect
this change to have any impact on the Funds' operations. Establishing the
restriction as non-fundamental, however, would enable the Boards to change this
restriction in the future without shareholder approval.
L. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING SECURITIES ISSUED BY
OTHER INVESTMENT COMPANIES.
FUND TO WHICH THIS CHANGE APPLIES: Dollar Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on purchasing securities issued by other investment companies for
Dollar Fund would be eliminated.
DISCUSSION: There is no legal requirement that Dollar Fund have a
fundamental restriction on this subject. Moreover, Item U discussed below would
add a new fundamental investment policy permitting the Fund to invest all of its
investable assets in another open-end investment company. As discussed below,
this change would offer the Fund the ability to use alternative investment
structures. Accordingly, the Board believes this investment restriction should
be eliminated.
M. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING COMMON STOCKS,
PREFERRED STOCKS, WARRANTS OR OTHER EQUITY SECURITIES.
FUND TO WHICH THIS CHANGE APPLIES: Dollar Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on purchasing common stocks, preferred stocks, warrants or other
equity securities for Dollar Fund would be eliminated.
DISCUSSION: There is no legal requirement that Dollar Fund have a
fundamental restriction on this subject. Moreover, Dollar Fund is regulated as a
money market fund under Rule 2a-7 under the 1940 Act.
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Rule 2a-7 imposes substantive restrictions on the types, quality, and maturities
of the securities in which Dollar Fund may invest. Accordingly, the Board
believes that this fundamental restriction is unnecessary and that it should be
deleted. This change is not expected to have any impact on the operations of the
Fund.
N. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTMENTS IN OIL, GAS AND
MINERAL LEASES AND PROGRAMS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except Developing Markets
Fund and New Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on investments in oil, gas or minerals for each Fund would be
eliminated.
DISCUSSION: The Funds are not required to have a fundamental restriction
with respect to oil, gas or mineral investments. In order to maximize each
Fund's flexibility in this area, the Boards believe that each Fund's restriction
on oil, gas and mineral investments should be eliminated. This restriction was
imposed by state laws and NSMIA preempts that requirement. Notwithstanding the
elimination of this fundamental restriction, no Fund expects to invest at this
time in oil, gas and mineral leases and programs.
O. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING FOR THE PURPOSE OF
CONTROL.
FUNDS TO WHICH THIS CHANGE APPLIES: Health Care Fund, Growth & Income Fund,
Government Income Fund, Strategic Income Fund, Pacific Fund, Europe Fund, Japan
Fund, International Fund, Worldwide Fund, America Mid Cap Fund, America Small
Cap Fund, and America Value Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on investing for the purpose of control for each of the
above-referenced Funds would be eliminated.
DISCUSSION: The Boards propose to eliminate this fundamental restriction,
which prohibits each of the above-referenced Funds from investing in companies
for the purpose of exercising control or management. Elimination of this
restriction would clarify each Fund's ability to exercise freely its rights as a
shareholder of the companies in which it invests. No Fund, however, currently
intends to become involved in directing or administering the day-to-day
operations of any company. Certain other Funds have, and will continue to have,
this restriction as a non-fundamental restriction.
Chancellor LGT believes that it should be able to communicate freely each
Fund's views as a shareholder on important matters of policy to a company's
management, its board of directors and its shareholders, when Chancellor LGT or
the Boards believe that such action or policy may affect significantly the value
of its investment. The activities that each Fund might engage in, either
individually or with others, include seeking changes in a company's direction,
seeking the sale of a company or a portion of its assets, or participating in a
takeover effort or in opposition to a takeover effort. Chancellor LGT believes
that each Fund currently may engage in such activities without necessarily
violating this fundamental restriction. Nevertheless, the existence of the
investment restriction might give rise to a claim that such activities did in
fact constitute investing for control or management.
P. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING SECURITIES OF ISSUERS
IN WHICH OFFICERS AND BOARD MEMBERS OF EACH COMPANY AND ITS AFFILIATES OWN
SECURITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: Growth & Income Fund, Government Income
Fund, and Strategic Income Fund, Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund, America Mid Cap Fund, America Small Cap
Fund, and America Value Fund.
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PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on purchasing securities of issuers in which affiliates of the
Companies own securities for each of the above-referenced Funds would be
eliminated.
DISCUSSION: There is no legal requirement that the Funds have this
fundamental restriction. This restriction was imposed by state laws and NSMIA
preempted state law requirements. Moreover, the Boards and Chancellor LGT do not
believe this restriction provides any safeguards against conflicts of interest
that are not covered under the Funds' Code of Ethics. Accordingly, the Boards
believe this restriction should be eliminated.
Q. ELIMINATION OF FUNDAMENTAL RESTRICTION ON JOINT PARTICIPATION IN A
SECURITIES TRADING ACCOUNT.
FUNDS TO WHICH THIS CHANGE APPLIES: Pacific Fund, Europe Fund, Japan Fund,
International Fund, Worldwide Fund, America Mid Cap Fund, America Small Cap
Fund, and America Value Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on joint participation in a securities trading account would be
eliminated.
DISCUSSION: The above-referenced Funds currently have a fundamental
restriction against participation on a joint or joint and several basis in any
securities trading account. Joint activities by an investment company are
subject to regulation under the 1940 Act, and there is no legal requirement for
a Fund to have a fundamental restriction on this subject. In certain
circumstances, participation in joint trading accounts may be beneficial to the
Fund. In addition, it is contemplated that the Funds may participate in joint
trading accounts if shareholders approve the New Management Agreements described
in Proposal 2. Accordingly, the Boards wish to ensure that the Funds will not be
more limited with respect to such transactions than is required by law.
Accordingly, the Boards have determined that this restriction should be
eliminated both as a fundamental and as a non-fundamental restriction.
R. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN SECURITIES OF
COMPANIES THAT HAVE BEEN IN OPERATION FOR LESS THAN THREE YEARS.
FUNDS TO WHICH THIS CHANGE APPLIES: Health Care Fund, Government Income
Fund and Strategic Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on investing in securities of companies that have been in operation
for less than three years for each of the above-referenced Funds would be
eliminated.
DISCUSSION: No Fund is required to have a fundamental restriction with
respect to investing in securities of companies that have been in operation for
less than three years. In order to maximize each Fund's flexibility in this
area, the Board believes that each Fund's restriction on investments in such
companies should be eliminated. This limitation was imposed by state laws and
NSMIA preempts that requirement. Notwithstanding the elimination of this
fundamental restriction, each Fund expects to continue to invest less than 5% of
its assets in securities of companies that, together with their predecessors,
have been in operation for less than three years.
S. ELIMINATION OF FUNDAMENTAL RESTRICTION ON SELLING SECURITIES SHORT.
FUNDS TO WHICH THIS CHANGE APPLIES: Government Income Fund, Strategic
Income Fund, Dollar Fund, Developing Markets Fund, Pacific Fund, Europe Fund,
Japan Fund, International Fund, Worldwide Fund, America Mid Cap Fund, America
Small Cap Fund, America Value Fund and Health Care.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on selling securities short for the above-referenced Funds would be
eliminated.
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DISCUSSION: No Fund is required to have a fundamental restriction with
respect to short sales of securities. In order to maximize the Funds'
flexibility in this area, the Boards believe that each Fund's restriction on
short sales of securities should be eliminated. This restriction was imposed by
state laws and NSMIA preempts that requirement. Notwithstanding the elimination
of this fundamental restriction, each Fund expects to continue not to engage in
short sales of securities, except to the extent 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 sold short. Moreover, Dollar
Fund, as a money market fund, is subject to substantive regulation under Rule
2a-7 under the 1940 Act. Growth & Income Fund has and will continue to have this
restriction as a non-fundamental restriction.
T. ELIMINATION OF FUNDAMENTAL RESTRICTION ON DIVERSIFICATION REQUIRED BY
INTERNAL REVENUE CODE.
FUND TO WHICH THIS CHANGE APPLIES: High Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the existing fundamental
restriction on diversification required by the Internal Revenue Code of 1986, as
amended (the "Code"), for High Income Fund would be eliminated.
DISCUSSION: This fundamental restriction is based on the diversification
test under the Code that High Income Fund must satisfy to qualify as a regulated
investment company. Chancellor LGT expects that the Fund will continue to
satisfy this diversification test. There is no legal requirement, however, that
this diversification test be included as a fundamental restriction of the Fund.
Accordingly, the Board believes that this fundamental restriction regarding
diversification should be eliminated.
U. APPROVAL OF NEW FUNDAMENTAL INVESTMENT POLICY REGARDING INVESTMENT OF ALL
OF EACH FUND'S ASSETS IN AN OPEN-END FUND.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds except Consumer Products and
Services Fund, Financial Services Fund, High Income Fund, Infrastructure Fund,
Natural Resources Fund, America Small Cap Fund, America Value Fund and New
Dimension Fund.
PROPOSED CHANGE: Upon the approval of Proposal 4, the following fundamental
investment policy on investing in an open-end fund would be added for each of
the above-referenced Funds:
"Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its investable assets (cash, securities and receivables
related to securities) in an open-end management investment company having
substantially the same investment objective, policies and limitations as the
Fund."
DISCUSSION: As discussed above, Consumer Products and Services Fund,
Financial Services Fund, High Income Fund, Infrastructure Fund, Natural
Resources Fund, America Small Cap Fund, and America Value Fund each seeks its
investment objective by investing all of its investable assets in another
open-end fund. The Boards have approved, subject to shareholder approval, the
adoption of a new fundamental investment policy that would permit each of the
other Funds to invest its assets in a similar fashion. At present the Boards
have not considered any specific proposal to authorize a Fund to invest its
assets in this fashion. A 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 restrictions, to combine their investments 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
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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 Boards recommend that Shareholders vote to permit the assets of any
Fund to be invested in an open-end fund, without a further vote of Shareholders,
but only if the applicable Board subsequently determines that such action is in
the best interests of the Fund and its Shareholders. If the Shareholders approve
this proposal, the fundamental restrictions of each Fund that currently may
prohibit investment in an open-end fund, in effect, would be modified 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 applicable 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.
Chancellor LGT (and AIM, if Proposal 2 is approved) may benefit from the use
of this structure if, as a result, overall assets under management are increased
(since management fees are based on assets). Also, Chancellor LGT's (and AIM's)
expense of providing investment and other services to the Funds may be reduced.
REQUIRED VOTE. Approval of each of the changes contemplated by Proposal 4
with respect to a Fund requires the affirmative vote of a "majority of the
outstanding voting securities" of that Fund, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of the outstanding Shares of
the Fund or (2) 67% or more of the Shares of the Fund present at the meeting if
more than 50% of the outstanding Shares of the Fund are represented at the
meeting in person or by proxy. In addition to voting "for" or "against" the
entire Proposal 4, Shareholders of any Fund also may vote against the changes
proposed with respect to specific fundamental restrictions applicable to their
Fund in the manner indicated on the proxy card. If the proposed changes are
approved by Shareholders of the respective Funds at the Special Meeting, those
changes will be effective upon appropriate disclosure being made in the Funds'
prospectuses and statements of additional information.
IF ONE OR MORE OF THE CHANGES CONTEMPLATED BY PROPOSAL 4 ARE NOT APPROVED BY
SHAREHOLDERS OF A FUND, THE RELATED EXISTING FUNDAMENTAL RESTRICTION(S) OF THAT
FUND WILL CONTINUE IN EFFECT FOR THAT FUND. DISAPPROVAL OF ALL OR PART OF
PROPOSAL 4 BY THE SHAREHOLDERS OF ONE FUND WILL NOT AFFECT ANY APPROVALS OF
PROPOSAL 4 THAT ARE OBTAINED WITH RESPECT TO ANY OTHER FUND.
EACH BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4
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PROPOSAL NO. 5: APPROVAL OF AN AGREEMENT AND PLAN
OF CONVERSION AND TERMINATION FOR EACH COMPANY
RELEVANT FUNDS. Proposal 5 applies to all Funds.
BACKGROUND. Investment Funds and Investment Portfolios (each a
"Corporation") currently are organized as Maryland corporations, and Growth
Series and Series Trust (each an "Old Trust") currently are organized as
Massachusetts business trusts. The Board of each Company has approved an
Agreement and Plan of Conversion and Termination ("Plan"), each of which
provides for a series of transactions (collectively, a "Reorganization") to
convert each Fund of the applicable Company to a series ("New Fund") of a newly
created open-end management investment company organized as a business trust
("New Trust") under the Delaware Business Trust Act ("Delaware Act"). Under the
Plans, each Fund will transfer all its assets to a New Fund in exchange solely
for voting shares of beneficial interest in the New Fund and the New Fund's
assumption of all the Fund's liabilities. Attached to this Proxy Statement as
Exhibit K is a form of the Plan relating to the proposed Reorganization
involving the Funds of Investment Funds; the form of the Plan relating to each
other proposed Reorganization is identical in all material respects to Exhibit K
except for the names of the applicable Company and its Funds and the New Trust
and its New Funds.
The Reorganizations are being proposed primarily to modernize the
organizational documents under which the Companies operate. As noted above,
Chancellor LGT, AIM, and the Boards believe that a number of benefits will be
available to the Funds and their shareholders once these documents conform to
those of the AIM Funds. The operations of each New Fund following the
Reorganization will be substantially identical to those of its predecessor Fund,
except that each New Fund's advisory arrangements will conform to the changes
proposed in Proposal 2, if Proposal 2 is approved; the Rule 12b-1 plan for each
Class of the New Fund will be substantially identical to the proposed
compensation-type Rule 12b-1 plans described in Proposal 3, provided that
Proposal 2 is approved and to the extent that the Rule 12b-1 plans described in
Proposal 3 are approved by each applicable Class of the Fund; and the
fundamental and non-fundamental restrictions of each New Fund will conform to
the changes proposed in Proposal 4 to the extent that Proposal 4 is approved.
Finally, as described below, the Trust Instruments for the New Trusts will
differ from the Articles of Incorporation and Declarations of Trust of the
Companies in certain respects that are expected to improve the Companies'
operations.
In addition, the class structure of the New Funds will differ somewhat from
the Funds' class structure. Unlike the Class B Shares of the Funds (other than
New Dimension Fund), each New Fund's Class B Shares acquired after the Closing
Date will have a conversion feature pursuant to which those shares will convert
to Class A Shares approximately eight years after issuance; in the case of the
Class B Shares of New Dimension Fund, which currently convert to Class A Shares
after approximately seven years, the conversion period will increase from seven
to eight years for shares acquired after the Closing Date.
REASONS FOR THE PROPOSED REORGANIZATIONS. The Reorganizations are being
proposed because, as noted above, Chancellor LGT, AIM, and the Boards believe
that the Delaware business trust organizational form offers a number of
advantages over both the Maryland corporate organizational form and the
Massachusetts business trust organizational form. As a result of these
advantages, the Delaware business trust organizational form has been
increasingly used by mutual funds, including several AIM Funds.
The Delaware business trust organizational form offers greater flexibility
than the Maryland corporate form. A Maryland corporation is governed by the
detailed requirements imposed by Maryland corporate law and by the terms of its
Articles of Incorporation. A Delaware business trust is subject to fewer
statutory requirements. Each New Trust will be governed primarily by the terms
of an Agreement and Declaration of Trust, which is its governing instrument
("Trust Instrument"), the form of which is attached to this Proxy Statement as
Exhibit L. In particular, each New Trust will have greater flexibility to
conduct business without the necessity of engaging in expensive proxy
solicitations to shareholders. For example, under Maryland corporate law,
amendments to a Corporation's Articles of Incorporation would typically require
shareholder approval. Under Delaware law, unless the Trust Instrument of a
Delaware business
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trust provides otherwise, amendments thereto may be made without first obtaining
shareholder approval. In addition, unlike Maryland corporate law, which
restricts the delegation of a board of directors' functions, Delaware law
permits the board of trustees of a Delaware business trust to delegate certain
of its responsibilities. For example, the board of trustees of a Delaware
business trust may delegate the responsibility of declaring dividends to duly
empowered committees of the board or to appropriate officers. Finally, Delaware
law permits the trustees to adapt a Delaware business trust to future
contingencies. For example, the trustees may, without a shareholder vote, change
a Delaware business trust's domicile or organizational form. Any exercise of
this authority by the Directors of a Corporation would require shareholder
approval.
The Delaware business trust organizational form also offers some advantages
over the Massachusetts business trust form. In particular, with respect to both
business trust law and corporate law generally, Delaware offers greater
specificity in its law and greater certainty than does Massachusetts law. The
Delaware Act also provides that shareholders of a Delaware business trust will
be entitled to the same limitation of personal liability extended to
stockholders of a Delaware corporation, while Massachusetts business trust law
does not limit the potential liability of Massachusetts business trust
shareholders. Delaware's limitation of liability may not be absolute, as it is
possible that a non-Delaware court would not uphold this provision of the
Delaware Act. However, the possibility of liability, which is remote for
Massachusetts business trust shareholders, appears to be even more remote for
Delaware business trust shareholders. Finally, the Delaware business trust
organizational form has an advantage over both the Maryland corporate and
Massachusetts business trust forms in that the Delaware Act limits inter-series
liability in a multi-series business trust, so that the assets of one series of
a New Trust (I.E., a New Fund) expressly will be protected against claims by
creditors and shareholders of another series of that New Trust. The limit on
such inter-series liability for the Companies, under Maryland and Massachusetts
law, is not as clear.
The Reorganizations will also have certain other effects on each Company,
its Shareholders, and management, which are described below under "Certain
Comparative Information about the Corporations, Old Trusts, and New Trusts."
SUMMARY OF EACH PLAN. To accomplish the Reorganizations, each New Trust
will be formed as a Delaware business trust pursuant to a Trust Instrument, and
each New Fund will be established as a series of a New Trust. On the Closing
Date, each Fund will transfer all its assets to a corresponding New Fund in
exchange solely for a number of full and fractional Class A, Class B, and
Advisor Class shares (and, in the case of New Dimension Fund, Class C shares) of
the New Fund equal to the number of full and fractional shares of the
corresponding classes of the Fund then outstanding and the New Fund's assumption
of the Fund's liabilities. Immediately thereafter, each 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 Fund will own 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 Fund.
Each Plan authorizes the applicable Company to acquire one share of each
class of each New Fund and, as the sole initial shareholder prior to the
Reorganization thereunder: (1) to elect the Company's Board Members as the
trustees of the New Trust to serve without limit in time, except as they may
resign or be removed by action of the New Trust's trustees or shareholders; (2)
to approve an investment management and administration agreement that will be
substantially identical to the New Management Agreement described in Proposal 2,
provided that Proposal 2 is approved; (3) to approve a sub-advisory agreement
that will be substantially identical to the New Sub-Advisory Agreement described
in Proposal 2, provided that Proposal 2 is approved; (4) to approve a new
distribution contract and new plans of distribution pursuant to Rule 12b-1 under
the 1940 Act that will be substantially identical to the compensation-type
distribution plans described in Proposal 3, provided that Proposal 2 is approved
and to the extent that the Rule 12b-1 Plans described in Proposal 3 are approved
by each applicable Class of the
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Fund; and (5) to ratify the selection of Coopers & Lybrand L.L.P., the Company's
current accountants, as the New Trust's independent public accountants.
Assuming approval of this Proposal 5 by Shareholders, it is currently
contemplated each Reorganization will occur on the Closing Date. However, one or
more of the Reorganizations may close on another date if circumstances warrant.
The obligations of each Company and each New Trust under each Plan are
subject to various conditions stated therein. To provide against unforeseen
events, each Plan may be terminated or amended at any time prior to the closing
of the Reorganization thereunder by action of the Board of the applicable
Company, notwithstanding the approval of the Plan by the Shareholders of the
Company. However, no amendments may be made that would materially adversely
affect the interests of Shareholders of any Fund. Each Company and New Trust may
at any time waive compliance with any condition contained in the Plan, provided
that the waiver does not materially adversely affect the interests of the
Shareholders of any Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT. Each Plan authorizes
the applicable Company, as the sole shareholder of the New Trust prior to the
Reorganization thereunder, to approve with respect to each New Fund a New
Management Agreement that will be substantially identical to that described in
Proposal 2. Information on the New Management Agreements, including a
description of the differences between them and the Current Management
Contracts, is set forth under Proposal 2. The form of the New Management
Agreement is Exhibit C to this Proxy Statement.
SUB-ADVISORY AGREEMENT. Each Plan authorizes the applicable Company, as the
sole shareholder of the New Trust prior to the Reorganization thereunder, to
approve with respect to each New Fund a New Sub-Advisory Agreement that will be
substantially identical to that described in Proposal 2. Information on the New
Sub-Advisory Agreement is set forth under Proposal 2. The form of the New
Sub-Advisory Agreement is Exhibit D to this Proxy Statement.
DISTRIBUTION CONTRACTS AND DISTRIBUTION PLANS. Each Plan authorizes the
applicable Company, as the sole shareholder of the New Trust prior to the
Reorganization thereunder, to enter into a new distribution contract with AIM
Distributors ("Proposed Distribution Contract"). Each Proposed Distribution
Contract will provide for substantially the same distribution services as
currently provided by GT Global.
Each Plan also authorizes the applicable Company, as the sole shareholder of
the New Trust prior to the Reorganization thereunder, to approve a replacement
distribution plan pursuant to Rule 12b-1 under 1940 Act with respect to each of
the New Trust's New Funds that will be substantially identical to the Proposed
Plans described in Proposal 3. Information on the Proposed Plans is set forth
under Proposal 3. The forms of the Proposed Plans are Exhibits H and I to this
Proxy Statement.
CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS. The New Trusts' transfer
agent will establish for each Shareholder an account containing the appropriate
number of shares of each class of each New Fund. Such accounts will be identical
in all respects to the accounts currently maintained by the Companies' transfer
agent for each Shareholder of the Funds. Shares held in the Fund accounts will
automatically be designated as shares of the New Funds. Holders of Share
certificates of each Fund will not need to exchange them for new certificates
after the Reorganizations, and certificates for Fund Shares issued before the
Reorganizations will represent shares of the corresponding New Funds after the
Reorganizations. Shareholders of the Funds who are receiving payment under a
withdrawal plan with respect to Fund Shares will retain the same rights and
privileges as to New Fund shares under each plan. Similarly, no further action
will be necessary to continue any automatic investment plan or retirement plan
currently maintained by a shareholder with respect to any Fund's Shares.
FEDERAL INCOME TAX CONSEQUENCES. Each Company and New Trust will receive an
opinion of Kirkpatrick & Lockhart LLP substantially to the effect that the
Reorganization in which it participates will constitute a tax-free
reorganization under section 368(a)(1)(F) of the Code. Accordingly, the Funds,
the New Funds, and the Shareholders of the Funds will recognize no gain or loss
for federal income tax
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purposes as a result of the Reorganizations. Shareholders of the Funds should
consult their tax advisors regarding the effect, if any, of a Reorganization in
light of their individual circumstances and as to state and local consequences,
if any, of a Reorganization.
APPRAISAL RIGHTS. Appraisal rights are not available to Shareholders.
However, Shareholders retain the right to redeem their shares of the Funds or
the New Funds, as the case may be, at any time before or after the
Reorganizations.
CERTAIN COMPARATIVE INFORMATION ABOUT THE CORPORATIONS, OLD TRUSTS, AND NEW
TRUSTS.
STRUCTURE OF THE NEW TRUSTS. Each New Trust will be established under the
laws of the State of Delaware by filing a certificate of trust in the office of
the Secretary of State of Delaware. Each New Trust will establish series
corresponding to and having identical designations as the series of its
predecessor Company, except to reflect the new proposed affiliations of the New
Funds with AIM and AMVESCAP. Each New Trust will also establish classes with
respect to each New Fund corresponding to and having identical designations as
the classes of each Fund except that the Class B Shares of each New Fund (unlike
those of all of the Funds except New Dimension Fund) will be convertible to
Class A Shares thereof. Each New Fund will have the same investment objectives,
policies, and restrictions as its predecessor Fund, except that each of the New
Fund's fundamental and nonfundamental restrictions will conform to the changes
proposed in Proposal 4 (assuming approval of that proposal by the Shareholders).
Each New Trust's fiscal year will be the same as that of its predecessor
Company. The New Trusts will not have any operations prior to the
Reorganizations. Initially, each Company will be the sole shareholder of its
corresponding New Trust.
As a Delaware business trust, each New Trust's operations will be governed
by its Trust Instrument and By-Laws and applicable Delaware law rather than by
its predecessor Corporation's Articles of Incorporation and By-Laws and
applicable Maryland law or by its predecessor Old Trust's Declaration of Trust
and By-Laws and applicable Massachusetts law. Certain differences between the
different domiciles and various forms of organization are summarized below. The
operations of each New Trust will continue to be subject to the provisions of
the 1940 Act and the rules and regulations thereunder.
TRUSTEES AND OFFICERS OF THE NEW TRUSTS. Subject to the provisions of the
Trust Instrument, the business of each New Trust will be managed by its
trustees, who will serve indefinite terms and will have all powers necessary or
convenient to carry out their responsibilities. The responsibilities, powers,
and fiduciary duties of the trustees will be substantially the same as those of
the Board Members of each Company.
The trustees of each New Trust would be those persons elected at the Special
Meeting to serve as Board Members of its predecessor Company. Information
concerning the nominees for election as Board Members of each Company, all of
whom presently serve in such positions, is set forth under Proposal 1. It is
anticipated that the current officers of each Company, as well as certain AIM
personnel will be elected to serve as officers of its successor New Trust and
the current officers of each Company will perform the same functions following
the Reorganizations that they now perform on behalf of the Companies.
SHARES OF THE NEW TRUSTS. The beneficial interests in the New Funds will be
represented by transferable shares, par value $0.01 per share. Share
certificates will not be issued unless requested in writing by a shareholder.
The trustees will have the power under the Trust Instrument to establish new
series and classes of shares; each Company's Board currently has a similar
right. Each Trust Instrument will permit the trustees to issue an unlimited
number of shares of each class and series. Each Old Trust is substantially
identical to its successor New Trust with regard to the issuance of shares. By
contrast, each Corporation is authorized to issue only the number of Shares
specified in its Articles of Incorporation and may issue additional Shares only
with Board approval and after payment of a fee to the State of Maryland on any
additional Shares authorized.
Each Fund, except New Dimension Fund, currently has three classes of Shares:
Class A, Class B, and Advisor Class. New Dimension Fund currently has four
classes of Shares: Class A, Class B, Class C, and Advisor Class. Each New Trust
will establish classes for each New Fund the classes that currently exist for
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its predecessor fund. With the exception of Class B shares, each class of the
New Funds will have rights, privileges, and terms identical to those of the
corresponding class of the Funds. Class B shares of the New Funds will be
identical to Class B Shares of the Funds with respect to all rights, privileges,
and terms, except that a conversion feature will be added to Class B shares of
the New Funds (with the exception of New Dimension Fund). Initially, the
conversion feature will provide that Class B shares will convert to Class A
shares eight years following the end of the calendar month in which a
shareholder acquired the Class B shares (whether before or after the
Reorganizations). The Class B Shares of New Dimension Fund purchased prior to
the Closing Date will continue to be subject to the seven-year conversion period
then in effect, although such Shares purchased after the Closing Date will be
subject to the eight-year conversion period. The conversion feature benefits
eligible Class B shareholders because Class A shares have a lower expense ratio
than Class B shares.
SHAREHOLDER MEETING REQUIREMENTS. Each Corporation's By-Laws and Maryland
law provide that a special meeting of Shareholders shall be called upon the
written request of Shareholders holding 25% of the Corporation's shares. Each
Old Trust's Declaration of Trust and By-Laws provide that special meetings of
Shareholders shall be called upon the written request of holders of at least 10%
of the Old Trust's Shares then outstanding. Each New Trust's By-Laws will
provide that a special meeting of shareholders for the purpose of voting on the
removal of any trustee may be called by the holders of 10% or more of the
outstanding shares of the New Trust.
Each New Trust, like its predecessor Company, will operate as an open-end
management investment company registered with the SEC under the 1940 Act.
Shareholders of the New Funds will therefore have the power to vote at special
meetings with respect to, among other things, changes in fundamental investment
objectives and fundamental policies of the New Funds; approval of certain
changes to investment advisory contracts and plans of distribution; and
additional matters relating to the New Trusts required by the 1940 Act. If, at
any time, less than a majority of the trustees holding office have been elected
by the shareholders, the trustees then in office will promptly call a meeting of
shareholders of the New Trust for the purpose of electing a trustee or trustees
in order to maintain a majority of trustees elected by shareholders.
REMOVAL OF DIRECTORS AND TRUSTEES. Each Corporation's Articles of
Incorporation and By-Laws permit removal of a director by the holders of more
than 50% of the Shares voted in person or by proxy at a meeting at which at
least 50% of the Corporation's outstanding Shares are represented in person or
by proxy. Under each Old Trust's Declaration of Trust, a trustee may be removed
by two-thirds of the trustees holding office prior to removal or by holders of
two-thirds of the outstanding Old Trust shares at a special meeting called for
that purpose. Each New Trust will be substantially identical to the Old Trusts
with respect to the removal of trustees.
SHAREHOLDERS' RIGHTS OF INSPECTION. Maryland law provides generally that
persons who have been shareholders of record for six months or more and who own
at least 5% of a Fund's Shares may inspect the Fund's books of account and stock
ledger. Under Massachusetts law, any Shareholder may inspect a Fund's records,
accounts, and books for any legitimate business purpose. Series Trust permits
its trustees to determine the extent to which, the times and places at which,
and the conditions under which a Shareholder may inspect any book or record. The
Declaration of Trust and Bylaws for Growth Series provide that, at each
Shareholder meeting, a list of all Shareholders entitled to vote, certifying the
number of Shares held by each, shall be made available. Under each New Trust's
Trust Instrument and By-Laws, New Fund shareholders who have held shares of
record for at least six months and who hold of record at least 5% of the
outstanding shares of any class of a New Fund will be permitted, upon written
request, to inspect a list of the shareholders of that class.
SHAREHOLDER LIABILITY. Maryland law provides that a Shareholder is not
obligated to a Corporation with respect to the stock held therein, except to the
extent that (1) the subscription price or other agreed consideration for the
stock has not been paid (subject to limited exceptions); (2) the Shareholder
knowingly accepted an illegal distribution; or (3) the Shareholder is subject to
any liability imposed by law
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upon the dissolution, voluntary or involuntary, of the Corporation. Under
Massachusetts law, there is a remote possibility, under certain circumstances,
that an Old Trust's Shareholders may be held personally liable for the Old
Trust's obligations. Each Old Trust's Declaration of Trust, however, disclaims
Shareholder liability for acts of obligations of the Old Trust and requires that
every written agreement, obligation, or other undertaking made or issued by the
Old Trust contain a provision to the effect that Old Trust Shareholders are not
personally liable thereunder. In addition, each Declaration of Trust also
provides for indemnification out of Old Trust property for any Shareholder held
personally liable solely by reason of his or her being or having been a
Shareholder. Each Declaration of Trust also provides that the Old Trust shall,
upon request, assume the defense of any claim made against any Shareholder for
any act or obligation of the Old Trust and satisfy any judgment thereon.
Therefore, the risk of any Shareholder's incurring financial loss beyond his or
her investment due to Shareholder liability is limited to circumstances in which
an Old Trust itself is unable to meet its obligations and the express disclaimer
of Shareholder liabilities is determined not to be effective. Given the nature
of each Old Trust's assets and operations, the possibility that an Old Trust
would be unable to meet its obligations is remote.
Under Delaware law, each New Trust's shareholders will not be personally
liable for the obligations of the New Trust. The Delaware Act provides that a
shareholder of a Delaware business trust is entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under Delaware law. The securities regulators of some states, however,
have indicated that they may decline to apply Delaware law on this point, and it
is conceivable that, notwithstanding current laws, courts in other states may
decline to apply Delaware law on this point. As a result, to the extent that
each New Trust or a shareholder will be subject to the jurisdiction of courts in
those states, there is a risk that those courts might not apply Delaware law and
could thereby subject New Trust shareholders to liability. The Boards and
management of the Companies believe this risk to be remote. To guard against
this risk, each Trust Instrument (i) will contain an express disclaimer of
shareholder liability for acts or obligations of the New Trust and (ii) will
provide for indemnification out of New Trust property of any shareholder held
personally liable for the obligations of the New Trust. Moreover, each Trust
Instrument will require that every written agreement, obligation, or other
undertaking made or issued by the New Trust contain a provision to the effect
that New Fund shareholders are not personally liable thereunder. Thus, the risk
of a New Trust shareholder's incurring financial loss beyond the shareholder's
investment because of shareholder liability would be limited to circumstances in
which (a) a court refused to apply Delaware law or otherwise failed to give full
effect to a Trust Instrument or contractual provisions limiting shareholder
liability and (b) a New Trust itself was unable to meet its obligations. In
light of Delaware law, the nature of each New Trust's business, and the nature
of its assets, the Boards believe that the risk of personal liability to a New
Trust shareholder is extremely remote.
LIABILITY OF DIRECTORS AND TRUSTEES. Under the Articles of Incorporation,
each Corporation indemnifies its present and past directors, officers,
employees, and agents, and persons who are serving or have served at the
Corporation's request in similar capacities for other entities, to the maximum
extent permitted by applicable law (including Maryland law and the 1940 Act). In
the event of any litigation or other proceeding against a director or officer of
a Corporation, Maryland law permits the Corporation to indemnify the director or
officer for certain expenses and to advance money for such expenses unless (a)
it is established that the act or omission of the director or officer was
material to the matter giving rise to the proceeding and the act or omission was
committed in bad faith or was the result of active and deliberate dishonesty;
(b) the director or officer actually received an improper personal benefit in
money, property, or services; or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe the act or omission was
unlawful.
Under each Old Trust's Declaration of Trust, so long as the trustees have
acted under the belief that their actions are in the best interests of the Old
Trust, they will be personally liable only for willful misfeasance, bad faith,
or gross negligence in the performance of their duties or by reason of reckless
disregard of their obligations and duties as trustees. Under the Declaration of
Trust, trustees, officers and employees will generally be indemnified against
liability and against the expenses of litigation incurred by
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them unless their conduct is determined to constitute willful misfeasance, bad
faith, gross negligence, or reckless disregard of their duties or unless it has
been determined that they have not acted in good faith in the reasonable belief
that their actions were in the best interests of the Trust. An Old Trust may
also advance money for these expenses, provided that the trustee or officer
undertakes to repay the Old Trust if his or her conduct is later determined to
preclude indemnification.
Each New Trust's Trust Instrument will provide indemnification for current
and former trustees and officers to the fullest extent permitted by Delaware law
and other applicable law. Trustees of a New Trust may be personally liable to
the Trust and its Shareholders by reason of willful misfeasance, bad faith, or
gross negligence in the performance of their duties or by reason of reckless
disregard of their obligations and duties as trustees.
AMENDMENT OF ARTICLES OF INCORPORATION, DECLARATIONS OF TRUST, AND TRUST
INSTRUMENTS. Under each Corporation's Articles of Incorporation and Maryland
law, the Articles may be amended upon (a) adoption by the Board of a resolution
setting forth the proposed amendment and declaring that the amendment is
advisable and (b) approval of the resolution by the holders of a majority of the
Corporation's outstanding shares. Each Old Trust's Declaration of Trust may be
amended by a majority of the trustees so long as the amendment does not
adversely affect the rights of Shareholders. When an amendment adversely affects
the rights of Shareholders, it may be adopted by a majority of the trustees so
long as the Old Trust obtains the approval of either (1) the holders of more
than 50% of the Old Trust's outstanding Shares or (2) holders of more than 50%
of the applicable series or class of a series of the Old Trust. Each New Trust's
Trust Instrument may be amended by the trustees without any shareholder vote,
except that the shareholders will have the right to vote on any amendment that
affects their voting rights, that alters the provisions governing amendments to
the Trust Instrument, that is required to have shareholder approval by law or by
the New Trust's registration statement, or that is submitted to the shareholders
by the trustees.
The foregoing is only a summary of certain differences between and among
each Corporation's Articles of Incorporation and By-Laws and Maryland law and
each Old Trust's Declaration of Trust and By-Laws and Massachusetts law and each
New Trust's Trust Instrument and By-Laws and Delaware law. It is not a complete
list of the differences. Shareholders should refer to the provisions of these
documents and state law directly for a more thorough comparison. Copies of the
Articles of Incorporation and By-Laws of the Corporations, of the Declarations
of Trust and the By-Laws of the Old Trusts, and of the New Trust's Trust
Instrument and By-Laws are, or will be, available to Shareholders without charge
upon written request to a Company or New Trust, when it comes into existence.
REQUIRED VOTE. Under the applicable provisions of each Corporation's
Articles of Incorporation and each Old Trust's Declaration of Trust, the votes
required for approval of a Plan are as follows. Series Trust and Growth Series
each requires the affirmative vote of the holders of a majority of the
outstanding voting securities of the Company as defined in the 1940 Act. The
1940 Act defines a "majority of the outstanding voting securities" as the lesser
of (1) 67% of the shares present or represented at a meeting of shareholders if
holders of more than 50% of all shares are present or represented by proxy, or
(2) more than 50% of all shares. Investment Funds and Investment Portfolios each
requires the affirmative vote of a majority of the aggregate number of votes
entitled to be cast. If a Plan is not approved, the applicable Company will
continue to operate as a Maryland corporation or as a Massachusetts business
trust, as the case may be, and the Funds will continue to operate as series
thereof.
EACH BOARD RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 5
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PROPOSAL NO. 6: APPROVAL OF THE CONVERSION OF THE PORTFOLIOS IN WHICH
CERTAIN FUNDS INVEST
RELEVANT FUNDS. Proposal 6 applies to the following Funds: Consumer
Products and Services Fund, Financial Services Fund, High Income Fund,
Infrastructure Fund, Natural Resources Fund, America Small Cap Fund, and America
Value Fund.
PROPOSAL. Global High Income Portfolio (in which High Income Fund invests
all its assets), Global Investment Portfolio (which has four series in which
Consumer Products and Services Fund, Financial Services Fund, Infrastructure
Fund, and Natural Resources Fund, respectively, invest all their assets), and
Growth Portfolio (which has two series in which America Small Cap Fund and
America Value Fund, respectively, invest all their assets) (the Portfolios) are
organized as New York common law trusts. It is proposed that each Portfolio be
reorganized as and converted to a Delaware business trust (each, a "New
Portfolio") in a series of transactions (collectively, a "Conversion") pursuant
to an Agreement and Plan of Conversion and Termination ("Conversion Plan"). Each
Conversion Plan has been approved by the Board of a Portfolio and is
substantially similar to the form of Plan described in Proposal 5 and attached
to this Proxy Statement as Exhibit K. Each New Portfolio will be governed by an
Agreement and Declaration of Trust substantially similar to the Trust Instrument
described in Proposal 5 and attached to this Proxy Statement as Exhibit L.
REASONS FOR THE PROPOSED CONVERSIONS. The Conversions are being proposed
because Chancellor LGT, AIM, and the Boards believe that the Delaware business
trust form of organization offers a number of advantages over the New York
common law trust form. In particular, the New York common law governing trusts
is vague in many respects. The Delaware Act, on the other hand, is very specific
in most vital areas. For example, and most importantly, the Delaware Act
expressly provides that the beneficial owners of a Delaware business trust
("Holders") shall be entitled to the same limitation of personal liability
extended to stockholders of a Delaware corporation. Of generally similar
significance, the Delaware Act limits inter-series liability in a multi-series
business trust (which Global Investment Portfolio and Growth Portfolio will
become if this Proposal is approved), so that the assets of one series of a New
Portfolio expressly will be protected against claims by creditors and Holders of
another series of that New Portfolio. The Delaware Act also contains fairly
detailed provisions covering various aspects of a business trust's operations,
such as the establishment of new series and management of the trust. Conversion
of the Portfolios to Delaware business trusts thus will add protection against
liability for Funds that invest therein and should improve certain aspects of
administration of the Portfolios. In addition, the Delaware Act provides that
trustees, officers, employees, managers, agents, and independent contractors of
a Delaware business trust, when acting as such, will not be personally liable to
any person other than the trust or a beneficial owner thereof for any act,
omission, or obligation of the trust or any trustee thereof.
DIFFERENCES BETWEEN THE CONVERSION PLANS AND THE PLANS. As noted above, the
Conversion Plan proposed to be used for each Conversion of a Portfolio is
substantially similar to the form of Plan for the Reorganizations of the Funds
described in Proposal 5 (Exhibit K). There are certain differences in those
documents, however, resulting from the facts that (1) ownership of the
Portfolios' series is represented by "interests" (in each series, all but a
nominal portion of which is held by a Fund), while ownership of the Funds is
represented by "Shares" (which are widely held), (2) each series of a Portfolio
has only a single class of interests, while each Fund has multiple classes of
Shares, (3) the Portfolios are organized as New York common law trusts, while
the Companies are organized as Maryland corporations or Massachusetts business
trusts, and (4) each series of a Portfolio is classified as a partnership for
federal income tax purposes, with the result that each Conversion Plan is
intended to implement a tax-free partnership-to-partnership conversion, while
each Plan is designed to implement a tax-free corporate reorganization.
DIFFERENCES BETWEEN THE NEW TRUSTS' AND NEW PORTFOLIOS' TRUST
INSTRUMENTS. As noted above, the Trust Instrument to be used for the New
Portfolios is substantially similar to the Trust Instrument to be used for the
New Trusts described in Proposal 5 (Exhibit L). There are certain differences in
those
37
<PAGE>
documents, however, resulting from the facts that (1) ownership of the New
Portfolios' series will be represented by "interests," while ownership of the
New Funds will be represented by "shares," (2) each series of a New Portfolio
will have only a single class of interests, while each New Fund will have
multiple classes of shares, and (3) for federal income tax purposes, the New
Portfolios' series will not be required to annually distribute their income and
gains, whereas the New Funds must do so to continue to qualify for treatment as
regulated investment companies. In addition, unlike a New Trust's Trust
Instrument, a New Portfolio's Trust Instrument will include provisions necessary
to comply with partnership tax accounting rules and to avoid being a "publicly
traded partnership" (which generally is treated as a corporation for federal
income tax purposes).
TAX CONSEQUENCES. The Conversion of a Portfolio from a New York common law
trust to a Delaware business trust will not result in recognition of any gain or
loss by that Portfolio, any Fund that invests in any series thereof, or the
Shareholders of such a Fund, in the opinion of Kirkpatrick & Lockhart LLP,
counsel to each Portfolio.
REQUIRED VOTE. Under the applicable provisions of the Declarations of Trust
of the Portfolios, approval of the proposed Conversions requires the affirmative
vote of the lesser of (1) 67% or more of the interests present or represented at
the meeting, if Holders of more than 50% of all interests are present or
represented by proxy, or (2) more than 50% of all interests. Each Fund that is a
Holder of interests in a series of a Portfolio will vote its interest therein in
the same proportion as Shareholders of the Fund cast their votes on this
Proposal. If a proposed Conversion is not approved with respect to a Portfolio,
that Portfolio will continue to operate as a New York common law trust.
EACH BOARD RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 6
PROPOSAL NO. 7: RATIFICATION OF THE SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
RELEVANT FUNDS. Proposal 7 applies to all Funds.
PROPOSAL. At a meeting called for the purpose of such selection, the firm
of Coopers & Lybrand L.L.P. was selected by each Company's Board, including the
Independent Board Members, as the independent public accountants to audit the
books and the accounts of each Fund for its fiscal year and to include its
opinion in financial statements filed with the SEC. Each Board has directed the
submission of this selection to the shareholders for ratification. Coopers &
Lybrand L.L.P. has advised the Boards that it has no financial interest in any
Company. For the most recent fiscal year, the professional services rendered by
Coopers & Lybrand L.L.P. included the issuance of an opinion on the financial
statements of each Fund and an opinion on other reports of the Funds filed with
the SEC. Representatives of Coopers & Lybrand L.L.P. are not expected to be
present at the Meeting but have been given the opportunity to make a statement
if they so desire and will be available should any matter arise requiring their
presence.
REQUIRED VOTE. With respect to each Company, the ratification of the
selection of Coopers & Lybrand L.L.P. requires the affirmative vote of a
majority of the votes cast thereon at the Meeting.
EACH BOARD RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 7
38
<PAGE>
OTHER INFORMATION
EXECUTIVE OFFICERS AND DIRECTORS OF AIM
<TABLE>
<CAPTION>
NAME AND POSITION WITH AIM PRINCIPAL OCCUPATIONS
- - ---------------------------------------- ------------------------------------------------------------------------
<S> <C>
John J. Arthur Director Senior Vice President and Treasurer, AIM; and Vice President
Director and Treasurer, AIM Management, A I M Capital Management, Inc. ("AIM
Capital"), AIM Distributors, AIM Services and Fund Management Company.
Charles T. Bauer Chairman of the Board of Directors, AIM Management, AIM, AIM Capital,
Director AIM Distributors, AIM Services, and Fund Management Company; and
Director and Executive Vice Chairman, AMVESCAP
Gary T. Crum Director and President, AIM Capital, Director and Senior Vice President,
Director AIM Management; and AIM; Director, AIM Distributors; and Director,
AMVESCAP
Robert H. Graham Director, President, and Chief Executive Officer, AIM Management;
Director and President Director and President, AIM; Director and Senior Vice President, AIM
Capital, AIM Distributors, AIM Services, and Fund Management Company;
and Director and Chief Executive Officer, AMVESCAP
Dawn M. Hawley Director and Vice President, AIM; and Senior Vice President and Chief
Director Financial Officer, AIM Management.
Carol F. Relihan Director, Senior Vice President, Secretary and General Counsel, AIM;
Director Director, Vice President and General Counsel, Fund Management Company;
Vice President, Secretary and General Counsel, AIM Management; Vice
President and General Counsel, AIM Capital and AIM Distributors.
</TABLE>
EXECUTIVE OFFICERS AND DIRECTORS OF CHANCELLOR LGT
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH
CHANCELLOR LGT AND ADDRESS PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST FIVE YEARS(1)
- - ---------------------------------------- ------------------------------------------------------------------------
<S> <C>
Paul J. Loach, 46 Chairman of the Board of Directors of Chancellor LGT since August 1997;
Chairman of the Board of Directors Director and Managing Director of LGT Asset Management PLC (London)
1166 Avenue of the Americas since October 1994; Group Manager and Director of Framlington Group from
New York, NY 10036 May 1988 to October 1994.
Prince Philipp von und zu Liechtenstein, Director of Chancellor LGT since November 1996; Vice Chairman of
51 Supervisory Board of LGT Bank in Liechtenstein (Deutschland) GmbH
Director (Frankfurt) since 1992; Chairman of the Board of Directors and CEO of
Herrengasse 12, P.O. Box 85 Liechtenstein Global Trust (Vaduz) since 1990; Vice Chairman of the
FL-9490 Vaduz, Liechtenstein Board of Directors of LGT Bank in Liechtenstein since 1981.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH
CHANCELLOR LGT AND ADDRESS PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST FIVE YEARS(1)
- - ---------------------------------------- ------------------------------------------------------------------------
John G. Greenwood, 51 Chief Economist and Director of Chancellor LGT since November 1997;
Director Chief Economist of Chancellor LGT from February 1994 to October 1996;
50 California Street, 27th Floor Chief Economist of LGT Asset Management, Limited (Hong Kong) from
San Francisco, CA 94111 September 1974 to January 1994.
<S> <C>
Nina Lesavoy, 40 Director of Chancellor LGT Senior Secured Management, Inc. since
Director and Head of North November 1996; Director and Head of North American Institutional
American Institutional Distribution Distribution for Chancellor LGT since November 1996; Director and Head
1166 Avenue of the Americas of Client Service and Sales for Chancellor LGT from March 1990 to
New York, NY 10036 October 1996.
Donald H. Young, 59 Director and Head of the Structured Products Group for Chancellor LGT
Director since November 1996; Director and Head of Global Asset Allocation for
1166 Avenue of the Americas Chancellor LGT from October 1988 to October 1996.
New York, NY 10036
Ken W. Chancey, 52 Senior Vice President--Mutual Fund Accounting, Chancellor LGT since
Senior Vice President 1997; Vice President--Mutual Fund Accounting, Chancellor LGT from 1992
Mutual Fund Accounting to 1997; Vice President, Putnam Fiduciary Trust Company from 1989 to
50 California Street, 27th Floor 1992.
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer--North America for Chancellor LGT
Chief Legal and Compliance since October 1997; Executive Vice President of the Asset Management
Officer and Secretary Division of Liechtenstein Global Trust since October 1996; Senior Vice
50 California Street, 27th Floor President, General Counsel and Secretary of Chancellor LGT, GT Global,
San Francisco, CA 94111 Inc., GT Investor Services, Inc. and G.T. Insurance Agency from February
1996 to October 1996; Vice President, General Counsel and Secretary of
LGT Asset Management, Inc., Chancellor LGT, GT Global, Inc., GT Investor
Services, Inc. and G.T. Insurance Agency from May 1994 to February 1996;
Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
Margaret A. Riley, 34 Director of Chancellor LGT Senior Secured Management, Inc. since
Chief Financial Officer November 1996; Director of Chancellor LGT Venture Partners, Inc. since
1166 Avenue of the Americas October 1997; Managing Director and Chief Financial Officer of
New York, NY 10036 Chancellor LGT since October 1997; Managing Director and Controller of
Chancellor LGT from November 1996 to October 1997; Managing Director of
Finance for Chancellor LGT from March 1989 to October 1996.
</TABLE>
- - ------------------------
(1) On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor
Capital") merged with LGT Asset Management, Inc. (San Francisco), and the
resulting entity was renamed Chancellor LGT Asset Management, Inc. Prior to
October 31, 1996, Ms. Lesavoy, Ms. Riley and Mr. Young held positions only
with Chancellor Capital.
40
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANIES
The executive officers of the Companies are listed below. The business
address of each officer is 50 California Street, 27th Floor, San Francisco,
California 94111.
William J. Guilfoyle, age 39, has been President of each Company since
February 1997. Mr. Guilfoyle is also President of GT Global, principal
distributor of the GT Global Mutual Funds. Additional information about Mr.
Guilfoyle is provided above.
Helge K. Lee, age 51, has been a Vice President and Secretary of the
Companies since May 1994. Additional information about Mr. Lee is provided
above.
Kenneth R. Chancey, age 52, has been a Vice President and Chief Accounting
Officer of the Companies since 1992. Additional information about Mr. Chancey is
provided above.
AFFILIATED BROKERAGE COMMISSIONS
Three Funds paid commissions to affiliated brokers in their last fiscal
year. Growth & Income Fund, Health Care Fund, and Telecommunications Fund paid
$12,262, $23,081, and $220,584, respectively, to affiliated brokers in the
fiscal year ended October 31, 1997; these commissions represent, respectively,
2.65%, 2.01%, and 1.00% of the total brokerage commissions paid by each of those
Funds.
GENERAL INFORMATION
SOLICITATION OF PROXIES
Each Company will request broker/dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares
held of record by such persons. Each Company may reimburse such broker/dealer
firms, custodians, nominees and fiduciaries for their reasonable expenses
incurred in connection with such proxy solicitation. In addition to the
solicitation of Proxies by mail, officers of each Company and employees of
Chancellor LGT and its affiliates, without additional compensation, may solicit
Proxies in person or by telephone. The costs associated with such solicitation
and the Special Meeting will be borne by LGT and AMVESCAP.
Each Company has retained Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist in the solicitation of proxies.
You may receive a telephone call from this firm concerning this proxy
solicitation. Investment Funds, Investment Portfolios, Growth Series, and Series
Trust estimate that SCC will be paid fees of approximately $34,079, $716,
$14,146, and $249, respectively. In addition, SCC will be paid for its expenses
incurred; the amount of these expenses will depend on the nature and extent of
the services provided in connection with the solicitation.
OTHER MATTERS TO COME BEFORE THE MEETING
The Boards do not know of any matters to be presented at the Meeting other
than those described in this Proxy Statement, but should any other matter
requiring a vote of Shareholders arise, the Proxyholders will vote thereon
according to their best judgment in the interests of the Companies.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Annual Meeting, if any, should send
their written proposals to the Secretary of the GT Global Funds, 50 California
Street, 27th Floor, San Francisco, CA 94111, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion. Normally, there will be no annual meeting of
shareholders in any year, except as required under the 1940 Act.
41
<PAGE>
REPORTS TO SHAREHOLDERS
EACH COMPANY WILL FURNISH TO SHAREHOLDERS, WITHOUT CHARGE AND UPON REQUEST,
A COPY OF THE MOST RECENT ANNUAL REPORT AND A COPY OF THE MOST RECENT
SEMI-ANNUAL REPORT FOLLOWING SUCH ANNUAL REPORT OF ANY FUND. REQUESTS FOR SUCH
REPORTS MAY BE MADE BY WRITING TO THE COMPANY AT 50 CALIFORNIA STREET, 27TH
FLOOR, SAN FRANCISCO, CALIFORNIA 94111, OR BY CALLING (800) 824-1580.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
BY ORDER OF THE BOARDS,
[LOGO]
HELGE KRIST LEE
SECRETARY
March 31, 1998
42
<PAGE>
[LOGO]
GT GLOBAL INVESTOR SERVICES
2121 NORTH CALIFORNIA BLVD.
SUITE 395
WALNUT CREEK, CA 94596-3572
G.T. INVESTMENT FUNDS, INC.
G.T. GLOBAL GROWTH SERIES
G.T. INVESTMENT PORTFOLIOS, INC.
GT GLOBAL SERIES TRUST
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1998
This proxy is being solicited on behalf of the Board of Trustees/Directors
of the Company indicated below and relates to the proposals with respect to the
Company, the portfolios of the Company ("Funds") and the classes of the Funds
("Classes") indicated below. The undersigned hereby appoints as proxies William
J. Guilfoyle, Helge K. Lee and Michael A. Silver and each of them (with power of
substitution) to vote for the undersigned all shares of beneficial
interest/common stock of the undersigned in the Fund at the Special Meeting of
Shareholders to be held at 1 p.m., Pacific time, on May 20, 1998, at the offices
of the Company, 50 California Street, 26th Floor, San Francisco, California
94111, and any adjournment thereof ("Meeting"), with all the power the
undersigned would have if personally present. The shares represented by this
proxy will be voted as instructed. Unless indicated to the contrary, this proxy
shall be deemed to grant authority to vote "FOR" all proposals relating to the
Company, the Fund and the Class with discretionary power to vote upon such other
business as may properly come before the Meeting.
The Board of Trustees/Directors recommends that you vote FOR each of the
nominees and FOR the following proposals:
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and return it
promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
GTGXXX KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<PAGE>
NAME OF COMPANY/FUND
<TABLE>
<CAPTION>
VOTE ON TRUSTEES/DIRECTORS FOR ALL WITHHOLD ALL FOR ALL EXCEPT
<S> <C> <C> <C> <C>
1. Election of the Company's Board of / / / / / / To withhold authority to vote
Directors or Board of Trustees; 01) C. for any individual nominee(s),
Derek Anderson; 02) Frank S. Bayley; 03) mark "For All Except" and
William J. Guilfoyle; 04) Arthur C. write the nominee's number
Patterson; 05) Ruth H. Quigley on the line below.
--------------------------
</TABLE>
<TABLE>
<CAPTION>
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
<S><C> <C> <C> <C>
2. (a) Approval of a new investment management and administration agreement; / / / / / /
(b) Approval of a new sub-advisory and sub-administration agreement; / / / / / /
3. Approval of replacement Rule 12b-1 plans of distribution; / / / / / /
4. Approval of changes to the fundamental investment restrictions; / / / / / /
/ / To vote against the proposed changes to one or more of the specific fundamental
investment restrictions, but to approve others, PLACE AN "X" IN THE BOX at left
and indicate the letters(s) (as set forth in the proxy statement) of the
investment restriction(s) you do not want to change on the line below.
----------------------------------------------------------------
5. Approval of an agreement and plan of conversion and termination with respect to / / / / / /
the Company;
6. Only for Consumer Products and Services Fund, Financial Services Fund, / / / / / /
Infrastructure Fund, Natural Resources Fund, High Income Fund, America Small Cap
Fund and America Value Fund: Approval of the conversion of the portfolios in
which certain Funds invest;
7. Ratification of the selection of Coopers & Lybrand L.L.P. as the Company's / / / / / /
Independent Public Accountants;
</TABLE>
If shares are held jointly, each shareholder named should sign. If only one
signs, his or her signature will be binding. If the shareholder is a
corporation, the President or a Vice President should sign in his or her own
name indicating title. If the Shareholder is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner".
<TABLE>
<CAPTION>
<S> <C>
- - ----------------------------------------------------------- -----------------------------
Signature (PLEASE SIGN WITHIN BOX) Date
- - ----------------------------------------------------------- -----------------------------
Signature (Joint Owners) Date
</TABLE>
<PAGE>
EXHIBIT A
NUMBER OF OUTSTANDING SHARES OF EACH FUND
AS OF MARCH 17, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
NAME OF COMPANY AND FUND ON MARCH 17, 1998
- - ------------------------------------------------------------------------------------ ----------------------------
<S> <C>
G.T. INVESTMENT FUNDS, INC.--TOTAL.................................................. 374,762,340.0644
GT Global Developing Markets Fund................................................... 17,559,370.822
GT Global Emerging Markets Fund..................................................... 17,526,229.353
GT Global Latin America Growth Fund................................................. 12,968,197.84
GT Global Consumer Products and Services Fund....................................... 8,099,875.472
GT Global Health Care Fund.......................................................... 26,730,460.6604
GT Global Infrastructure Fund....................................................... 5,770,105.428
GT Global Financial Services Fund................................................... 5,581,985.886
GT Global Natural Resources Fund.................................................... 6,561,741.418
GT Global Telecommunications Fund................................................... 94,688,164.9206
GT Global Government Income Fund.................................................... 27,259,669.8364
GT Global High Income Fund.......................................................... 27,539,511.853
GT Global Strategic Income Fund..................................................... 32,394,415.69
GT Global Growth & Income Fund...................................................... 92,082,610.885
G.T. GLOBAL GROWTH SERIES--TOTAL.................................................... 143,411,353.999
GT Global Europe Growth Fund........................................................ 37,287,270.636
GT Global International Growth Fund................................................. 25,504,257.341
GT Global Japan Growth Fund......................................................... 11,708,182,151
GT Global New Pacific Growth Fund................................................... 31,751,549.965
GT Global Worldwide Growth Fund..................................................... 10,091,873.254
GT Global America Mid Cap Growth Fund............................................... 23,272,365.853
GT Global America Small Cap Growth Fund............................................. 2,153,216.865
GT Global America Value Fund........................................................ 1,642,637.934
GT GLOBAL SERIES TRUST--TOTAL....................................................... 4,157,326.922
GT Global New Dimension Fund........................................................ 4,157,326.922
G.T. INVESTMENT PORTFOLIOS, INC.--TOTAL............................................. 225,113,170.658
GT Global Dollar Fund............................................................... 225,113,170.658
</TABLE>
A-1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the Companies' best knowledge, the names and addresses of the beneficial
owners of 5% or more of the outstanding shares of a class of a Fund as of the
Record Date, and the amount of the outstanding shares owned of record by such
owners, are set forth below.
<TABLE>
<CAPTION>
SHARES OWNED
NAME AND ADDRESS OF AS OF PERCENT
NAME OF COMPANY AND FUND BENEFICIAL OWNER MARCH 17, 1998 OF CLASS
- - -------------------------------------------- ------------------------------------------- ----------------- ----------
<S> <C> <C> <C>
G.T. INVESTMENT FUNDS, INC.
GT Global Developing Markets Fund
Class B Raymond James & Assoc. Inc. Csdn. 1,358.8480 8.21%
Mary Lynn James IRA
1215 W Los Angeles Circle
Broken Arrow, OK 74011-4215
PaineWebber for the benefit of Joseph 899.8970 5.44%
McDonald & Mildred McDonald
JTWROS
379 Quarry Pond Court
Moriches, NY 11955-1706
Olde Discount FBO 05012322 9,902.7410 59.82%
751 Griswold St.
Detroit, MI 48226-3224
Smith Barney Inc. 917.4070 5.54%
00150926032
388 Greenwich St.
New York, NY 10013-2339
G.T. INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund
Class A Bear Stearns Securities Corp. 7,053,362.7700 5.39%
FBO 102-06578-29
1 Metrotech Center North
Brooklyn, NY 11201-3870
Bear Stearns Securities Corp. 16,255,055.1050 12.41%
FBO 101-40029-25
1 Metrotech Center North
Brooklyn, NY 11201-3870
</TABLE>
A-2
<PAGE>
EXHIBIT B
NUMBER OF OUTSTANDING SHARES OWNED BY TRUSTEES/DIRECTORS
AND OFFICERS AS OF MARCH 17, 1998
The following table sets forth certain information regarding the ownership
of the shares of the Companies listed below by the Board Members and Officers of
such Companies. To the extent that a Company is not listed next to an
individual's name, such individual held no shares of any class of such Company
as of March 17, 1998. As of March 17, 1998, Mr. Anderson did not own any shares
of the Companies.
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AS
NAME OF BOARD OF
MEMBER/OFFICER NAME OF COMPANY AND FUND MARCH 17, 1998
- - ------------------------------ ---------------------------------------------------------------- ---------------
<S> <C> <C>
Frank S. Bayley............... G.T. GLOBAL GROWTH SERIES
GT Global Europe Growth Fund (Class A) 455.1320
G.T. INVESTMENT FUNDS, INC.
GT Global Government Income Fund (Class A) 935.7180
GT Global Growth & Income Fund (Class A) 190.9720
GT Global Developing Markets Fund (Class A) 100.0000
William J. Guilfoyle.......... G.T. INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund (Class A) 0.5300
G.T. GLOBAL GROWTH SERIES
GT Global New Pacific Growth Fund (Class A) 946.1480
GT Global Europe Growth Fund (Class A) 186.5580
GT Global America Mid Cap Growth Fund (Class A) 149.5400
G.T. INVESTMENT FUNDS, INC.
GT Global Government Income Fund (Class A) 193.9030
GT Global Growth & Income Fund (Class A) 286.0660
GT Global Health Care Fund (Class A) 125.2720
Arthur C. Patterson........... G.T. INVESTMENT FUNDS, INC.
GT Global Latin America Growth Fund (Class A) 832.6630
Ruth H. Quigley............... G.T. INVESTMENT FUNDS, INC.
GT Global Developing Markets Fund (Class A) 100.0000
Kenneth W. Chancey............ GT GLOBAL SERIES TRUST
GT Global New Dimension Fund (Class A) 915.4810
Helge K. Lee.................. G.T. GLOBAL GROWTH SERIES
GT Global Europe Growth Fund (Class A) 3,814.2670
G.T. INVESTMENT FUNDS, INC.
GT Global Latin America Growth Fund (Class A) 1,347.7590
</TABLE>
B-1
<PAGE>
EXHIBIT C
[NAME OF COMPANY]
MASTER INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
[FUND]
AND
A I M ADVISORS, INC.
Contract made as of , 1998, between [Company], a Delaware
business trust ("Company), and A I M Advisors, Inc., a Delaware corporation (the
"Adviser").
WHEREAS the Company is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and
intends to offer for public sale shares of [Funds], each being a series of the
Company's shares of beneficial interest: and
WHEREAS the Company hereafter may establish additional series of its shares
of beneficial interest (any such additional series, together with the series
named in the paragraph immediately preceding, are collectively referred to
herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS the Company desires to retain Adviser as investment manager and
administrator to furnish certain investment advisory, portfolio management and
administration services to the Company and the Funds, and Adviser is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints Adviser as investment manager
and administrator of each Fund for the period and on the terms set forth in this
Contract. Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Company's Board of Trustees ("Board"),
Adviser will provide a continuous investment program for each Fund, including
investment research and management with respect to all securities and
investments and cash equivalents of the Fund. Adviser will determine from time
to time what securities and other investments will be purchased, retained or
sold by each Fund, and the brokers and dealers through whom trades will be
executed.
(b) Adviser agrees that in placing orders with brokers and dealers it will
attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of the
Funds or provide the Funds or Adviser's other clients with research, analysis,
advice and similar services. Adviser may pay to brokers and dealers, in return
for research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to Adviser's determining in good faith that
such commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of Adviser to the Funds and its
other clients and that the total commissions or spreads paid by each Fund will
be reasonable in relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to Adviser or any
affiliated person thereof except in accordance with the federal securities laws
and the rules and regulations thereunder and any exemptive orders currently in
effect. Whenever Adviser simultaneously places orders to purchase or sell the
same security on behalf of a Fund and one or more other accounts advised by
Adviser, such orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Company
recognizes that in some cases this procedure may adversely affect the results
obtained for each Fund.
C-1
<PAGE>
[For New Dimension Fund, Sections 2(a) and (b) are replaced with the
following: "The Adviser will be responsible for the daily allocation and
periodic rebalancing of the Fund's assets among the investment companies in
which the Fund invests ("Underlying Funds"). Such allocation and rebalancing
shall be made in accordance with the Company's Registration Statement. The
Adviser will be responsible for placing all trades on behalf of the Fund. The
Adviser also will determine from time to time what other securities, if any,
will be purchased, retained or sold by the Fund and what cash, if any, will be
retained by the Fund."]
(c) Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Funds, and will furnish the Board
with such periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser
hereby agrees that all records which it maintains for the Company are the
property of the Company, agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any records which it maintains for the Company and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Company any records which it
maintains for the Company upon request by the Company.
3. DUTIES AS ADMINISTRATOR. Adviser will administer the affairs of each
Fund subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services, except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the Funds
with such corporate, administrative and clerical personnel (including officers
of the Company) and services as are reasonably deemed necessary or advisable by
the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's [prospectus,
statement of additional information,] proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain for them,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Adviser will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. DELEGATION OF ADVISER'S DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. With respect to one or more of the Funds, Adviser may enter into
one or more contracts ("Sub-Advisory or Sub-Administration Contract") with a
sub-adviser or sub-administrator in which Adviser delegates to such sub-adviser
or sub-administrator the performance of any or all of the services specified in
Paragraphs 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which Adviser is subject with
respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each
Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940
Act and rules thereunder, and (iii) Adviser shall not enter into a Sub-Advisory
or Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. SERVICES NOT EXCLUSIVE. The services furnished by Adviser hereunder are
not to be deemed exclusive and Adviser shall be free to furnish similar services
to others so long as its services under this
C-2
<PAGE>
Contract are not impaired thereby. Nothing in this Contract shall limit or
restrict the right of any director, officer or employee of Adviser, who may also
be a Trustee, officer or employee of the Company, to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature.
7. EXPENSES.
(a) During the term of this Contract, each Fund will bear all expenses, not
specifically assumed by Adviser, incurred in its operations [and the offering of
its shares.] [Bracketed language omitted in Portfolio Agreements.]
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Company and the Fund; (v) expenses of preparing
filing reports and other documents with governmental and regulatory agencies;
(vi) filing fees and expenses relating to the registration and qualification of
the Fund's shares and the Company under federal and/or state securities laws and
maintaining such registrations and qualifications; (vii) costs incurred in
connection with the issuance, sale or repurchase of the Fund's shares of
beneficial interest; (viii) fees and salaries payable to the Company's Trustees
who are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (ix) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (x) taxes (including
any income or franchise taxes) and governmental fees; (xi) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (xii) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Company or the Fund for
violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; [(xvii) costs
of preparing share certificates;] (xviii) expenses of setting in type, printing
and mailing [prospectuses and supplements thereto, statements of additional
information and supplements thereto,] reports, notices and proxy materials for
existing shareholders; (xix) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Company is a party and the expenses the Company may incur as a result of its
legal obligation to provide indemnification to its officers, Trustees, employees
and agents) incurred by the Company or the Fund; (xx) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xxi) costs of mailing and tabulating proxies
and costs of meetings of shareholders, the Board and any committees thereof;
(xxii) the cost of investment company literature and other publications provided
by the Company to its Trustees and officers; and (xxiii) costs of mailing,
stationery and communications equipment. [Bracketed language omitted in
Portfolio Agreements.]
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by
Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services provided
to the Company received by the officers of the Company and by the Trustees of
the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the Company or
any Fund that Adviser is not required by this Contract to pay or assume shall
not obligate Adviser to pay or assume the same or any similar expense of the
Company or any Fund on any subsequent occasion. [For New Dimension Fund, Section
7 is replaced with the following:
"EXPENSES. (a) During the term of this Agreement, the Adviser shall
bear all expenses of the Fund (other than expenses reimbursed pursuant to
the Fund's Rule 12b-1 plans of distribution and
C-3
<PAGE>
non-recurring and extraordinary expenses of the Fund) until such time as the
Fund enters into a special servicing or similar agreement among the Company,
the Adviser, G.T. Investment Funds, Inc. and GT Investor Services, Inc.
("Special Servicing Agreement"). Once the Company enters into the Special
Servicing Agreement, all expenses of the Fund (other than expenses
reimbursed pursuant to the Fund's Rule 12b-1 plans of distribution and
non-recurring and extraordinary expenses of the Fund) shall be paid for
pursuant to that agreement. Without limiting the generality of the
foregoing, such expenses include the following: (i) the cost (including
brokerage commissions, if any) of securities purchased or sold by the Fund
and any losses incurred in connection therewith; (ii) expenses of organizing
the Fund; (iii) filing fees and expenses relating to the registration and
qualification of the Fund's shares and the Company under federal and/or
state securities law and maintaining such registrations and qualifications;
(iv) fees and salaries payable to the Company's Trustees who are not parties
to this Agreement or interested persons of any such party ("Independent
Trustees"); (v) all expenses incurred in connection with the Independent
Trustees' services, including travel expenses; (vi) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (vii)
legal, accounting and auditing expenses, including legal fees of special
counsel for the Independent Trustees; (viii) charges of custodians, transfer
agents, pricing agents and other agents; (ix) costs of preparing share
certificates; (x) expenses of setting in type, printing and mailing
prospectuses and supplements thereto, statements of additional information,
reports and proxy materials for existing shareholders; (xi) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xii) costs of mailing and tabulating
proxies and costs of meetings of shareholders, the Board and any committees
thereof; (xiii) the cost of investment company literature and other
publications provided by the Company to its Trustees and officers; and (xiv)
costs of mailing, stationery and communications equipment.
(c) During the term of this Agreement, the Fund shall bear any
non-recurring and extraordinary expenses incurred in its operations. Such
non-recurring and extraordinary expenses include: (i) the fees and costs of
actions, suits or proceedings, and any penalties, damages or payments in
settlement in connection therewith, for which the Company and/or the Fund
may be liable directly, or which they may incur as a result of their legal
obligation to provide indemnification to their officers, trustees and
agents; (ii) the fees and costs of any governmental investigation and any
fines or penalties in connection therewith; (iii) and any federal, state or
local tax, or related interest, penalties or additions to tax for which the
Company or the Fund may be liable.
(d) The payment or assumption by the Adviser of any expense of the Fund
prior to the effective date of the Special Servicing Agreement shall not
obligate the Adviser to pay or assume the same or any similar expense of the
Fund after the effective date of the Special Servicing Agreement."]
8. COMPENSATION.
(a) For the services provided to a Fund under this Contract, the Company
shall pay the Adviser an annual fee, payable monthly, based upon the average
daily net assets of such Fund as forth in Appendix A attached hereto. Such
compensation shall be paid solely from the assets of such Fund. [For High Income
Portfolio, add the following: "The Portfolio will also pay the Adviser a fee
equal to 2% of the Portfolio's total investment income calculated in accordance
with generally accepted accounting principles, adjusted daily for currency
revaluations, on a marked to market basis, of the Portfolio's assets; provided,
however, that during any fiscal year this amount shall not exceed 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles."]
(b) For the services provided under this Contract, each Fund as hereafter
may be established will pay to Adviser a fee in an amount to be agreed upon in a
written Appendix to this Contract executed by the Company on behalf of such Fund
and by Adviser.
(c) The fee shall be computed daily and paid monthly to Adviser on or before
the last business day of the next succeeding calendar month.
C-4
<PAGE>
(d) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
[For New Dimension Fund, Section 8 is replaced with the following: "The
Adviser will not be paid any special compensation for the services provided by
it hereunder. However, the Adviser may receive fees for performing investment
management and other services on behalf of the Underlying Funds and may receive
further fees from the Underlying Funds pursuant to the Special Servicing
Agreement."]
9. LIMITATION OF LIABILITY OF ADVISER AND INDEMNIFICATION. Adviser shall
not be liable and each Fund shall indemnify Adviser and its directors, officers
and employees, for any costs or liabilities arising from any error of judgment
or mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Adviser in the
performance by Adviser of its duties or from reckless disregard by Adviser of
its obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Company shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company, to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Adviser even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect with respect to any Fund
unless it has first been approved (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund this Contract shall continue automatically
for successive periods not to exceed twelve months each, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of the
Fund on sixty days' written notice to Adviser or by Adviser at any time, without
the payment of any penalty, on sixty days' written notice to the Company.
Termination of this Contract with respect to one Fund shall not affect the
continued effectiveness of this Contract with respect to any other Fund. This
Contract will automatically terminate in the event of its assignment.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract shall be
effective until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
12. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
C-5
<PAGE>
13. LICENSE AGREEMENT. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or adviser to the
Company with respect to such series of shares.
14. LIMITATION OF SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has been executed and delivered
by an authorized officer of the Company acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
15. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
Attest: [COMPANY]
- - -------------------------------------------- By: -----------------------------------------
Name:
Title:
Attest: A I M ADVISORS, INC.
- - -------------------------------------------- By: -----------------------------------------
Name:
Title:
</TABLE>
C-6
<PAGE>
APPENDIX A
TO
MASTER INVESTMENT ADVISORY MANAGEMENT AND ADMINISTRATION CONTRACT
OF
[FUND]
The Company shall pay the Adviser, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fee shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
C-7
<PAGE>
EXHIBIT D
[NAME OF COMPANY]
MASTER SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
[CHANCELLOR LGT ASSET MANAGEMENT, INC.--NAME TO BE CHANGED]
Contract made as of , 1998, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and [Chancellor LGT Asset Management,
Inc.--name to be changed], a California corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and Administration
Contract with [Company], an [open-end] management investment company registered
under the Investment Company Act of 1940, as amended ("1940 Act"), with respect
to [Funds], each Fund being a series of the Company's shares of beneficial
interest; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Funds, and Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of each Fund for the period and on the terms set forth in this
Contract. Sub-Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Company's Board of Trustees ("Board")
and Adviser, the Sub-Adviser will provide a continuous investment program for
each Fund, including investment research and management, with respect to all
securities and investments and cash equivalents of the Fund. The Sub-Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by each Fund, and the brokers and dealers through
whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers and dealers,
it will attempt to obtain the best net result in terms of price and execution.
Consistent with this obligation, the Sub-Adviser may, in its discretion,
purchase and sell portfolio securities from and to brokers and dealers who sell
shares of the Funds or provide the Funds, Adviser's other clients, or
Sub-Adviser's other clients with research, analysis, advice and similar
services. The Sub-Adviser may pay to brokers and dealers, in return for such
research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to the Sub-Adviser determining in good faith
that such commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of the Adviser and the Sub-Adviser
to the Funds and their other clients and that the total commissions or spreads
paid by each Fund will be reasonable in relation to the benefits to the Fund
over the long term. In no instance will portfolio securities be purchased from
or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and regulations
thereunder and any exemptive orders currently in effect. Whenever the
Sub-Adviser simultaneously places orders to purchase or sell the same security
on behalf of a Fund and one or more other accounts advised by the Sub-Adviser,
such orders will be allocated as to price and amount among all such accounts in
a manner believed to be equitable to each account.
[For New Dimension Fund, Sections 2(a) and (b) are replaced with the
following: "The Sub-Adviser will be responsible for the daily allocation and
periodic rebalancing of the Fund's assets among the
D-1
<PAGE>
investment companies in which the Fund invests ("Underlying Funds"). Such
allocation and rebalancing shall be made in accordance with the Company's
Registration Statement. The Sub-Adviser will be responsible for placing all
trades on behalf of the Fund. The Sub-Adviser also will determine from time to
time what other securities, if any, will be purchased, retained or sold by the
Fund and what cash, if any, will be retained by the Fund."]
(c) The Sub-Adviser will maintain all books and records with respect to the
securities transactions of the Funds, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the
Company are the property of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Company and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Company any records which
it maintains for the Company upon request by the Company.
3. DUTIES AS SUB-ADMINISTRATOR. Sub-Adviser will administer the affairs of
each Fund subject to the supervision of the Company's Board of Trustees
("Board"), the Adviser and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Funds.
(b) At Sub-Adviser's expense, Sub-Adviser will provide the Company and the
Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Sub-Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's [prospectus,
statement of additional information,] proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
[Bracketed language omitted in Portfolio Agreements.]
(d) Sub-Adviser will provide the Company and the Funds with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Sub-Adviser will act in conformity with the Agreement and Declaration
of Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. SERVICES NOT EXCLUSIVE. The services furnished by Sub-Adviser hereunder
are not to be deemed exclusive and Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of Sub-Adviser, who may also be a Trustee, officer
or employee of the Company, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. EXPENSES.
(a) During the term of this Contract, each Fund will bear all expenses, not
specifically assumed by [Adviser and] Sub-Adviser, incurred in its operations
[and the offering of its shares]. [Bracketed language omitted in Portfolio
Agreements.]
D-2
<PAGE>
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Sub-Adviser under this Contract; (iii) investment consulting fees and related
costs; (iv) expenses of organizing the Company and the Fund; (v) expenses of
preparing and filing reports and other documents with governmental and
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; [(xvii) costs
of preparing share certificates;] (xviii) expenses of setting in type, printing
and mailing [prospectuses and supplements thereto, statements of additional
information,] reports, notices and proxy materials for existing shareholders;
(xix) any extraordinary expenses (including fees and disbursements of counsel,
costs of actions, suits or proceedings to which the Company is a party and the
expenses the Company may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, employees and agents) incurred by the
Company; (xx) fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; (xxi) costs of
mailing and tabulating proxies and costs of meetings of shareholders, the Board
and any committees thereof; (xxii) the cost of investment company literature and
other publications provided by the Company to its Trustees and officers; and
(xxiii) costs of mailing, stationery and communications equipment. [Bracketed
language omitted in Portfolio Agreements.]
(c) Sub-Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(d) The payment or assumption by Sub-Adviser of any expense of the Company or
any Fund that Sub-Adviser is not required by this Contract to pay or assume
shall not obligate Sub-Adviser to pay or assume the same or any similar expense
of the Company or any Fund on any subsequent occasion.
[For New Dimension Fund, Section 6 is replaced with the following:
"EXPENSES. (a) During the term of this Agreement, the Sub-Adviser shall
bear all expenses of the Fund (other than expenses reimbursed pursuant to the
Fund's Rule 12b-1 plans of distribution and non-recurring and extraordinary
expenses of the Fund) until such time as the Fund enters into a special
servicing or similar agreement among the Company, the Sub-Adviser, G.T.
Investment Funds, Inc. and GT Investor Services, Inc. ("Special Servicing
Agreement"). Once the Company enters into the Special Servicing Agreement, all
expenses of the Fund (other than expenses reimbursed pursuant to the Fund's Rule
12b-1 plans of distribution and non-recurring and extraordinary expenses of the
Fund) shall be paid for pursuant to that agreement. Without limiting the
generality of the foregoing, such expenses include the following: (i) the cost
(including brokerage commissions, if any) of securities purchased or sold by the
Fund and any losses incurred in connection therewith; (ii) expenses of
organizing the Fund; (iii) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities law and maintaining such registrations and qualifications; (iv)
fees and salaries payable to the Company's Trustees who are not parties to this
Agreement or interested persons of any such party ("Independent Trustees"); (v)
all expenses incurred in connection with the Independent
D-3
<PAGE>
Trustees' services, including travel expenses; (vi) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (vii)
legal, accounting and auditing expenses, including legal fees of special counsel
for the Independent Trustees; (viii) charges of custodians, transfer agents,
pricing agents and other agents; (ix) costs of preparing share certificates; (x)
expenses of setting in type, printing and mailing prospectuses and supplements
thereto, statements of additional information, reports and proxy materials for
existing shareholders; (xi) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations;
(xii) costs of mailing and tabulating proxies and costs of meetings of
shareholders, the Board and any committees thereof; (xiii) the cost of
investment company literature and other publications provided by the Company to
its Trustees and officers; and (xiv) costs of mailing, stationery and
communications equipment.
(c) During the term of this Agreement, the Fund shall bear any non-recurring
and extraordinary expenses incurred in its operations. Such non-recurring and
extraordinary expenses include: (i) the fees and costs of actions, suits or
proceedings, and any penalties, damages or payments in settlement in connection
therewith, for which the Company and/or the Fund may be liable directly, or
which they may incur as a result of their legal obligation to provide
indemnification to their officers, trustees and agents; (ii) the fees and costs
of any governmental investigation and any fines or penalties in connection
therewith; (iii) and any federal, state or local tax, or related interest,
penalties or additions to tax for which the Company or the Fund may be liable.
(d) The payment or assumption by the Sub-Adviser of any expense of the Fund
prior to the effective date of the Special Servicing Agreement shall not
obligate the Sub-Adviser to pay or assume the same or any similar expense of the
Fund after the effective date of the Special Servicing Agreement."]
7. COMPENSATION.
(a) For the services provided to a Fund under this Contract, Adviser will
pay Sub-Adviser a fee, computed weekly and paid monthly, as set forth in
Appendix A hereto. [For High Income Portfolio, add the following: "Adviser will
also pay Sub-Adviser a fee equal to 0.8% of the Portfolio's total investment
income calculated in accordance with generally accepted accounting principles,
adjusted daily for currency revaluations, on a marked to market basis, of the
Portfolio's assets; provided, however, that during any fiscal year this amount
shall not exceed 0.8% of the Portfolio's total investment income calculated in
accordance with generally accepted accounting principles."]
(b) For the services provided under this Contract to each Fund as hereafter
may be established, Adviser will pay to Sub-Adviser a fee in an amount to be
agreed upon in a written Appendix to this Contract executed by Adviser and by
Sub-Adviser.
(c) The fee shall be computed weekly and paid monthly to Sub-Adviser on or
before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
[For New Dimension Fund, Section 7 is replaced with the following: "The
Sub-Adviser will not be paid any special compensation for the services provided
by it hereunder. However, the Sub-Adviser may receive fees for performing
investment management and other services on behalf of the Underlying Funds and
may receive further fees from the Underlying Funds pursuant to the Special
Servicing Agreement."]
8. LIMITATION OF LIABILITY OF SUB-ADVISER AND INDEMNIFICATION. Sub-Adviser
shall not be liable for any costs or liabilities arising from any error of
judgment or mistake of law or any loss suffered by the Fund or the Company in
connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Sub-Adviser in the performance by Sub-
D-4
<PAGE>
Adviser of its duties or from reckless disregard by Sub-Adviser of its
obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Sub-Adviser, who may be or become a
Trustee, officer, employee or agent of the Company, shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Sub-Adviser even though paid by
it.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect with respect to any Fund
unless it has first been approved (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of the
Fund on sixty days' written notice to Sub-Adviser or by Sub-Adviser at any time,
without the payment of any penalty, on sixty days' written notice to the
Company. Termination of this Contract with respect to one Fund shall not affect
the continued effectiveness of this Contract with respect to any other Fund.
This Contract will automatically terminate in the event of its assignment.
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
11. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
D-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
Attest: A I M ADVISORS, INC.
- - -------------------------------------------- By: -----------------------------------------
Name:
Title:
Attest: CHANCELLOR LGT ASSET MANAGEMENT, INC. [Name
to be Changed]
- - -------------------------------------------- By: -----------------------------------------
Name:
Title:
</TABLE>
D-6
<PAGE>
APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- - -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
D-7
<PAGE>
EXHIBIT E
ADVISORY AGREEMENT FEE SCHEDULE FOR GT GLOBAL FUNDS
<TABLE>
<CAPTION>
TOTAL NET
ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE DAILY (BASED ON AVERAGE DAILY COMPLETED
OF EXPENSE CAP NET ASSETS) NET ASSETS)(1) FISCAL YEAR
- - ---------------------- ------------------------------------ ------------------------------------ ---------------
<S> <C> <C> <C>
G.T. GLOBAL GROWTH SERIES
GT Global Europe
Growth Fund (A)....... .975% on the first $500 million; .39% on the first $500 million; .38% $ 491,253,811
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global
International Growth
Fund (A).............. .975% on the first $500 million; .39% on the first $500 million; .38% $ 204,450,024
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global Japan Growth
Fund (A).............. .975% on the first $500 million; .39% on the first $500 million; .38% $ 99,184,283
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global New Pacific
Growth Fund (A)....... .975% on the first $500 million; .39% on the first $500 million; .38% $ 193,115,287
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global Worldwide
Growth Fund (A)....... .975% on the first $500 million; .39% on the first $500 million; .38% $ 151,406,807
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global America
Small Cap Growth Fund
(C)................... 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 33,710,743
the Small Cap Growth Portfolio.)(2) of fees paid by the Small Cap Growth
Portfolio.)
GT Global America Mid
Cap Growth Fund (C)... .725% on the first $500 million; .29% on the first $500 million; .28% $ 512,282,162
.70% on the next $500 million; .675% on the next $500 million; .27% on
on the next $500 million; and .65% the next $500 million; and .26% on
on amounts thereafter amounts thereafter
GT Global America
Value Fund (C)........ 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 24,824,615
the Value Portfolio.)(2) of fees paid by the Value
Portfolio.)
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET
ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE DAILY (BASED ON AVERAGE DAILY COMPLETED
OF EXPENSE CAP NET ASSETS) NET ASSETS)(1) FISCAL YEAR
- - ---------------------- ------------------------------------ ------------------------------------ ---------------
<S> <C> <C> <C>
GROWTH PORTFOLIO
Small Cap Growth
Portfolio............. .475% on the first $500 million; .29% on the first $500 million; .28% $ 33,710,743
.45% on the next $500 million; .425% on the next $500 million; .27% on
on the next $500 million; and .40% the next $500 million; and .26% on
on amounts thereafter amounts thereafter
Value Portfolio....... .475% on the first $500 million; .29% on the first $500 million; .28% $ 24,824,615
.45% on the next $500 million; .425% on the next $500 million; .27% on
on then next $500 million; and .40% the next $500 million; and .26% on
on amounts thereafter amounts thereafter
G.T. GLOBAL VARIABLE INVESTMENT SERIES
GT Global Variable
America Fund (F)...... .75% .30% $ 43,976,824
GT Global Variable New
Pacific Fund (E)...... 1.00% .40% $ 16,490,084
GT Global Variable
Europe Fund (E)....... 1.00% .40% $ 27,409,750
GT Global Variable
International Fund
(E)................... 1.00% .40% $ 5,929,179
GT Global Money Market
Fund (G).............. .50% .20% $ 26,964,207
G.T. GLOBAL VARIABLE INVESTMENT TRUST
GT Global Variable
Telecommunications
Fund (E).............. 1.00% .40% $ 68,186,143
GT Global Variable
Emerging Markets Fund
(E)................... 1.00% .40% $ 16,508,757
GT Global Variable
Infrastructure Fund
(E)................... 1.00% .40% $ 8,745,185
GT Global Variable
Latin America Fund
(E)................... 1.00% .40% $ 28,786,217
GT Global Variable
Growth & Income Fund
(E)................... 1.00% .40% $ 50,356,264
GT Global Variable
Strategic Income Fund
(F)................... .75% .30% $ 28,496,692
GT Global Variable
Natural Resources Fund
(E)................... 1.00% .40% $ 16,709,007
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET
ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE DAILY (BASED ON AVERAGE DAILY COMPLETED
OF EXPENSE CAP NET ASSETS) NET ASSETS)(1) FISCAL YEAR
- - ---------------------- ------------------------------------ ------------------------------------ ---------------
<S> <C> <C> <C>
GT Global Variable
Global Government
Income Fund (F)....... .75% .30% $ 8,251,027
GT Global Variable
U.S. Government Income
Fund (F).............. .75% .30% $ 7,372,636
G.T. INVESTMENT FUNDS, INC.
GT Global Government
Income Fund (C)....... .725% on the first $500 million; .29% on the first $500 million; .28% $ 282,109,478
.70% on the next $1 billion; .675% on the next $1 billion; .27% on the
on the next $1 billion; and .65% on next $1 billion; and .26% on amounts
amounts thereafter thereafter
GT Global High Income
Fund (C).............. 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 365,792,411
the Global High Income of fees paid by the Global High
Portfolio.)(2) Income Portfolio.)
GT Global Strategic
Income Fund (C)....... .725% on the first $500 million; .29% on the first $500 million; .28% $ 420,623,795
.70% on the next $1 billion; .675% on the next $1 billion; .27% on the
on the next $1 billion; and .65% on next $1 billion; and .26% on amounts
amounts thereafter thereafter
GT Global Health Care
Fund (B).............. .975% on the first $500 million; .39% on the first $500 million; .38% $ 626,342,117
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global
Infrastructure Fund
(B)................... 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 98,019,059
the Global Infrastructure of fees paid by the Global
Portfolio.)(2) Infrastructure Portfolio.)
GT Global Natural
Resources Fund (B).... 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 171,673,573
the Global Natural Resources of fees paid by the Global Natural
Portfolio.)(2) Resources Portfolio.)
GT Global
Telecommunications
Fund (B).............. .975% on the first $500 million; .39% on the first $500 million; .38% $1,721,119,059
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global Financial
Services Fund (B)..... 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 80,961,634
the Global Financial Services of fees paid by the Global Financial
Portfolio.)(2) Services Portfolio.)
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET
ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE DAILY (BASED ON AVERAGE DAILY COMPLETED
OF EXPENSE CAP NET ASSETS) NET ASSETS)(1) FISCAL YEAR
- - ---------------------- ------------------------------------ ------------------------------------ ---------------
<S> <C> <C> <C>
GT Global Consumer
Products and Services
Fund (B).............. 0% (The advisory fee is imposed on 0% (The sub-advisory fee is paid out $ 162,662,313
the Global Consumer Products and of fees paid by the Global Consumer
Services Portfolio.)(2) Products and Services Portfolio.)
GT Global Emerging
Markets Fund (B)...... .975% on the first $500 million; .39% on the first $500 million; .38% $ 242,901,049
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global Latin
America Growth Fund
(B)................... .975% on the first $500 million; .39% on the first $500 million; .38% $ 293,580,062
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global Growth and
Income Fund (C)....... .975% on the first $500 million; .39% on the first $500 million; .38% $ 752,477,823
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GT Global Developing
Markets Fund (B)...... .975% on the first $500 million; .39% on the first $500 million; .38% $ 457,379,188
.95% on the next $500 million; .925% on the next $500 million; .37% on
on the next $500 million; and .90% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
GLOBAL INVESTMENT PORTFOLIO
Global Consumer
Products and Services
Portfolio............. .725% on the first $500 million; .39% on the first $500 million; .38% $ 162,616,034
.70% on the next $500 million; .675% on the next $500 million; .37% on
on the next $500 million; and .65% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
Global Financial
Services Portfolio.... .725% on the first $500 million; .39% on the first $500 million; .38% $ 80,246,799
.70% on the next $500 million; .675% on the next $500 million; .37% on
on the next $500 million; and .65% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
Global Infrastructure
Portfolio............. .725% on the first $500 million; .39% on the first $500 million; .38% $ 98,575,211
.70% on the next $500 million; .675% on the next $500 million; .37% on
on the next $500 million; and .65% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET
ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE DAILY (BASED ON AVERAGE DAILY COMPLETED
OF EXPENSE CAP NET ASSETS) NET ASSETS)(1) FISCAL YEAR
- - ---------------------- ------------------------------------ ------------------------------------ ---------------
<S> <C> <C> <C>
Global Natural
Resources Portfolio... .725% on the first $500 million; .39% on the first $500 million; .38% $ 171,031,199
.70% on the next $500 million; .675% on the next $500 million; .37% on
on the next $500 million; and .65% the next $500 million; and .36% on
on amounts thereafter amounts thereafter
Global High Income
Portfolio............. .475% on the first $500 million; .29% on the first $500 million; .28% $ 368,639,850
.45% on the next $1 billion; .425% on the next $1 billion; .27% on the
on the next $1 billion; and .40% on next $1 billion; and .26% on amounts
amounts thereafter, plus 2% of the thereafter, plus 0.8% of the
Portfolio's total investment income Portfolio's total investment income
G.T. INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund
(D)................... .50% .20% $ 276,888,755
GT GLOBAL SERIES TRUST
GT Global New
Dimension Fund........ 0% (Advisory Fees are paid by the GT 0% (Sub-Advisory Fees are paid out $ 35,569,014
Global Theme Funds.) of fees paid by the GT Global Theme
Funds.)
</TABLE>
- - --------------------------
(1) For information about advisory fees and total compensation paid to
Chancellor LGT and its affiliates during the most recently completed fiscal
year, see the Annual Report of the applicable Fund.
(2) The Fund is also subject to an administration fee of 0.25% of the Fund's
average daily net assets.
The expense caps correspond to the following percents of the Funds' average
daily net assets, exclusive of brokerage commissions, taxes, interest and
extraordinary expenses:
<TABLE>
<S> <C> <C>
Expense Cap A............... Class A 2.00%
Class B 2.65%
Advisor Class 1.65%
Expense Cap B............... Class A 2.00%
Class B 2.50%
Advisor Class 1.50%
Expense Cap C............... Class A 1.75%
Class B 2.40%
Advisor Class 1.40%
Expense Cap D............... Class A 1.00%
Class B 1.75%
Advisor Class 1.00%
Expense Cap E............... All Shares 1.25%
Expense Cap F............... All Shares 1.00%
Expense Cap G............... All Shares .75%
</TABLE>
E-5
<PAGE>
EXHIBIT F
ADVISORY AGREEMENT FEE SCHEDULE FOR AIM FUNDS AS OF JANUARY 31, 1998
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- - ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
AIM ADVISOR FUNDS, INC.
AIM Advisor Flex Fund........................... .75%(1) $ 625,853,949
AIM Advisor Large Cap Value Fund................ .75%(1) $ 174,849,143
AIM Advisor International Value Fund............ 1.00%(2) $ 103,739,567
AIM Advisor MultiFlex Fund...................... 1.00%(3) $ 387,498,357
AIM Advisor Real Estate Fund.................... .90%(4) $ 65,098,868
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund...................... .80% of the first $150 million and $ 3,493,585,350
.625% of amounts in excess of $150
million
AIM Blue Chip Fund.............................. .75% of the first $350 million and $ 979,685,761
.625% of amounts in excess of $350
million
AIM Capital Development Fund.................... .75% of the first $350 million and $ 1,010,135,296
.625% of amounts in excess of $350
million
AIM Charter Fund................................ 1.0% of the first $30 million; .75% of $ 4,752,019,015
the next $120 million; and .625% of
amounts in excess of $150 million(5)
AIM Constellation Fund.......................... 1.0% of the first $30 million; .75% of $ 13,912,446,119
the next $120 million; and .625% of
amounts in excess of $150 million(5)
AIM Weingarten Fund............................. 1.0% of the first $30 million; .75% of $ 6,483,927,020
the next $320 million; and .625% of
amounts in excess of $350 million(5)
AIM FUNDS GROUP
AIM Balanced Fund............................... .75% of the first $150 million and $ 1,277,805,629
.50% of amounts in excess of $150
million
AIM Global Utilities Fund....................... .60% of the first $200 million; .50% $ 277,498,403
of the next $300 million; .40% of the
next $500 million; and .30% in excess
of $1 billion
AIM Intermediate Government Securities Fund..... .50% of the first $200 million; .40% $ 265,925,326
of the next $300 million; .35% of the
next $500 million; and .30% in excess
of $1 billion
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- - ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
AIM Growth Fund................................. .80% of the first $150 million and $ 616,924,481
.625% of amounts in excess of $150
million
AIM High Yield Fund............................. .625% of the first $200 million; .55% $ 3,605,716,624
of the next $300 million; .50% of the
next $500 million; and .45% in excess
of $1 billion
AIM Income Fund................................. .50% of the first $200 million; .40% $ 489,526,640
of the next $300 million; .35% of the
next $500 million; and .30% in excess
of $1 billion
AIM Money Market Fund........................... .55% of the first $1 billion and .50% $ 750,048,007
in excess of $1 billion
AIM Municipal Bond Fund......................... .50% of the first $200 million; .40% $ 370,535,277
of the next $300 million; .35% of the
next $500 million; and .30% in excess
of $1 billion
AIM Value Fund.................................. .80% of the first $150 million and $ 13,824,307,149
.625% in excess of $150 million(6)
AIM INTERNATIONAL FUNDS, INC.
AIM Asian Growth Fund........................... .95% of the first $500 million and $ 2,743,531
.90% of amounts in excess of $500
million(7)
AIM European Development Fund................... .95% of the first $500 million and $ 4,315,458
.90% of amounts in excess of $500
million(7)
AIM International Equity Fund................... .95% of the first $1 billion and .90% $ 2,317,723,349
of amounts in excess of $1 billion(8)
AIM Global Income Fund.......................... .70% of the first $1 billion and .65% $ 63,888,544
of amounts in excess of $1 billion(9)
AIM Global Growth Fund.......................... .85% of the first $1 billion and .80% $ 421,251,030
of amounts in excess of $1 billion
AIM Global Aggressive Growth Fund............... .90% of the first $1 billion and .85% $ 2,260,087,933
of amounts in excess of $1 billion
AIM INVESTMENT SECURITIES FUNDS
AIM Limited Maturity Treasury Fund.............. .20% of the first $500 million and $ 440,551,972
.175% in excess of $500 million
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- - ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
AIM SUMMIT FUND, INC............................ 1.00% of the first $10 million; .75% $ 1,645,427,899
of the next $140 million; and .625% of
amounts in excess of $150 million(10)
AIM TAX EXEMPT FUNDS, INC.
AIM High Income Municipal Fund.................. .0% of the first $500 million; .55% of $ 13,736,161
the next $500 million; .50% of the
next $500 million; and .45% of amounts
in excess of $1.5 billion(11)
AIM Tax-Exempt Bond Fund of Connecticut......... .50%(12) $ 39,350,145
AIM Tax-Exempt Cash Fund........................ .35% $ 51,861,063
AIM Tax-Free Intermediate Fund.................. .30% of the first $500 million; .25% $ 193,457,422
of the next $500 million; and .20% of
amounts in excess of $1 billion
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund.............. .65% of the first $250 million and $ 518,951,143
.60% of amounts in excess of $250
million
AIM V.I. Diversified Income Fund................ .60% of the first $250 million and $ 92,801,459
.55% of amounts in excess of $250
million
AIM V.I. Government Securities Fund............. .50% of the first $250 million and $ 34,818,984
.45% of amounts in excess of $250
million
AIM V.I. Growth Fund............................ .65% of the first $250 million and $ 263,728,239
.60% of amounts in excess of $250
million
AIM V.I. Growth and Income Fund................. .65% of the first $250 million and $ 679,090,534
.60% of amounts in excess of $250
million
AIM V.I. International Equity Fund.............. .75% of the first $250 million and $ 209,002,303
.70% of amounts in excess of $250
million
AIM V.I. Money Market Fund...................... .40% of the first $250 million and $ 54,028,632
.35% of amounts in excess of $250
million
AIM V.I. Global Utilities Fund.................. .65% of the first $250 million and $ 22,915,161
.60% of amounts in excess of $250
million
AIM V.I. Value Fund............................. .65% of the first $250 million and $ 710,899,635
.60% of amounts in excess of $250
million
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- - ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS CO.
Liquid Asset Portfolio.......................... .15%(13) $ 3,788,439,224
Prime Portfolio................................. .20% of the first $100 million; .15% $ 7,378,100,156
of the next $100 million; .10% of the
next $100 million; .06% of the next
$1.2 billion; and .05% of amounts in
excess of $1.5 billion
SHORT TERM INVESTMENTS TRUST
Treasury Portfolio.............................. .15% of the first $300 million; .06% $ 4,887,208,702
of the next $1.2 billion; and .05% of
the amounts in excess of $1.5 billion
Treasury Tax Advantage Portfolio................ .20% of the first $250 million; .15% $ 170,033,083
of the next $250 million; and .10% of
the amounts in excess of $500
million(14)
TAX-FREE INVESTMENTS CO.
Cash Reserve Portfolio.......................... .25% of the first $500 million and $ 991,816,762
.20% of amounts in excess of $500
million(15)
</TABLE>
- - ------------------------
NOTES:
(1) AIM has agreed to pay INVESCO Capital Management, which serves as
sub-advisor, a fee equal to .20% of the average daily net asset value of the
Fund for each of the Large Cap Value Fund and Flex Fund.
The following is the expense limitation schedule for AIM Advisor Large Cap
Value Fund and Flex Fund: Total expenses are capped for the first $500
million at the annual rate of 1.45% for Class A and 2.20% for Class C; on
the next $500 million of net assets, expenses shall not exceed 1.40% for
Class A and 2.15% for Class C; on the net $1 billion of net assets, expenses
shall not exceed 1.35% for Class A and 2.10% for Class C; and on all assets
over $2 billion, expenses shall not exceed 1.30% for Class A and 2.05% for
Class C. A portion of the Flex Fund's administrative fees are currently
being waived due to the expense limitation.
(2) AIM has agreed to pay INVESCO Global Asset Management Limited (IGAM), which
serves as sub-advisor, a fee equal to .35% of average net assets up to $50
million; .30% on average net assets over $50 million up to $100 million; and
.25% on average net assets in excess of $100 million of the International
Value Fund.
The following is the expense limitation schedule for AIM Advisor
International Value Fund: Total expenses are capped for the first $100
million at the annual rate of 1.70% for Class A and 2.45% for Class C; on
the next $400 million of net assets, expenses shall not exceed 1.65% for
Class A and 2.40% for Class C; on the next $500 million of net assets,
expenses shall not exceed 1.60% for Class A and 2.35% for Class C; on the
next $l billion of assets, expenses shall not exceed 1.55% for Class A and
2.30% for Class C; and on all assets over $2 billion, expenses shall not
exceed 1.50% for Class A and 2.25% for Class C. A portion of International
Value Fund's administrative fees are being waived due to the expense
limitation.
F-4
<PAGE>
(3) AIM has agreed to pay INVESCO Management & Research, Inc., which serves as
a sub-advisor, a fee equal to .35% of average net assets on the first $500
million of assets and .25% of average net assets in excess of $500 million
of the MultiFlex Fund.
The following is the expense limitation schedule for AIM Advisor MultiFlex
Fund: Total expenses are capped for the first $100 million at the annual
rate of 1.70% for Class A and 2.45% for Class C; on the next $400 million of
net assets, expenses shall not exceed 1.65% for Class A and 2.40% for Class
C; on the next $500 million of net assets, expenses shall not exceed 1.60%
for Class A and 2.35% for Class C; on assets over $1 billion, expenses shall
not exceed 1.55% for Class A and 2.30% for Class C; and on all assets over
$2 billion, expenses shall not exceed 1.50% for Class A and 2.25% for Class
C.
(4) AIM has agreed to pay INVESCO Realty Advisors, Inc., which serves as
sub-advisor, a fee equal to .35% of average net assets on the first $100
million of assets and .25% of average net assets in excess of $100 million
of the Real Estate Fund.
The following is the expense limitation schedule for AIM Advisor Real Estate
Fund: Total expenses are capped for the first $500 million at the annual
rate of 1.60% for Class A and 2.35% for Class C; on the next $500 million,
expenses shall not exceed 1.55% for Class A and 2.30% for Class C; and on
all assets over $1 billion, expenses shall not exceed 1.50% for Class A and
2.25% for Class C.
(5) AIM pays 50% of the advisory fees it receives with respect to AIM Charter
Fund, AIM Constellation Fund and AIM Weingarten Fund to AI M Capital
Management, Inc. as Sub-Advisor for such funds. AIM and A I M Capital
Management, Inc. are voluntarily waiving fees for AIM Weingarten Fund for
net asset levels in excess of $2 billion. In lieu of the contractual
agreement, fees are being calculated at the annual rate of .60% of the
Fund's average daily net assets in excess of $2 billion to and including $3
billion, plus .575% of the Fund's average daily net assets in excess of $3
billion to and including $4 billion, plus .55% of the Fund's average daily
net assets in excess of $4 billion. AIM and A I M Capital Management, Inc.
are voluntarily waiving fees for AIM Constellation Fund and AIM Charter Fund
for net asset levels in excess of $2 billion. In lieu of the contractual
agreement, fees are being calculated at the annual rate of .60% of the
Fund's average daily net assets in excess of $2 billion.
(6) AIM is voluntarily waiving a portion of the fees for AIM Value Fund for net
asset levels in excess of $2 billion. In lieu of the contractual agreement,
fees are being calculated at the annual rate of .60% of the Fund's average
daily net assets in excess of $2 billion.
(7) AIM has agreed to pay INVESCO Global Asset Management Limited (IGAM) a fee
equal to .20% of the first $500 million of net assets and .175% of net
assets over $500 million for each of the AIM Asian Growth Fund and AIM
European Development Fund.
IGAM has sub-sub advisory agreements with INVESCO Asset Management Limited
(IAML) and INVESCO Asia Limited (IAL) for the European Development Fund and
Asian Growth Fund, respectively. IAL and IAML are entitled to an annual fee
equal to 100% of the fees received by IGAM with respect to the Funds.
(8) AIM has agreed to waive fees for AIM International Equity Fund. In lieu of
the contractual agreement, fees are being calculated at the annual rate of
.90% of the Fund's average daily net assets in excess of $500 million to and
including $1 billion, plus .85% of the Fund's average daily net assets
exceeding $1 billion.
(9) AIM has agreed on a voluntary basis to waive fees and reimburse expenses to
the extent that the expense ratios do not exceed 1.25% and 1.75% for Class A
& B respectively.
(10) AIM bears a portion of the fee reduction obligation. The other portion is
borne by TradeStreet, which serves as sub-advisor to AIM Summit Fund, Inc.
AIM and TradeStreet reduce their fees in proportion to the fees being
received from AIM Summit Fund, Inc. TradeStreet has agreed to accept a fee
of .50% of the first $10 million of the Fund's average daily net assets,
.35% of the next $140 million of
F-5
<PAGE>
the Fund's average daily net assets, .225% of the next $550 million of the
Fund's average daily net assets and .15% of the Fund's average daily net
assets in excess of $700 million.
(11) AIM is currently waiving all advisory fees on the High Yield Municipal Bond
Fund. AIM has agreed to limit expenses of this Fund as follows: Class A .25%
of average daily net assets; Class B & C 1.00% of average daily net assets.
AIM has agreed to this limit until June 30, 1998; however, it may be decided
to continue this limit.
(12) AIM is currently waiving a portion of the advisory fee for AIM Tax Exempt
Bond Fund of Connecticut. In lieu of the contractual agreement, fees are
currently calculated at the annual rate of .35% of the Fund's average daily
net assets.
(13) AIM is currently voluntarily waiving a portion of the advisory fee for the
Liquid Assets Portfolio.
(14) AIM has agreed to reduce its fee on the Tax Advantage Portfolio to the
extent required so that the amount of ordinary expenses of the Portfolio
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) do not exceed an annual rate of .20% of the average daily net
assets.
(15) As of June 1, 1985, AIM agreed to reduce its fees from Tax-Free Investments
Co. to the extent necessary to cause the expense ratio of the Institutional
Cash Reserve Shares of Tax-Free Investments Co. not to exceed .20%
(exclusive of interest, taxes, brokerage commissions, directors' fees and
registration fees payable to the SEC).
F-6
<PAGE>
EXHIBIT G
SALES CHARGE SCHEDULE OF GT GLOBAL FUNDS
GROUP I:
G.T. GLOBAL GROWTH SERIES
GT Global Europe Growth Fund
GT Global International Growth Fund
GT Global Japan Growth Fund
GT Global New Pacific Growth Fund
GT Global Worldwide Growth Fund
GT Global America Mid Cap Growth Fund
GT Global America Small Cap Growth Fund
GT Global America Value Fund
G.T. INVESTMENT FUNDS, INC.
GT Global Growth & Income Fund
<TABLE>
<CAPTION>
CURRENT SALES CHARGES AS % OF PROPOSED SALES CHARGES AS % OF
AMOUNT OF PURCHASE OFFERING PRICE OFFERING PRICE
- - -------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
less than $25,000 4.75% 5.50%
$25,000 but less than $50,000 4.75% 5.25%
$50,000 but less than $100,000 4.00% 4.75%
$100,000 but less than $250,000 3.00% 3.75%
$250,000 but less than $500,000 2.00% 3.00%
$500,000 but less than $1,000,000 0.00%* 2.00%
$1,000,000 or more 0.00%* 0.00%*
* All shares purchased without a * A CDSC of 1% of the lesser of the
sales charge based on the aggregate value of the shares redeemed
purchase amount equaling at least (excluding reinvested dividends and
$500,000 will be subject to a capital gain distributions) or the
contingent deferred sales charge for total original cost of such shares
the first year after their purchase applies to purchases of $1,000,000
equal to 1% of the lower of the or more that are redeemed within 18
original purchase price or the NAV months of the date of purchase.
of such shares at redemption.
</TABLE>
G-1
<PAGE>
GROUP II:
G.T. INVESTMENT FUNDS, INC.
GT Global Developing Markets Fund
GT Global Emerging Markets Fund
GT Global Latin America Growth Fund
GT Global Consumer Products and Services Fund
GT Global Financial Services Fund
GT Global Health Care Fund
GT Global Infrastructure Fund
GT Global Natural Resources Fund
GT Global Telecommunications Fund
GT Global Government Income Fund
GT Global High Income Fund
GT Global Strategic Income Fund
GT GLOBAL SERIES TRUST
GT Global New Dimension Fund
<TABLE>
<CAPTION>
CURRENT SALES CHARGES AS % OF PROPOSED SALES CHARGES AS % OF
AMOUNT OF PURCHASE OFFERING PRICE OFFERING PRICE
- - -------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
less than $25,000 4.75% 4.75%
$25,000 but less than $50,000 4.75% 4.75%
$50,000 but less than $100,000 4.00% 4.00%
$100,000 but less than $250,000 3.00% 3.75%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than $1,000,000 0.00%* 2.00%
$1,000,000 or more 0.00%* 0.00%*
* All shares purchased without a * A CDSC of 1% of the lesser of the
sales charge based on the aggregate value of the shares redeemed
purchase amount equaling at least (excluding reinvested dividends and
$500,000 will be subject to a capital gain distributions) or the
contingent deferred sales charge for total original cost of such shares
the first year after their purchase applies to purchases of $1,000,000
equal to 1% of the lower of the or more that are redeemed within 18
original purchase price or the NAV months of the date of purchase.
of such shares at redemption.
</TABLE>
G-2
<PAGE>
EXHIBIT H
MASTER DISTRIBUTION PLAN
OF
[NAME OF TRUST]
(CLASS A SHARES [AND CLASS C SHARES])
SECTION 1. [Name of Trust], a Delaware business trust (the "Fund"), on
behalf of the series of shares of beneficial interest set forth in Schedule A to
this plan (the "Portfolios"), may act as a distributor of the Class A Shares
[and Class C Shares] (each a "Class") of such Portfolios as described in
Schedule A to this plan (the "Shares") of which the Fund is the issuer, pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"),
according to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur as a distributor of the Shares, expenses at
the rates set forth in Schedule A per annum of the average daily net assets of
the Fund attributable to the Shares, subject to any applicable limitations
imposed from time to time by applicable rules of the NASD Regulation, Inc.
SECTION 3. Amounts set forth in Schedule A may be expended when and if
authorized in advance by the Fund's Board of Trustees. Such amounts may be used
to finance any activity which is primarily intended to result in the sale of the
Shares, including, but not limited to, expenses of organizing and conducting
sales seminars, advertising programs, finders fees, printing prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions as asset-based sales charges. Amounts set forth on Schedule A may
also be used to finance payments of service fees under a shareholder service
arrangement to be established by A I M Distributors, Inc. ("Distributors") as
the Fund's distributor in accordance with Section 4, and the costs of
administering the Plan. To the extent that amounts paid hereunder are not used
specifically to reimburse Distributors for any such expense, such amounts may be
treated as compensation for distribution-related services of Distributors or the
Fund's former distributor, GT Global, Inc. All amounts expended pursuant to the
Plan shall be paid to Distributors and are the legal obligation of the Fund and
not of Distributors. That portion of the amounts paid under the Plan that is not
paid or advanced by Distributors to dealers or other institutions that provide
personal continuing shareholder service as a service fee pursuant to Section 4
shall be deemed an asset-based sales charge. No provision of this Plan shall be
interpreted to prohibit any payments by the Fund during periods when the Fund
has suspended or otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in part for
the implementation by Distributors of shareholder service arrangements.
The maximum service fee paid to any service provider shall be twenty-five
one-hundredths of one percent (0.25%), or such lower rate for the
Portfolio and Class as is specified on Schedule A, per annum of the
average daily net assets of the Fund attributable to the Shares owned by
the customers of such service provider.
(b) Pursuant to this program, Distributors may enter into agreements
substantially in the form attached hereto as Exhibit A ("Service
Agreements") with such broker-dealers ("Dealers") as may be selected from
time to time by Distributors for the provision of distribution-related
personal shareholder services in connection with the sale of Shares to
the Dealers' clients and customers ("Customers") who may from time to
time directly or beneficially own Shares. The distribution-related
personal continuing shareholder services to be rendered by Dealers under
the Service Agreements may include, but shall not be limited to, the
following: (i) distributing sales literature; (ii) answering routine
Customer inquiries concerning the Fund and the Shares; (iii) assisting
Customers in changing dividend options, account designations and
addresses, and in enrolling into any of several retirement plans offered
in connection with the purchase of the
H-1
<PAGE>
Shares; (iv) assisting in the establishment and maintenance of customer
accounts and records, and in the processing of purchase and redemption
transactions; (v) investing dividends and capital gains distributions
automatically in Shares; and (vi) providing such other information and
services as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank Shareholder Service Agreements
substantially in the form attached hereto as Exhibit B ("Bank
Agreements") with selected banks acting in an agency capacity for their
customers ("Banks"). Banks acting in such capacity will provide some or
all of the shareholder services to their customers as set forth in the
Bank Agreements from time to time.
(d) Distributors may also enter into Agency Pricing Agreements substantially
in the form attached hereto as Exhibit C ("Pricing Agreements") with
selected retirement plan service providers acting in an agency capacity
for their customers ("Retirement Plan Providers"). Retirement Plan
Providers acting in such a capacity will provide some or all of the
shareholders services to their customers as set forth in the Pricing
Agreements from time to time.
(e) Distributors may also enter into Shareholder Service Agreements
substantially in the form attached hereto as Exhibit D ("Bank Trust
Department Agreements and Brokers for Bank Trust Department Agreements")
with selected bank trust departments and brokers for bank trust
departments. Such bank trust departments and brokers for bank trust
departments will provide some or all of the shareholder services to their
customers as set forth in the Bank Trust Department Agreements and
Brokers for Bank Trust Department Agreements.
SECTION 5. Any amendment to this Plan that requires the approval of the
shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall become
effective as to such Class upon approval of such amendment by a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of such Class,
provided that the Board of Trustees of the Fund has approved such amendment in
accordance with the provisions of Section 6 of this Plan.
SECTION 6. This Plan, any amendment to this Plan and any agreements related
to this Plan shall become effective with respect to any Class of any Portfolio
immediately upon receipt by the Fund of both (a) the affirmative vote of a
majority of the Board of Trustees of the Fund, and (b) the affirmative vote of a
majority of those trustees of the Fund who are not "interested persons" of the
Fund (as defined in the 1940 Act) and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Disinterested Trustees"), cast in person at a meeting called for the purpose of
voting on this Plan or such agreements. Notwithstanding the foregoing, no such
amendment that requires the approval of the shareholders of a Class of a
Portfolio shall become effective as to such Class until such amendment has been
approved by the shareholders of such Class in accordance with the provisions of
Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan shall
continue in effect until and thereafter shall continue in effect
so long as such continuance is specifically approved, at least annually, in the
manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Trustees and
the Board of Trustees shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made.
SECTION 9. This Plan may be terminated with respect to the shares of any
Class of any Portfolio at any time by vote of a majority of the Disinterested
Trustees, or by a vote of a majority of the outstanding voting securities of
such Class of such Portfolio. Upon termination of this Plan with respect to any
or all such Classes, the obligation of the Fund to make payments pursuant to
this Plan with respect to such Classes shall terminate, and the Fund shall not
be required to make payments hereunder beyond such
H-2
<PAGE>
termination date with respect to expenses incurred in connection with shares of
such Classes sold prior to such termination date.
SECTION 10. Any agreement related to this Plan shall be made in writing,
and shall provide:
(a) that such agreement may be terminated with respect to the shares of
any Class of any Portfolio at any time, without payment of any
penalty, by vote of a majority of the Disinterested Trustees or by a
vote of the outstanding voting securities of such Class of such
Portfolio, on not more than sixty (60) days' written notice to any
other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its
assignment.
SECTION 11. This Plan may not be amended with respect to the shares of any
Class of any Portfolio to increase materially the amount of distribution
expenses provided for in Section 2 hereof unless such amendment is approved by
such Class in the manner provided in Section 5 hereof, and no material amendment
to the Plan with respect to the shares of any Class of any Portfolio shall be
made unless approved in the manner provided for in Section 6 hereof.
<TABLE>
<CAPTION>
<S> <C>
[Name of Trust]
(on behalf of its Class A Shares [and Class C
Shares])
Attest: By: -----------------------------------------
- - --------------------------------------
Assistant Secretary President
Effective as of .
</TABLE>
H-3
<PAGE>
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
[NAME OF TRUST]
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services
rendered and all facilities furnished under the Distribution Plan for each
Portfolio (or Class thereof) designated below, a Distribution Fee* determined by
applying the annual rate set forth below as to each Portfolio (or Class thereof)
to the average daily net assets of the Portfolio (or Class thereof) for the plan
year, computed in a manner used for the determination of the offering price of
shares of the Portfolio.
<TABLE>
<CAPTION>
MINIMUM
ASSET-BASED MAXIMUM MAXIMUM AGGREGATE
PORTFOLIO (CLASS A SHARES) SALES CHARGE SERVICE FEE FEE
- - ------------------------------------------------------------- --------------- ------------- -----------------
<S> <C> <C> <C>
<CAPTION>
MAXIMUM
ASSET-BASED MAXIMUM MAXIMUM AGGREGATE
[PORTFOLIO (CLASS C SHARES) SALES CHARGE SERVICE FEE FEE]
- - ------------------------------------------------------------- --------------- ------------- -----------------
<S> <C> <C> <C>
</TABLE>
The Distributor will waive part or all of its Distribution Fee as to a
Portfolio (or Class thereof) to the extent that the ordinary business expenses
of the Portfolio exceed the expense limitation as to the Portfolio (if any) as
contained in the Master Investment Advisory Agreement between the Company and
A I M Advisors, Inc.
THIS PLAN REFERS TO EXHIBITS A-D, WHICH RELATE TO AGREEMENTS THAT THE
DISTRIBUTOR MAY ENTER INTO WITH THIRD PARTIES. FORMS OF THESE AGREEMENTS HAVE
NOT BEEN INCLUDED WITH THIS PLAN.
- - ------------------------
* The Distribution Fee is payable apart from the sales charge, if any, as stated
in the current prospectus for the applicable Portfolio (or Class thereof).
H-4
<PAGE>
EXHIBIT I
MASTER DISTRIBUTION PLAN
OF
[NAME OF TRUST]
(CLASS B SHARES)
[(SECURITIZATION FEATURE)]
SECTION 1. [Name of Trust] (the "Fund"), on behalf of the series of
beneficial interest set forth in Schedule A to this plan (the "Portfolios"), may
pay for distribution of the Class B Shares of such Portfolios (the "Shares")
which the Fund issues from time to time, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"), according to the terms of this
Distribution Plan (the "Plan").
SECTION 2. The Fund may incur expenses for and pay any institution selected
to act as the Fund's agent for distribution of the Shares of any portfolio from
time to time (each, a "Distributor") at the rates set forth in Schedule A hereto
based on the average daily net assets of each class of Shares subject to any
applicable limitations imposed by the Conduct Rules of the NASD Regulation, Inc.
in effect from time to time (the "Conduct Rules"). All such payments are the
legal obligation of the Fund and not of any Distributor or its designee.
SECTION 3.
(a) Amounts set forth in Section 2 may be used to finance any activity which
is primarily intended to result in the sale of the Shares, including, but not
limited to, expenses of organizing and conducting sales seminars and running
advertising programs, payment of finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, payment of overhead and supplemental payments to
dealers and other institutions as asset-based sales charges. Amounts set forth
in Section 2 may also be used to finance payments of service fees under a
shareholder service arrangement, which may be established by each Distributor in
accordance with Section 4, and the costs of administering the Plan. To the
extent that amounts paid hereunder are not used specifically to reimburse the
Distributor for any such expense, such amounts may be treated as compensation
for the Distributor's distribution-related services. No provision of this Plan
shall be interpreted to prohibit any payments by the Fund during periods when
the Fund has suspended or otherwise limited sales.
(b) Subject to the provisions in Sections 8 and 9 hereof, amounts payable
pursuant to Section 2 in respect of Shares of each Portfolio shall be paid by
the Fund to the Distributor in respect of such Shares or, if more than one
institution has acted or is acting as Distributor in respect of such Shares,
then amounts payable pursuant to Section 2 in respect of such Shares shall be
paid to each such Distributor in proportion to the number of such Shares sold by
or attributable to such Distributor's distribution efforts in respect of such
Shares in accordance with allocation provisions of each Distributor's
distribution agreement (the "Distributor's 12b-1 Share") notwithstanding that
such Distributor's distribution agreement with the fund may have been
terminated. The Distributor's 12b-1 Share shall include amounts payable pursuant
to Section 2 in respect of Shares sold by or attributable to distribution
efforts of GT Global, Inc. That portion of the amounts paid under the Plan that
is not paid or advanced by the Distributor to dealers or other institutions that
provide personal continuing shareholder service as a service fee pursuant to
Section 4 shall be deemed an asset-based sales charge.
(c) Any Distributor may assign, transfer or pledge ("Transfer") to one or
more designees (each an "Assignee"), its rights to all or a designated portion
of its Distributor's 12b-1 Share from time to time (but not such Distributor's
duties and obligations pursuant hereto or pursuant to any distribution agreement
in effect from time to time, if any, between such Distributor and the Fund),
free and clear of any offsets or claims the Fund may have against such
Distributor. Each such Assignee's ownership interest in a Transfer
I-1
<PAGE>
of a specific designated portion of a Distributor's 12b-1 Share is hereafter
referred to as an "Assignee's 12b-1 Portion." A Transfer pursuant to this
Section 3(c) shall not reduce or extinguish any claims of the Fund against the
Distributor.
(d) Each Distributor shall promptly notify the Fund in writing of each such
Transfer by providing the Fund with the name and address of each such Assignee.
(e) A Distributor may direct the Fund to pay an Assignee's 12b-1 Portion
directly to such Assignee. In such event, the Distributor shall provide the Fund
with a monthly calculation of the amount of (i) the Distributor's 12b-1 Share,
and (ii) each Assignee's 12b-1 Portion, if any, for such month (the "Monthly
Calculation"). In such event, the Fund shall, upon receipt of such notice and
Monthly Calculation from the Distributor, make all payments required under such
distribution agreement directly to the Assignee in accordance with the
information provided in such notice and Monthly Calculation upon the same terms
and conditions as if such payments were to be paid to the Distributor.
(f) Alternatively, in connection with a Transfer, a Distributor may direct
the Fund to pay all of such Distributor's 12b-1 Share from time to time to a
depository or collection agent designated by any Assignee, which depository or
collection agent may be delegated the duty of dividing such Distributor's 12b-1
Share between the Assignee's 12b-1 Portion and the balance of the Distributor's
12b-1 Share (such balance, when distributed to the Distributor by the depository
or collection agent, the "Distributor's 12b-1 Portion"), in which case only the
Distributor's 12b-1 Portion may be subject to offsets or claims the Fund may
have against such Distributor.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in part for
the implementation by the Distributor of shareholder service arrangements with
respect to the Shares. The maximum service fee payable to any provider of such
shareholder service shall be twenty-five one-hundredths of one percent (0.25%)
per annum of the daily net assets of the Shares attributable to the customers of
such service provider. All such payments are the legal obligation of the Fund
and not of any Distributor or its designee.
(b) Pursuant to this Plan, the Distributor may enter into agreements
substantially in the form attached hereto as Exhibit A ("Service Agreements")
with such broker-dealers ("Dealers") as may be selected from time to time by the
Distributor for the provision of continuing shareholder services in connection
with Shares held by such Dealers' clients and customers ("Customers") who may
from time to time directly or beneficially own Shares. The personal continuing
shareholder services to be rendered by Dealers under the Service Agreements may
include, but shall not be limited to, some or all of the following: (i)
distributing sales literature; (ii) answering routine Customer inquiries
concerning the Fund and the Shares; (iii) assisting Customers in changing
dividend options, account designations and addresses, and in enrolling in any of
several retirement plans offered in connection with the purchase of Shares; (iv)
assisting in the establishment and maintenance of Customer accounts and records,
and in the processing of purchase and redemption transactions; (v) investing
dividends and capital gains distributions automatically in Shares; (vi)
performing sub-accounting; (vii) providing periodic statements showing a
Customer's shareholder account balance and the integration of such statements
with those of other transactions and balances in the Customer's account serviced
by such institution; (viii) forwarding applicable prospectuses, proxy
statements, reports and notices to Customers who hold Shares; and (ix) providing
such other information and administrative services as the Fund or the Customer
may reasonably request.
(c) The Distributor may also enter into Bank Shareholder Service Agreements
substantially in the form attached hereto as Exhibit B ("Bank Agreements") with
selected banks and financial institutions acting in an agency capacity for their
customers ("Banks"). Banks acting in such capacity will provide some or all of
the shareholder services to their customers as set forth in the Bank Agreements
from time to time.
I-2
<PAGE>
(d) The Distributor may also enter into Agency Pricing Agreements
substantially in the form attached hereto as Exhibit C ("Pricing Agreements")
with selected retirement plan service providers acting in an agency capacity for
their customers ("Retirement Plan Providers"). Retirement Plan Providers acting
in such capacity will provide some or all of the shareholder services to their
customers as set forth in the Pricing Agreements from time to time.
(e) The Distributor may also enter into Shareholder Service Agreements
substantially in the form attached hereto as Exhibit D ("Bank Trust Department
Agreements and Brokers for Bank Trust Department Agreements") with selected bank
trust departments and brokers for bank trust departments. Such bank trust
departments and brokers for bank trust departments will provide some or all of
the shareholder services to their customers as set forth in the Bank Trust
Department Agreements and Brokers for Bank Trust Department Agreements from time
to time.
SECTION 5. This Plan shall not take effect with respect to any Shares of
any Portfolio until (i) it has been approved, together with any related
agreements, by votes of the majority of both (a) the Board of Trustees of the
Fund, and (b) those trustees of the Fund who are not "interested persons" of the
Fund (as defined in the 1940 Act) and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Disinterested Trustees"), cast in person at a meeting called for the purpose of
voting on this Plan or such agreements, and (ii) the execution by the Fund and
A I M Distributors, Inc. of a Master Distribution Agreement in respect of the
Shares of such Portfolio.
SECTION 6. Unless sooner terminated pursuant to Section 8, this Plan shall
continue in effect until and thereafter shall continue in effect so
long as such continuance is specifically approved, at least annually, in the
manner provided for approval of this Plan in Section 5.
SECTION 7. Each Distributor shall provide the Fund's Board of Trustees and
the Board of Trustees shall review, at least quarterly, a written report of the
amounts expended for distribution of the Shares and the purposes for which such
expenditures were made.
SECTION 8. This Plan may be terminated with respect to the Shares of any
Portfolio at any time by vote of a majority of the Disinterested Trustees, or by
a vote of a majority of outstanding Shares of such Portfolio. Upon termination
of this Plan with respect to any or all such classes, the obligation of the Fund
to make payments pursuant to this Plan with respect to such classes shall
terminate, and the Fund shall not be required to make payments hereunder beyond
such termination date with respect to expenses incurred in connection with
Shares sold prior to such termination date, provided, in each case that each of
the requirements of a Complete Termination of the Plan in respect of such class,
as defined below, are met. A termination of this Plan with respect to any or all
Shares of any or all Portfolios shall not affect the obligation of the Fund to
withhold and pay to any Distributor contingent deferred sales changes to which
such distributor is entitled pursuant to any distribution agreement. For
purposes of this Section 8, a "Complete Termination" of this Plan in respect of
any Portfolio shall mean a termination of this Plan in respect of such
Portfolio, provided that: (i) the Disinterested Trustees of the Fund shall have
acted in good faith and shall have determined that such termination is in the
best interest of the Fund and the shareholders of such Portfolio; (ii) the Fund
does not alter the terms of the contingent deferred sales charges applicable to
Shares outstanding at the time of such termination; and (iii) unless the
applicable Distributor at the time of such termination was in material breach
under the distribution agreement in respect of such Portfolio, the Fund shall
not, in respect of such Portfolio, pay to any person or entity, other than such
Distributor or its designee, either the asset-based sales charge or the service
fee (or any similar fee) in respect of the Shares sold by such Distributor prior
to such termination.
SECTION 9. Any agreement related to this Plan shall be made in writing, and
shall provide:
(a) that such agreement may be terminated with respect to the Shares of any
or all Portfolios at any time, without payment of any penalty, by vote of a
majority of the Disinterested Trustees or by a vote of the
I-3
<PAGE>
majority of the outstanding Shares of such Portfolio, on not more than sixty
(60) days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its
assignment; provided, however, that, subject to the provisions of Section 8
hereof, if such agreement is terminated for any reason, the obligation of the
Fund to make payments of (i) the Distributor's 12b-1 Share in accordance with
the directions of the Distributor pursuant to Section 3(e) or (f) hereof if
there exist Assignees for all or any portion of such Distributor's 12b-1 Share,
and (ii) the remainder of such Distributor's 12b-1 Share to such Distributor if
there are no Assignees for such Distributor's Share, pursuant to such agreement
and this Plan will continue with respect to the Shares until such Shares are
redeemed or automatically converted into another class of shares of the Fund.
SECTION 10. This Plan may not be amended with respect to the shares of any
Portfolio to increase materially the amount of distribution expenses provided
for in Section 2 hereof unless such amendment is approved by a vote of at least
a "majority of the outstanding voting securities" (as defined in the 1940 Act)
of the Shares of such Portfolio, and no material amendment to the Plan with
respect to the shares of any Portfolio shall be made unless approved in the
manner provided for in Section 5 hereof.
<TABLE>
<S> <C>
[Name of Trust]
(on behalf of its Class B Shares)
Attest:-------------------------------------- By:-----------------------------------------
[Secretary] [President]
Effective as of .
</TABLE>
I-4
<PAGE>
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
[NAME OF TRUST]
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
ASSET-BASED MAXIMUM MAXIMUM
CLASS B SHARES PORTFOLIO SALES CHARGE SERVICE FEE AGGREGATE FEE
- - ------------------------------------------------------------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
THIS PLAN REFERS TO EXHIBITS A-D, WHICH RELATE TO AGREEMENTS THAT THE
DISTRIBUTOR MAY ENTER INTO WITH THIRD PARTIES. FORMS OF THESE AGREEMENTS HAVE
NOT BEEN INCLUDED WITH THIS PLAN.
I-5
<PAGE>
EXHIBIT J
GT GLOBAL FUNDS
12B-1 FEE SCHEDULE
<TABLE>
<CAPTION>
AMOUNT EXPENDED
PURSUANT TO 12B-1 PLAN
FOR THE MOST RECENTLY
COMPLETED FISCAL YEAR
--------------------------
COMPANY CLASS A CLASS B
- - -------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
G.T. GLOBAL GROWTH SERIES
GT Global Europe Growth Fund.......................................................... $ 1,554,410 $ 910,363
GT Global International Growth Fund................................................... $ 607,400 $ 625,899
GT Global Japan Growth Fund........................................................... $ 212,419 $ 317,148
GT Global New Pacific Growth Fund..................................................... $ 942,945 $ 1,119,211
GT Global Worldwide Growth Fund....................................................... $ 400,318 $ 496,417
GT Global America Small Cap Growth Fund............................................... $ 33,776 $ 148,043
GT Global America Mid Cap Growth Fund................................................. $ 958,593 $ 2,781,908
GT Global America Value Fund.......................................................... $ 17,701 $ 102,587
G.T. INVESTMENT FUNDS, INC.
GT Global Government Income Fund...................................................... $ 672,237 $ 1,392,802
GT Global High Income Fund............................................................ $ 605,133 $ 2,653,190
GT Global Strategic Income Fund....................................................... $ 560,886 $ 3,185,408
GT Global Health Care Fund............................................................ $ 2,327,631 $ 1,316,284
GT Global Infrastructure Fund......................................................... $ 218,486 $ 621,768
GT Global Natural Resources Fund...................................................... $ 291,788 $ 733,200
GT Global Telecommunications Fund..................................................... $ 5,105,842 $ 8,933,516
GT Global Financial Services Fund..................................................... $ 97,454 $ 280,650
GT Global Consumer Products and Services Fund......................................... $ 351,953 $ 941,035
GT Global Emerging Markets Fund....................................................... $ 977,082 $ 2,022,092
GT Global Latin America Growth Fund................................................... $ 1,011,259 $ 1,587,737
GT Global Growth & Income Fund........................................................ $ 994,519 $ 4,233,024
GT Global Developing Markets Fund..................................................... N/A* N/A*
G.T. INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund**............................................................... $ 0 $ 746,848
GT GLOBAL SERIES TRUST
GT Global New Dimension Fund.......................................................... $ 11,800 $ 27,856
</TABLE>
- - ------------------------
* Effective November 1, 1997, GT Global Developing Markets Fund became and
open-end fund. Prior thereto, the fund did not incur any distribution fees
pursuant to Rule 12b-1.
** The figures shown for payments under the Class A and Class B Plans reflect a
waiver of expenses by GT Global. Without the waiver, Dollar Fund would have
paid GT Global $422,808 and $995,797 under the Class A Plan and Class B
Plan, respectively.
J-1
<PAGE>
EXHIBIT K
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of this day of , 1998, between G.T. Investment Funds,
Inc., a Maryland corporation ("Corporation"), on behalf of each segregated
portfolio of assets ("series") of Corporation listed in Schedule A to this
Agreement ("Schedule A") (each an "Old Fund"), and , a Delaware
business trust ("Trust"), on behalf of each series of Trust listed in Schedule A
(each a "New Fund"). (Each Old Fund and New Fund is sometimes referred to herein
individually as a "Fund" and collectively as the "Funds"; Corporation and Trust
are sometimes referred to herein individually as an "Investment Company" and
collectively as the "Investment Companies.") All agreements, representations,
actions, and obligations described herein made or to be taken or undertaken by a
Fund are made and shall be taken or undertaken by Corporation on behalf of each
Old Fund and by Trust on behalf of each New Fund.
Each Old Fund intends to change its identity, form, and place of
organization--by converting from a series of a Maryland corporation to a series
of a Delaware business trust--through a reorganization within the meaning of
section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended ("Code").
Each Old Fund desires to accomplish such conversion by transferring all its
assets to the New Fund listed on Schedule A opposite its name (which is being
established solely for the purpose of acquiring such assets and continuing such
Old Fund's business) (each, a "corresponding New Fund") in exchange solely for
voting shares of beneficial interest in such New Fund ("New Fund Shares") and
such New Fund's assumption of such Old Fund's liabilities, followed by the
constructive distribution of the New Fund Shares pro rata to the holders of
shares of common stock of such Old Fund ("Old Fund Shares") in exchange
therefor, all on the terms and conditions set forth in this Agreement (which is
intended to be, and is adopted as, a "plan of reorganization" for federal income
tax purposes). All such transactions involving each Old Fund and its
corresponding New Fund are referred to herein as a "Reorganization." For
convenience, the balance of this Agreement will refer only to a single
Reorganization, one Old Fund, and one New Fund, but the terms and conditions of
this Agreement shall apply separately to each Reorganization. The consummation
of a Reorganization shall not be contingent on consummation of any other
Reorganization.
The Old Fund Shares currently are divided into three classes, designated
Class A, Class B, and Advisor Class shares ("Class A Old Fund Shares," "Class B
Old Fund Shares," and "Advisor Class Old Fund Shares," respectively). The New
Fund Shares will be divided into three classes, designated Class A, Class B, and
Advisor Class shares ("Class A New Fund Shares," "Class B New Fund Shares," and
"Advisor Class New Fund Shares," respectively). The classes of New Fund Shares
are substantially similar to the correspondingly designated classes of Old Fund
Shares. [THIS PARAGRAPH WILL INCLUDE REFERENCE TO EACH OLD FUND'S CLASS C SHARES
IN THE AGREEMENT INVOLVING GT GLOBAL SERIES TRUST ("SERIES TRUST AGREEMENT").]
In consideration of the mutual promises herein contained, the parties agree
as follows:
1. Plan of Conversion and Termination.
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to its corresponding New Fund.
New Fund agrees in exchange therefor--
(a) to issue and deliver to Old Fund the number of full and fractional
(rounded to the third decimal place) (i) Class A New Fund Shares equal to
the number of full and fractional Class A Old Fund Shares then outstanding,
(ii) Class B New Fund Shares equal to the number of full and fractional
Class B Old Fund Shares then outstanding, and (iii) Advisor Class New Fund
Shares equal to the number of full and fractional Advisor Class Old Fund
Shares then outstanding [THIS CLAUSE WILL INCLUDE REFERENCE TO THE FUNDS'
CLASS C SHARES IN THE SERIES TRUST AGREEMENT.]; and
K-1
<PAGE>
(b) to assume all of Old Fund's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 2.1).
1.2 The Assets shall include, 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 Old Fund's books, and other property owned by Old Fund at the
Effective Time (as defined in paragraph 2.1).
1.3 The Liabilities shall include all of Old Fund's liabilities, 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.
1.4 At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall constructively distribute
the New Fund Shares received by it pursuant to paragraph 1.1 to Old Fund's
shareholders of record, determined as of the Effective Time (collectively,
"Shareholders" and each individually, a "Shareholder"), in exchange for their
Old Fund Shares. Such distribution shall be accomplished by Trust's transfer
agent ("Transfer Agent") opening accounts on New Fund's share transfer books in
the Shareholders' names and transferring such New Fund Shares thereto. Each
Shareholder's account shall be credited with the respective PRO RATA number of
full and fractional (rounded to the third decimal place) New Fund Shares due
that Shareholder, by class (I.E., the account for a Shareholder of Class A Old
Fund Shares shall be credited with the respective pro rata number of Class A New
Fund Shares due that Shareholder, the account for a Shareholder of Class B Old
Fund Shares shall be credited with the respective pro rata number of Class B New
Fund Shares due that Shareholder, and the account for a Shareholder of Advisor
Class Old Fund Shares shall be credited with the respective PRO RATA number of
Advisor Class New Fund Shares due that Shareholder). [THE PRECEDING SENTENCE
WILL INCLUDE REFERENCE TO THE FUNDS' CLASS C SHARES IN THE SERIES TRUST
AGREEMENT.] All outstanding Old Fund Shares, including those represented by
certificates, shall simultaneously be canceled on Old Fund's share transfer
books. New Fund shall not issue certificates representing the New Fund Shares in
connection with the Reorganization. However, certificates representing Old Fund
Shares shall represent New Fund Shares after the Reorganization.
1.5 As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, Old Fund shall be terminated and any further
actions shall be taken in connection therewith as required by applicable law.
1.6 Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
1.7 Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
2. Closing.
2.1 The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Investment Companies' principal office
on May 29, 1998, 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 Investment Companies' close of business on the
date thereof or at such other time as the parties may agree ("Effective Time").
2.2 Corporation shall deliver to Trust at the Closing a schedule of the
Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by lot.
Old Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all
K-2
<PAGE>
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.
2.3 Corporation shall deliver to Trust at the Closing a list of the
Shareholders' names and addresses and the number of outstanding Old Fund Shares
owned by each Shareholder, all as of the Effective Time, certified by
Corporation's Secretary or Assistant Secretary. The Transfer Agent shall deliver
at the Closing a certificate as to the opening on New Fund's share transfer
books of accounts in the Shareholders' names. Trust shall issue and deliver a
confirmation to Corporation evidencing the New Fund Shares to be credited to Old
Fund at the Effective Time or provide evidence satisfactory to Corporation that
such shares have been credited to Old 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.
2.4 Each Investment Company 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.
3. Representations and Warranties.
3.1 Old Fund represents and warrants as follows:
3.1.1. Corporation is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland, and its
Articles of Incorporation are on file with that state's Department of
Assessments and Taxation;
3.1.2. Corporation is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and such registration is in full force and effect;
3.1.3. Old Fund is a duly established and designated series of
Corporation;
3.1.4. At the Closing, Old Fund will have good and marketable title to
the Assets and full right, power, and authority to sell, assign, transfer,
and deliver the Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, its corresponding New Fund will acquire
good and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the terms hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("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); it has no earnings and profits accumulated in any
taxable year in which the provisions of Subchapter M did not apply to it;
and it 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;
3.1.7. There is no plan or intention of Shareholders who individually
own 5% or more of an Old Fund Shares--and, to the best of Corporation's
management's knowledge, there is no plan or intention of the remaining
Shareholders--to redeem or otherwise dispose of any New Fund Shares to be
received by them in the Reorganization. That management does not anticipate
dispositions of those shares at the time of or soon after the Reorganization
to exceed the usual rate and frequency of redemptions of shares of Old Fund
as a series of an open-end investment company. Consequently,
K-3
<PAGE>
that management expects that the percentage of Shareholder interests, if
any, that will be disposed of as a result of or at the time of the
Reorganization will be DE MINIMIS;
3.1.8. The Liabilities were incurred by Old Fund in the ordinary course
of its business and are associated with the Assets;
3.1.9. Old Fund 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;
3.1.10. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested in
the stock and securities of any one issuer, and not more than 50% of the
value of such assets is invested in the stock and securities of five or
fewer issuers [THIS PARAGRAPH WILL NOT BE INCLUDED IN THE SERIES TRUST
AGREEMENT.];
3.1.11. As of the Effective Time, Old Fund will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Old Fund Shares;
3.1.12. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.13. Old Fund will be terminated as soon as reasonably practicable
after the Reorganization, but in all events within twelve months after the
Effective Time.
3.2 New Fund represents and warrants as follows:
3.2.1. 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 thereof;
3.2.2. At the Effective Time Trust will succeed to Corporation's
registration statement filed under the 1940 Act with the Securities and
Exchange Commission ("SEC") and thus will become duly registered as an
open-end management investment company thereunder;
3.2.3. Before the Effective Time, New Fund will be a duly established
and designated series of Trust;
3.2.4. New Fund has not commenced operations and will not commence
operations until after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to its
corresponding Old 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 New Fund, fully paid and
non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of the
Code and will meet all the requirements to qualify for treatment as a RIC
for its taxable year in which the Reorganization occurs;
3.2.9. New Fund has no plan or intention to issue additional New Fund
Shares following the Reorganization except for shares issued in the ordinary
course of its business as a series of an open-end investment company; nor
does New Fund have any plan or intention to redeem or otherwise reacquire
any New Fund Shares issued pursuant to the Reorganization, other than in the
ordinary
K-4
<PAGE>
course of that business or to the extent necessary to comply with its legal
obligation under section 22(e) of the 1940 Act;
3.2.10. New Fund will actively continue Old Fund's business in
substantially the same manner that Old Fund conducted that business
immediately before the Reorganization; and New Fund has no plan or intention
to sell or otherwise dispose of any of the Assets, except for dispositions
made in the ordinary course of its business and dispositions necessary to
maintain its qualification as a RIC, although in the ordinary course of its
business New Fund will continuously review its investment portfolio (as Old
Fund did before the Reorganization) to determine whether to retain or
dispose of particular stocks or securities, including those included in the
Assets;
3.2.11. There is no plan or intention for New Fund to be dissolved or
merged into another corporation or business trust or "fund" thereof (within
the meaning of section 851(g)(2) of the Code) following the Reorganization;
and
3.2.12. Immediately after the Reorganization, (a) not more than 25% of
the value of New Fund's total assets (excluding cash, cash items, and U.S.
government securities) will be invested in the stock and securities of any
one issuer and (b) not more than 50% of the value of such assets will be
invested in the stock and securities of five or fewer issuers. [THIS
PARAGRAPH WILL NOT BE INCLUDED IN THE SERIES TRUST AGREEMENT.]
3.3 Each Fund represents and warrants as follows:
3.3.1. The fair market value of the New Fund Shares received by each
Shareholder will be approximately equal to the fair market value of the Old
Fund Shares constructively surrendered in exchange therefor;
3.3.2. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
3.3.4. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets--except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization--and be subject to
the same liabilities that Old Fund held or was subject to immediately prior
to the Reorganization, plus any liabilities for expenses of the parties
incurred in connection with the Reorganization. Such excepted assets,
together with the amount of all redemptions and distributions (other than
regular, normal dividends) made by Old Fund immediately preceding the
Reorganization, will, in the aggregate, constitute less than 1% of its net
assets.
4. Conditions Precedent.
Each Fund's obligations hereunder shall be subject to (a) performance by the
other party of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other party
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1 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
K-5
<PAGE>
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 Investment Company
to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain
same would not involve a risk of a material adverse effect on the assets or
properties of either Fund, provided that either Investment Company may for
itself waive any of such conditions;
4.2 Corporation shall have called a meeting of Old Fund's shareholders
("Shareholders Meeting") to consider and act on this Agreement and the
Reorganization, and at such meeting those shareholders shall have approved
thereof in accordance with applicable law;
4.3 Each party shall have received an opinion from Kirkpatrick & Lockhart
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 addressed to such counsel) and the certificates delivered
pursuant to paragraph 2.4. Such opinion shall be substantially to the effect
that, based on the facts and assumptions stated therein and conditioned on
consummation of the Reorganization in accordance with this Agreement, for
federal income tax purposes:
4.3.1. The Reorganization will constitute a reorganization within the
meaning of section 368(a)(1)(F) of the Code, and each Fund will be "a party
to a reorganization" within the meaning of section 368(b) of the Code;
4.3.2. No gain or loss will be recognized to Old Fund on the transfer
of the Assets to New Fund in exchange solely for New Fund Shares and New
Fund's assumption of the Liabilities or on the subsequent distribution of
those shares to the Shareholders, in constructive exchange for their Old
Fund Shares, in liquidation of Old Fund;
4.3.3. No gain or loss will be recognized to New Fund on its receipt of
the Assets in exchange for New Fund Shares and its assumption of the
Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the Reorganization, and New
Fund's holding period for the Assets will include Old Fund's holding period
therefor;
4.3.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Old Fund Shares solely for New Fund Shares pursuant to
the Reorganization;
4.3.6. A Shareholder's basis for the New Fund Shares to be received by
it in the Reorganization will be the same as the basis for its Old Fund
Shares to be constructively surrendered in exchange for those New Fund
Shares, and its holding period for those New Fund Shares will include its
holding period for those Old Fund Shares, provided they are held as capital
assets by the Shareholder at the Effective Time; and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's taxable
year, Old Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by New Fund as if there had been no
Reorganization, and the part of Old Fund's taxable year before the
Reorganization will be included in New Fund's taxable year after the
Reorganization;
4.4 Prior to the Closing, Trust's trustees shall have authorized the
issuance of, and each New Fund shall have issued, one New Fund Share to
Corporation in consideration of the payment of $1.00 for the purpose of enabling
Corporation to elect Corporation's directors as Trust's trustees (to serve
without limit in time, except as they may resign or be removed by action of
Trust's trustees or shareholders), to ratify the selection of Trust's
independent certified public accountants, and to vote on the matters referred to
in paragraph 4.5; and
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<PAGE>
4.5 Trust (on behalf of and with respect to New Fund) shall have entered
into an investment management and administration agreement, a sub-advisory and
sub-administration agreement, distribution contracts, plans of distribution
pursuant to Rule 12b-1 under the 1940 Act, and such other agreements as are
necessary for each New Fund's operation as a series of an open-end investment
company. Each such agreement shall have been approved by Trust's trustees and,
to the extent required by law, by such of those trustees who are not "interested
persons" thereof (as defined in the 1940 Act) and by Corporation as the sole
shareholder of each New Fund.
At any time prior to the Closing, any of the foregoing conditions (except
that set forth in paragraph 4.2) may be waived by the directors/trustees of
either Investment Company if, in their judgment, such waiver will not have a
material adverse effect on the interests of Old Fund's shareholders.
5. Expenses.
Except as otherwise provided in subparagraph 3.3.3, 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.
6. Entire Agreement; Survival.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the Closing.
7. Amendment.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund'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.
8. Termination.
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
8.1 By either Fund (a) in the event of the other Fund'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 September 30, 1998; or
8.2 By the parties' mutual agreement.
Except as otherwise provided in paragraph 5, in the event of termination under
paragraphs 8.1(c) or 8.2, there shall be no liability for damages on the part of
either Fund--or the directors or trustees, as the case may be, or officers of
either Investment Company--to the other Fund.
9. Miscellaneous.
9.1 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.
9.2 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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<PAGE>
9.3 The execution and delivery of this Agreement have been authorized by the
Trust's trustees, and this Agreement has been executed and delivered by
authorized officers of 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 of any shareholder of Trust personally, but shall bind only the assets and
property of the New Fund, as provided in Trust's Agreement and Declaration of
Trust. [IN THE AGREEMENTS INVOLVING OLD TRUSTS, THIS PARAGRAPH WILL INCLUDE
SIMILAR EXCULPATORY LANGUAGE WITH RESPECT TO THE OLD TRUST AND ITS TRUSTEES,
SHAREHOLDERS AND OFFICERS.]
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>
<CAPTION>
<S> <C>
Attest: G.T. INVESTMENT FUNDS, INC.,
on behalf of each of its series
listed in Schedule A to this
Agreement
- - -------------------------------------------- By: -----------------------------------------
Title:
---------------------------------------
[ ],
Attest: on behalf of each of its series
listed in Schedule A to this
Agreement
- - -------------------------------------------- By: -----------------------------------------
Title:
---------------------------------------
</TABLE>
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<PAGE>
SCHEDULE A
SERIES OF G.T. INVESTMENT FUNDS, INC.
GT Global Health Care Fund
GT Global Telecommunications Fund
GT Global Financial Services Fund
GT Global Infrastructure Fund
GT Global Consumer Products and
Services Fund
GT Global Natural Resources Fund
GT Global Latin America Growth Fund
GT Global Emerging Markets Fund
GT Global Growth & Income Fund
GT Global Strategic Income Fund
GT Global High Income Fund
SERIES OF [ ]
[ ] Global Health Care Fund
[ ] Telecommunications Fund
[ ] Financial Services Fund
[ ] Infrastructure Fund
[ ] Consumer Products and
Services Fund
[ ] Natural Resources Fund
[ ] Latin America Growth Fund
[ ] Emerging Markets Fund
[ ] Growth & Income Fund
[ ] Strategic Income Fund
[ ] High Income Fund
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<PAGE>
EXHIBIT L
AGREEMENT AND DECLARATION OF TRUST
OF
[ ]
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as
of , 1998, among , , ,
, and , as Trustees, and each person who becomes a
Shareholder (as hereinafter defined) in accordance with the terms hereinafter
set forth.
WHEREAS, the parties hereto desire to create a business trust pursuant to
the Delaware Act (as hereinafter defined) for the investment and reinvestment of
funds contributed thereto;
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with the Office of the Secretary of State of Delaware and do hereby
declare that all money and property contributed to the trust hereunder shall be
held and managed in trust under this Agreement for the benefit of the
Shareholders (as hereinafter defined) as herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST
Section 1.1. NAME. The name of the business trust created hereby is
" ," and the Trustees may transact the Trust's affairs in that
name. The Trust shall constitute a Delaware business trust in accordance with
the Delaware Act, as hereinafter defined.
Section 1.2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "Agreement" means this Agreement and Declaration of Trust, as it may be
amended from time to time;
(b) "Bylaws" means the Bylaws referred to in Article IV, Section 4.1(e)
hereof, as from time to time amended;
(c) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Article II, Section 2.3
hereof;
(d) "Affiliated Person," "Company," "Person," and "Principal Underwriter"
shall have the meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretive releases of the Commission
thereunder. The term "Commission" shall have the meaning given it in the
1940 Act;
(e) "Covered Person" means every person who is, or has been, a Trustee or an
officer or employee of the Trust;
(f) The "Delaware Act" refers to the Delaware Business Trust Act, 12 Del.
C.Section 3801 et seq., as such Act may be amended from time to time;
(g) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Trust, Portfolio, or Class, as applicable;
(h) The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time;
(i) "Outstanding Shares" means Shares shown on the books of the Trust or its
transfer agent as then issued and outstanding, but does not include
Shares that have been repurchased or redeemed by the Trust;
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(j) "Portfolio" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.3 hereof;
(k) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(l) "Shares" means, as to a Portfolio or any Class thereof, the equal
proportionate transferable units of beneficial interest into which the
beneficial interest of such Portfolio of the Trust or such Class thereof
shall be divided and may include fractions of Shares as well as whole
Shares;
(m) The "Trust" means , the Delaware business trust established
hereby, and reference to the Trust, when applicable to one or more
Portfolios of the Trust, or Classes thereof, shall refer to any such
Portfolio, or Class thereof, as the case may be;
(n) The "Trustees" means the Persons who have signed this Agreement and
Declaration of Trust as trustees so long as they shall continue to serve
as trustees of the Trust in accordance with the terms hereof, and all
other Persons who may from time to time be duly appointed as Trustee in
accordance with the provisions of Section 3.4 hereof or elected as
Trustee in accordance with the provisions of Article V, Section 5.6
hereof, and reference herein to a Trustee or to the Trustees shall refer
to such Persons in their capacity as Trustees hereunder; and
(o) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the account of one or
more of the Trust, any Portfolio, any Class of a Portfolio, or the
Trustees on behalf of the Trust, a Portfolio, or a Class.
Section 1.3. PURPOSE. The purpose of the Trust is to conduct, operate and
carry on the business of a management investment company registered under the
1940 Act through one or more Portfolios investing primarily in securities and to
carry on such other business as the Trustees may from time to time determine
pursuant to their authority under this Agreement.
Section 1.4. CERTIFICATE OF TRUST. Immediately upon the execution of this
Agreement, the Trustees shall file a Certificate of Trust with respect to the
Trust in the Office of the Secretary of State of the State of Delaware pursuant
to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. SHARES OF BENEFICIAL INTEREST. The beneficial interest in the
Trust shall be divided into an unlimited number of Shares, with par value of
$0.01 per Share. The Trustees may, from time to time, authorize the division of
the Shares into one or more series, each of which constitutes a Portfolio, and
may further authorize the division of said Portfolios into one or more
additional, separate and distinct Classes in accordance with Article II, Section
2.3 of this Agreement. All Shares issued hereunder, including without
limitation, Shares issued in connection with a dividend or other distribution in
Shares or a split or reverse split of Shares, shall be fully paid and
nonassessable.
Section 2.2. ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
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<PAGE>
Section 2.3. ESTABLISHMENT OF PORTFOLIOS AND CLASSES. The Trust shall
consist of one or more separate and distinct Portfolios, each with an unlimited
number of Shares unless otherwise specified. The Trustees hereby establish and
designate the Portfolios listed on Schedule A attached hereto and made a part
hereof ("Schedule A"). Each additional Portfolio shall be established by the
adoption of a resolution by the Trustees and shall be effective upon the date
stated therein (or, if no such date is stated, upon the date of such adoption).
The Shares of each Portfolio shall have the relative rights and preferences
provided for herein and such rights and preferences as may be designated by the
Trustees. The Trust shall maintain separate and distinct records for each
Portfolio and shall hold and account for the assets belonging thereto separately
from the other Trust Property and the assets belonging to any other Portfolio.
Each Share of a Portfolio shall represent an equal beneficial interest in the
net assets belonging to that Portfolio, except to the extent of expenses
separately allocated to Classes thereof as permitted herein. A Portfolio may
have exclusive voting rights with respect to matters affecting only that
Portfolio.
The Trustees may divide the Shares of any Portfolio into two or more
Classes, each with an unlimited number of Shares unless otherwise specified.
Each Class so established and designated shall represent interests in the net
assets belonging to that Portfolio and shall have identical voting, dividend,
liquidation, and other rights and be subject to the same terms and conditions,
except that expenses (or certain assets as determined by the Trustees) allocated
to a Class may be borne solely by (or credited solely to) that Class and except
that each Class may have separate rights to convert to another Class, exchange
rights, and similar rights, each as determined by the Trustees and a Class may
have exclusive voting rights with respect to matters affecting only that Class.
The Trustees hereby establish for each Portfolio listed on Schedule A the
Classes listed thereon. Each additional Class for any or all Portfolios shall be
established by the adoption of a resolution by the Trustees and shall be
effective upon the date stated therein (or, if no such date is stated, upon the
date of such adoption).
Section 2.3.1. Subject to Section 6.1 of this Agreement, the Trustees shall
have full power and authority, in their sole discretion without obtaining any
prior authorization or vote of the Shareholders of any Portfolio, or Class
thereof, to establish and designate and to change in any manner any Portfolio of
Shares, or any Class or Classes thereof; to fix such preferences, voting powers,
rights, and privileges of any Portfolio, or Classes thereof, as the Trustees may
from time to time determine (but the Trustees may not change the preferences,
voting powers, rights, and privileges of Outstanding Shares in a manner
materially adverse to the Shareholders of such Shares without the prior approval
of the affected Shareholders); to divide or combine the Shares or any Portfolio,
or Classes thereof, into a greater or lesser number; to classify or reclassify
any issued Shares or any Portfolio, or Classes thereof, into one or more
Portfolios or Classes of Shares of a Portfolio; and to take such other action
with respect to the Shares as the Trustees may deem desirable. A Portfolio and
any Class thereof may issue any number of Shares but need not issue any shares.
At any time that there are no Shares outstanding of any particular Portfolio or
Class previously established and designated, the Trustees may abolish that
Portfolio or Class and the establishment and designation thereof.
Section 2.3.2. Unless the establishing resolution or any other resolution
adopted pursuant to this Section 2.3 otherwise provides, Shares of each
Portfolio or Class thereof established hereunder shall have the following
relative rights and preferences:
(a) Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or the
Trustees, whether of the same or other Portfolio (or Class).
(b) All consideration received by the Trust for the issue or sale of Shares
of a particular Portfolio, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange, or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall be held and accounted for separately from the
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<PAGE>
other assets of the Trust and of every other Portfolio and may be
referred to herein as "assets belonging to" that Portfolio. The assets
belonging to a particular Portfolio shall belong to that Portfolio for
all purposes, and to no other Portfolio, subject only to the rights of
creditors of that Portfolio. In addition, any assets, income, earnings,
profits, or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Portfolio
shall be allocated by the Trustees between and among one or more of the
Portfolios for all purposes and such assets, income, earnings, profits,
or funds, or payments and proceeds with respect thereto, shall be assets
belonging to that Portfolio. The Trustees may, in their sole discretion,
allocate certain assets to a particular Class, and such assets may be
referred to herein as "assets belonging to" that Class.
(c) A particular Portfolio (or Class) shall be charged with the liabilities
of that Portfolio (or Class) and all expenses, costs, charges and
reserves attributable to any particular Portfolio (or Class) shall be
borne by such Portfolio (or Class). Any general liabilities, expenses,
costs, charges or reserves to the Trust which are not readily
identifiable as belonging to any particular Portfolio (or Class) shall
be allocated and charged by the Trustees between or among any one or
more of the Portfolios (or Classes) in such manner as the Trustees in
their sole discretion deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Portfolios
(or Classes) for all purposes. Without limitation of the foregoing
provisions of this Subsection 2.3.2, the debts, liabilities, obligations
and expenses incurred, contracted for or otherwise existing with respect
to a particular Portfolio (or Class) shall be enforceable against the
assets of such Portfolio (or Class) only, and not against the assets of
the Trust generally. Notice of this contractual limitation on
inter-Portfolio liabilities shall be set forth in the Certificate of
Trust described in Section 1.4 of this Agreement (whether originally or
by amendment), and upon the giving of such notice in the Certificate of
Trust, the statutory provisions of Section 3804 of the Delaware Act
relating to limitations on inter-Portfolio liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
Certificate of Trust) shall become applicable to the Trust and each
Portfolio and Class thereof.
All references to Shares in this Agreement shall be deemed to be shares of
any or all Portfolios, or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Portfolio of
the Trust, and each Class thereof, except as the context otherwise requires.
Section 2.4. INVESTMENT IN THE TRUST. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees from time to time may authorize. At the
Trustees' sole discretion, such investments, subject to applicable law, may be
in the form of cash or securities in which the affected Portfolio is authorized
to invest, valued as provided in applicable law. Each Investment shall be
credited to the individual shareholder's account in the form of full and
fractional Shares of the Trust, in such Portfolio (or Class) as the purchaser
shall select.
Section 2.5. PERSONAL LIABILITY OF SHAREHOLDERS. As provided by applicable
law, no Shareholder of the Trust shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or any Portfolio (or Class) thereof. Neither
the Trust nor the Trustees, nor any officer, employee, or agent of the Trust
shall have any power to bind personally any Shareholder or, except as provided
herein or by applicable law, to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. The Shareholders shall be entitled, to the fullest extent permitted
by applicable law, to the same limitation on personal liability as is extended
under the Delaware General Corporation Law to stockholders of private
corporations for profit. Every note, bond, contract, or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust or to any
Portfolio (or Class) thereof shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Portfolios thereof or to one
or more Classes of a
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<PAGE>
Portfolio and its or their assets (but the omission of such a recitation shall
not operate to bind any Shareholder or Trustee of the Trust).
Section 2.6. ASSENT TO AGREEMENT. Every Shareholder, by virtue of having
purchased a Share, shall be held to have expressly assented to, and agreed to be
bound by, the terms hereof. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to rights of said decedent
under this Trust.
ARTICLE III
THE TRUSTEES
Section 3.1. MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Agreement. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any and all foreign jurisdictions and to do
all such other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Agreement, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Agreement shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court or other authority.
Section 3.2. INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein.
Section 3.3. TERMS OF OFFICE OF TRUSTEES. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as herein provided;
except (a) that any Trustee may resign his trusteeship or may retire by written
instrument signed by him and delivered to the other Trustees, which shall take
effect upon such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument, signed by
least two-thirds of the number of Trustees prior to such removal, specifying the
date when such removal shall become effective; (c) that any Trustee who has
died, become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of the Shareholders owning at least
two-thirds of the Outstanding Shares.
Section 3.4. VACANCIES AND APPOINTMENT OF TRUSTEES. A vacancy shall occur
in case of the declination to serve, death, resignation, retirement or removal
of a Trustee, or a Trustee is otherwise unable to serve, or an increase in the
number of Trustees. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certification of the other Trustees of such vacancy shall be
conclusive. In the case of an existing vacancy, the remaining Trustees may fill
such vacancy by appointment such other person as they in their discretion shall
see fit, or may leave such vacancy unfilled or may reduce the number of Trustees
to not less than two (2) Trustees. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office or by
resolution of the Trustees, duly adopted, which shall be recorded in the minutes
of a meeting of the Trustees, whereupon the appointment shall take effect.
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<PAGE>
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation, or
removal of a Trustee or an increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at the time or
after the expected vacancy occurs. As soon as any Trustee appointed pursuant to
this Section 3.4 shall have accepted this appointment in writing and agreed in
writing to be bound by the terms of the Agreement, the Trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
Section 3.5. TEMPORARY ABSENCE OF TRUSTEE. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.6. NUMBER OF TRUSTEES. The number of Trustees shall initially be
five (5), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees; provided, however, that the number of
Trustees shall in no event be less than two (2) nor more than twelve (12). The
Shareholders shall elect the Trustees (other than the initial Trustees) on such
dates as the Trustees may fix from time to time.
Section 3.7. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Trust Agreement.
Section 3.8. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust and
of each Portfolio thereof shall be held separate and apart from any assets now
or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustees. Legal title in all of the assets of the
Trust and the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held by, or in the name of the
Trust, or in the name of any Person as nominee. No Shareholder shall be deemed
to have a severable ownership in any individual asset of the Trust or of any
Portfolio, or Class thereof, or any right of partition or possession thereof,
but each Shareholder shall have, except as otherwise provided for herein, a
proportionate undivided beneficial interest in the Trust, Portfolio or Class
thereof. The Shares shall be personal property giving only the rights
specifically set forth in this Agreement or the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. Without
limiting the foregoing and subject to any applicable limitation in this
Agreement or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited
by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on, and lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment company,
and exercise all the powers necessary and appropriate to the conduct of
such operations;
(c) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging, or otherwise
subjecting as security the Trust Property; to
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endorse, guarantee, or undertake the performance of an obligation or
engagement of any other Person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either through
a principal underwriter in the manner hereafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution
of any kind;
(e) To adopt Bylaws not inconsistent with this Agreement providing for the
conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve such right to the shareholders; such
Bylaws shall be deemed incorporated and included in this Agreement;
(f) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange, or such other domestic or
foreign entities as custodians of any assets of the Trust subject to any
conditions set forth in this Agreement or in the Bylaws;
(h) To retain one or more transfer agents or Shareholder servicing agents,
or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any officers of
the Trust and to any investment adviser, manager, administrator,
custodian, underwriter, or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article VI, Section 6.1 hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies and powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustee shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any Trust,
whether in bearer, book entry, unregistered, or other negotiable form;
or either in the name of the Trust or of a Portfolio or Class thereof or
in the name of a custodian or a nominee or nominees, subject in either
case to proper safeguards according to the usual practice of Delaware
business trusts or investment companies;
(o) To establish separate and distinct Portfolios with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish
Classes of such Portfolios having relative rights, powers, and duties as
they may provide consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities, and expenses of the Trust to a particular
Portfolio or to apportion the same between or among two or more
Portfolios, provided that any liabilities or expenses incurred by a
particular Portfolio shall be payable solely out of the assets belonging
to that Portfolio as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contact, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust;
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(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income and of
capital gains and capital to Shareholders in the manner hereinafter
provided;
(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Portfolio or Class, and to require the
redemption of the Shares of any Shareholder whose investment is less
than such minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees, and to adopt a committee charter
providing for such responsibilities, membership (including Trustees,
officers, or other agents of the Trust therein) and any other
characteristics of said committees as the Trustees may deem proper.
Notwithstanding the provisions of this Article IV, and in addition to
such provisions or any other provision of this Agreement or of the
Bylaws, the Trustees may by resolution appoint a committee consisting of
less than the whole number of Trustees then in office, which committee
may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in
office, with respect to the institution, prosecution, dismissal,
settlement, review, or investigation of any action, suit, or proceeding
which shall be pending or threatened to be brought before any court,
administrative agency, or other adjudicatory body;
(v) To interpret the investment policies, practices or limitations of any
Portfolios;
(w) To establish a registered office and have a registered agent in the
State of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable, or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects, or powers.
The foregoing clauses shall be construed both as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Portfolio, and not an action in an
individual capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.2. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and VII, to apply to any such repurchase,
redemption, retirement, cancellation, or acquisition of Shares any funds or
property of the Trust, or the particular Portfolio or Class of the Trust, with
respect to which such Shares are issued.
Section 4.3. ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote of those present at a meeting duly called (including a meeting by
telephonic or other electronic means, unless the 1940 Act requires that a
particular action be taken only at a meeting of the Trustees in person) at which
a quorum is present or by unanimous written consent of the Trustees (or by
written consent of a majority of the Trustees if the President of the Trust
determines that such exceptional circumstances exist, and are of such urgency,
as to make unanimous written consent impossible or impractical, which
determination shall be
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conclusive and binding on all Trustees and not otherwise subject to challenge)
without a meeting. A majority of the Trustees shall constitute a quorum at any
meeting. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees. Notice of the time, date, and
place of all meetings of the Trustees shall be given to each Trustee by
telephone, facsimile, electronic-mail, or other electronic mechanism sent to his
or her home or business address at least twenty-four hours in advance of the
meeting or in person at another meeting of the Trustees or by written notice
mailed to his or her home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who attends the
meeting without objecting to the lack of notice or who signs a waiver of notice
either before or after the meeting. Subject to the requirements of the 1940 Act,
the Trustees by majority vote may delegate to any Trustee or Trustees authority
to approve particular matters or take particular actions on behalf of the Trust.
Any written consent or waiver may be provided and delivered to the Trust by any
means by which notice may be given to a Trustee.
Section 4.4. PRINCIPAL TRANSACTIONS. The Trustees may, on behalf of the
Trust, buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with any investment adviser, distributor, or transfer agent for the Trust or
with any affiliated person of such Person; and the Trust may employ any such
Person, or firm or Company in which such Person is an affiliated person, as
broker, legal counsel, registrar, investment adviser, distributor,
administrator, transfer agent, dividend disbursing agent, custodian, or in any
capacity upon customary terms, subject in all cases to applicable laws, rules,
and regulations and orders of regulatory authorities.
Section 4.5. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are authorized
to pay or cause to be paid out of the principal or income of the Trust or
Portfolio (or Class), or partly out of the principal and partly out of income,
and to charge or allocate the same to, between or among such one or more of the
Portfolios (or Classes) that may be established or designated pursuant to
Article II, Section 2.3, as they deem fair, all expenses, fees, charges, taxes,
and liabilities incurred or arising in connection with the Trust or Portfolio
(or Class), or in connection with the management thereof, including, but not
limited, to the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser and manager,
administrator, principal underwriter, auditors, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 4.6. TRUSTEE COMPENSATION. The Trustees as such shall be entitled
to reasonable compensation from the Trust. They may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, administrative, legal, accounting, investment
banking, underwriting, brokerage, or investment dealer or other services and the
payment for the same by the Trust.
ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Portfolio whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trustees
with such management, investment advisory, statistical, and research facilities
and services and such other facilities and services, if any, and all upon such
terms and conditions, as the Trustees may in their discretion determine.
The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
among the Trustees, the investment adviser, and the sub-adviser. Any
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references in this Agreement to the investment adviser shall be deemed to
include such sub-advisers, unless the context otherwise requires.
Section 5.2. OTHER SERVICE CONTRACTS. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator, custodian,
and similar servicers.
Section 5.3. PARTIES TO CONTRACT. Any contract of the character described
in Sections 5.1 and 5.2 of this Article V may be entered into with any
corporation, firm, partnership, trust, or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract.
Section 5.4. MISCELLANEOUS. The fact that (i) any of the Shareholders,
Trustees, or officers of the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter or distributor, or
agent of or for any Company or of or for any parent or affiliate of any Company,
with which an advisory or administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing, custodian, or other
agency contract may have been or may hereafter be made, or that any such
Company, or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that (ii) any Company with which an advisory or administration
contract or principal underwriter's or distributor's contract, or transfer,
shareholder servicing, or other agency contract may have been or may hereafter
be made also has an advisory or administration contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing,
custodial, or other agency contract with one or more other companies, or has
other business or interests shall not affect the validity of any such contract
or disqualify any Shareholder, Trustee, or officer of the Trust from voting upon
or executing the same or create any liability or accountability to the Trust or
its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
Section 6.1. VOTING POWERS. The Shareholders shall have power to vote only
with respect to (1) the election of Trustees as provided in Article III, Section
3.6, (2) the removal of a Trustee as provided in Article III, Section 3.3(d),
(3) any investment advisory contract to the extent required by the 1940 Act, (4)
termination of the Trust or a Portfolio or Class thereof as provided in Article
IX, Section 9.3, (5) amendment of this Agreement only as provided in Article IX,
Section 9.7, (6) the sale of all or substantially all the assets of the Trust or
of any Portfolio or Class, unless the primary purpose of such sale is to change
the Trust's domicile or form of organization or form of business trust; (7) the
merger or consolidation of the Trust or any Portfolio or Class with and into
another Company, unless (A) the primary purpose of such merger or consolidation
is to change the Trust's domicile or form of organization or form of business
trust, or (B) after giving effect to such merger or consolidation, based on the
number of Shares outstanding as of a date selected by the Trustees, the
Shareholders of the Trust or such Portfolio or Class will have a majority of the
outstanding shares of the surviving Company or Portfolio or Class, as the case
may be; and (8) such additional matters relating to the Trust as may be required
by law or as the Trustees may consider desirable.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may make any action required or permitted by law, this
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to vote of the Shareholders, all Shares shall be
voted together, except when required by applicable law or when the Trustees have
determined that the matter affects the interests of one or more Portfolios (or
Classes), then only the Shareholders of all such Portfolios (or Classes) shall
be entitled to vote thereon. Each whole Share shall be entitled to one vote as
to any matter on which it is entitled to vote, and each fractional Share shall
be entitled to a proportionate fractional vote. The vote necessary to approve
any such matter shall be set forth in this Agreement or in the Bylaws.
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ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1. DISTRIBUTIONS. The Trustees may from time to time declare and
pay dividends and make other distributions with respect to any Portfolio, or
Class thereof, which may be from income, capital gains, or capital. The amount
of such dividends or distributions and the payment of them and whether they are
in cash or any other Trust Property shall be wholly in the discretion of the
Trustees. Dividends and other distributions may be paid pursuant to a standing
resolution adopted once or more often as the Trustees determine. All dividends
and other distributions on Shares of a particular Portfolio or Class shall be
distributed pro rata to the Shareholders of that Portfolio or Class, as the case
may be, in proportion to the number of Shares of that Portfolio or Class they
held on the record date established for such payment, provided that such
dividends and other distributions on Shares of a Class shall appropriately
reflect expenses allocated to that Class. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash distribution payout plans,
or similar plans as the Trustees deem appropriate.
Section 7.2. REDEMPTIONS. Any holder of record of Shares of a particular
Portfolio, or Class thereof, shall have the right to require the Trust to redeem
his Shares, or any portion thereof, subject to such terms and conditions as are
set forth in the Bylaws or are prescribed by the Trustees.
Section 7.3. REDEMPTION OF SHARES BY TRUSTEES. Upon the terms and
conditions set forth in the Bylaws, the Trustees may call for the redemption of
the Shares of any Person or may refuse to transfer or issue Shares to any Person
to the extent that the same is necessary to comply with applicable law or
advisable to further the purposes of which the Trust is formed. To the extent
permitted by law, the Trustees may retain the proceeds of any redemption of
Shares required by them for payment of amounts due and owing by a Shareholder to
the Trust or any Portfolio or Class.
Section 7.4. REDEMPTION OF DE MINIMIS ACCOUNTS. If, at any time, when a
request for transfer or redemption of Shares of any Portfolio is received by the
Trust or its agent, the value of the Shares of such Portfolio in a Shareholder's
account is less than Five Hundred Dollars ($500.00), or such greater amount as
the Trustees in their discretion shall have determined in accordance with
Article IV, Section 4.1(t) hereof, after giving effect to such transfer or
redemption, the Trust may, at any time following such transfer or redemption and
upon giving thirty (30) days' notice to the Shareholder, cause the remaining
Shares of such Portfolio in such Shareholder's account to be redeemed at net
asset value and in accordance with such procedures as are set forth in the
Bylaws.
Section 7.5. SUSPENSION OF RIGHT OF REDEMPTION. Notwithstanding Section 2
of this Article, the Trustees may postpone payment of the redemption price and
suspend the Shareholders' right to require any Portfolio or Class to redeem
Shares during any period when and to the extent permissible under the 1940 Act.
Any such postponement and suspension shall take effect at the time the Trustees
shall specify, but not later than the close of business on the business day next
following the declaration thereof, and shall continue until the Trustees declare
the end thereof. If the right of redemption is suspended, a Shareholder may
either withdraw his or her request for redemption or receive payment based on
the net asset value per Share next determined after the suspension terminates.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1. LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person for any act, omission, or
obligation of the Trust or any Trustee; provided, however, that nothing
contained herein or in the Delaware Act shall protect any Trustee against any
liability to the Trust or to Shareholders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
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Section 8.2. INDEMNIFICATION OF COVERED PERSONS. Every Covered Person
shall be indemnified by the Trust to the fullest extent permitted by the
Delaware Act and other applicable law.
Section 8.3. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former shareholder of the Trust shall be held to be personally liable solely by
reason of his being or having been a Shareholder of the Trust or any Portfolio
or Class and not because of his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors, administrators, or
other legal representatives, or, in the case of a corporation or other entity,
its corporate or general successor) shall be entitled, out of the assets
belonging to the applicable Portfolio (or Class), to be held harmless from and
indemnified against all loss and expense arising from such liability in
accordance with the Bylaws and applicable law. The Trust, on behalf of the
affected Portfolio (or Class), shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder for any act or obligation
of that Portfolio (or Class).
ARTICLE IX
MISCELLANEOUS
Section 9.1. TRUST NOT A PARTNERSHIP; TAXATION. It is hereby expressly
declared that a trust and not a partnership is created hereby. No Trustee
hereunder shall have any power to bind personally either the Trust's officers or
any Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Portfolio or Class or, if the Trustees shall have yet to have
established any separate Portfolio or Class, of the Trust for payment under such
credit, contract, or claim; and neither the Shareholders nor the Trustee, nor
any of their agents, whether past, present, or future, shall be personally
liable therefor.
It is intended that the Trust, or each Portfolio if there is more than one
Portfolio, be classified for income tax purposes as an association taxable as a
corporation, and the Trustees shall do all things that they, in their sole
discretion, determine are necessary to achieve that objective, including (if
they so determine) electing such classification on Internal Revenue Form 8832.
Any Trustee is hereby authorized to sign such form on behalf of the Trust or any
Portfolio, and the Trustees may delegate such authority to any executive
officer(s) of any Portfolio's investment adviser. The Trustees, in their sole
discretion and without the vote or consent of the Shareholders, may amend this
Agreement to ensure that this objective is achieved.
Section 9.2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretion hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
VIII hereof and to Section 9.1 of this Article IX, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Agreement, and subject to the provisions of Article VIII hereof and Section
9.1 of this Article IX, shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
obtained.
Section 9.3. TERMINATION OF TRUST OR PORTFOLIO OR CLASS. (a) The Trust or
any Portfolio (or Class) may be terminated by (1) a Majority Shareholder Vote of
the Trust or the affected Portfolio (or Class), respectively, or (2) if there
are fewer than 100 Shareholders of record of the Trust or of such terminating
Portfolio (or Class), the Trustees pursuant to written notice to the
Shareholders of the Trust or the affected Portfolio (or Class).
(b) On termination of the Trust or any Portfolio (or Class) pursuant to
paragraph (a),
(1) the Trust or that Portfolio (or Class) thereafter shall carry on no
business except for the purpose of winding up its affairs,
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(2) the Trustees shall proceed to wind up the affairs of the Trust or
that Portfolio (or Class), and all powers of the Trustees under this
Agreement with respect thereto shall continue until such affairs have been
wound up, including the powers to fulfill or discharge the contracts of the
Trust or that Portfolio (or Class), collect its assets, sell, convey,
assign, exchange, or otherwise dispose of all or any part of its remaining
assets to one or more persons at public or private sale for consideration
that may consist in whole or in part of cash, securities, or other property
of any kind, discharge or pay its liabilities, and do all other acts
appropriate to liquidate its business, and
(3) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and refunding
agreements as they deem necessary for their protection, the Trustees shall
distribute the remaining assets ratably among the Shareholders of the Trust
or that Portfolio (or Class); however, the payment to any particular Class
of that Portfolio may be reduced by any fees, expenses, or charges allocated
to that Class.
(c) On completion of distribution of the remaining assets pursuant to paragraph
(b), the Trust or the affected Portfolio (or Class) shall terminate and the
Trustees and the Trust shall be discharged from all further liabilities and
duties hereunder with respect thereto and the rights and interests of all
parties therein shall be canceled and discharged. On termination of the
Trust, following completion of winding up of its business, the Trustees
shall cause a Certificate of Cancellation of the Trust's Certificate of
Trust to be filed in accordance with the Delaware Act, which Certificate may
be signed by any one Trustee.
Section 9.4. SALE OF ASSETS; MERGER AND CONSOLIDATION. Subject to Section
6.1 of this Agreement, the Trustees may cause (i) the Trust or one or more of
its Portfolios (or Classes) to the extent consistent with applicable law to sell
all or substantially all of its assets, or be merged into or consolidated with
another Trust or Company, (ii) the Shares of the Trust or any Portfolio (or
Class) to be converted into beneficial interests in another business trust (or
series thereof) created pursuant to this Section 9.4 of Article IX, or (iii) the
Shares to be exchanged under or pursuant to any state or federal statute to the
extent permitted by law. In all respects not governed by statute or applicable
law, the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation including
the power to create one or more separate business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the trust or any
Portfolio (or Class) into beneficial interests in such separate business trust
or trusts (or series or class thereof).
Section 9.5. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Agreement supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. In this Agreement or in any
such amendment or supplemental Agreement, references to this Agreement, and all
expressions like "herein," "hereof," and "hereunder," shall be deemed to refer
to this Agreement as amended or affected by any such supplemental Agreement. All
expressions like "his," "he," and "him," shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Agreement, rather than the headings, shall control. This Agreement may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 9.6. GOVERNING LAW. The Trust and this Agreement, and the rights,
obligations and remedies of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
other laws of the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees, the Shareholders or this Trust Agreement
(a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Act) pertaining to trusts which relate to or regulate (i) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents, or
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employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding, or disposition of
real or personal property, (iv) fees or other sums payable to trustees,
officers, agents, or employees of a trust, (v) the allocation of receipts and
expenditures to income or principal, (vi) restrictions or limitations on the
permissible nature, amount, or concentration of trust investments or
requirements relating to the titling, storage, or other manner of holding of
trust assets, or (vii) the establishment of fiduciary or other standards or
responsibilities or limitations on the indemnification, acts or powers of
trustees or other Persons, which are inconsistent with the limitations of
liabilities or authorities and powers of the Trustees or officers of the Trust
set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business trust," and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions, provided, however, that the exercise of any
such power, privilege, or action shall not otherwise violate applicable law.
Section 9.7. AMENDMENTS. Except as specifically provided herein, the
Trustees may, without any Shareholder vote, amend this Agreement by making an
amendment, a Agreement supplemental hereto, or an amended and restated trust
instrument. Any amendment submitted to Shareholders that the Trustees determine
would affect the Shareholders of only one or more Portfolios (or Classes
thereof) shall be authorized by vote of only the Shareholders of that Portfolio
(or Class), and no vote shall be required of Shareholders of any Portfolio (or
Class) that is not affected. Notwithstanding anything else herein to the
contrary, any amendment to Article IX that would have the effect of reducing the
indemnification provided thereby to Covered Persons or to Shareholders or former
Shareholders, and any repeal or amendment of this sentence shall each require
the affirmative vote of Shareholders owning at least two-thirds of the
Outstanding Shares entitled to vote thereon. A certification signed by a
majority of the Trustees setting forth an amendment to this Agreement and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid, or a copy of this Agreement, as amended, executed by a majority of
the Trustees, shall be conclusive evidence of such amendment when lodged among
the records of the Trust.
Section 9.8. PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Agreement are severable, and the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with applicable law the
conflicting provision shall be deemed never to have constituted a part of this
Agreement; provided, however, that such determination shall not affect any of
the remaining provisions of this Agreement or render invalid or improper any
action taken or omitted prior to such determination. If any provision of this
Agreement shall be held invalid or enforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
Section 9.9. SHAREHOLDERS' RIGHT TO INSPECT SHAREHOLDER LIST. One or more
Persons who together and for at least six months have been Shareholders of at
least five percent (5%) of the outstanding shares of any Class may present to
any officer or resident agent of the Trust a written request for a list of its
Shareholders. Within twenty (20) days after such request is made, the Trust
shall prepare and have available on file at its principal office a list verified
under oath by one of its officers or its transfer agent or registrar which sets
forth the name and address of each Shareholder and the number of Shares of each
Class which the Shareholder holds. The rights provided for herein shall not
extend to any Person who is a beneficial owner but not also a record owner of
Shares of the Trust.
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IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust,
have executed this instrument this day of , 1998.
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SCHEDULE A
[Name of Trust] shall be divided into the following Portfolios, each of
which shall have three Classes (Class A, Class B, and Advisor Class):
Date: [ ]
L-16
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GTGPX804
