<PAGE>
INVESCO ADVISOR FUNDS, INC.
[LOGO OF INVESCO APPEARS HERE] JUNE 2, 1997
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Dear INVESCO Advisor Funds Shareholder:
Enclosed is a proxy statement for the July 9, 1997 special meeting of
shareholders of all Series ("Portfolios") of INVESCO Advisor Funds, Inc.
("Company"). The recently completed merger of INVESCO Group Services, Inc., a
subsidiary of INVESCO PLC, and A I M Management Group Inc. ("AIM Group") has
created an organization with over $160 billion in assets under management. As
one of the largest independent investment companies in the world, we are now
positioned to offer fund shareholders additional investment options and
improved services.
To facilitate this process, the Company's Board of Directors ("Directors")
has determined that it would be advisable to consolidate the Company's
investment advisory, marketing, administration, fund accounting and
distribution services with those of The AIM Family of Funds(R) registered
investment companies ("AIM Funds"). To effect this consolidation, it is
necessary for shareholders to approve a new investment advisory agreement with
A I M Advisors, Inc. ("AIM"), to approve the reflection of this change in five
subadvisory arrangements, to approve a new Sub-Advisory Agreement for INVESCO
Advisor International Value Portfolio, and to elect the AIM Fund directors as
directors of the Company. The sub-advisers who manage five of the Portfolios
will not change. However, AIM will directly advise INVESCO Advisor Cash
Management Portfolio, without a sub-adviser. Also INVESCO Global Asset
Management Limited will become Sub-Adviser to INVESCO Advisor International
Value Portfolio, but the individuals responsible for managing this Portfolio
will not change. Management believes that the proposed consolidation has
potential to result, over time, in reduced expense ratios for the Portfolios
and expanded investment options and services for shareholders.
If these matters are approved by shareholders, the Company's Directors have
also approved a change in the Company's name to AIM Advisor Funds, Inc., with
corresponding changes to the names of each Portfolio. The Directors have also
approved the use for the Company of other service providers that currently are
used by the AIM Funds. These include the provision by AIM and its affiliates
of distribution, operating and transfer agent services, as well as the use of
State Street Bank and Trust Company as custodian.
The important factors for shareholders are:
. the consolidation will cause no change in the way in which the
Portfolios' investments are managed, or in the investment objectives or
policies of the Portfolios.
. the consolidation will result in no change in the contractual level of
the Company's expenses, although it is hoped that the Portfolios' expense
ratios will decline since AIM's greater distribution capabilities provide
the potential for asset growth while certain expenses will remain
constant or decline.
. the range of services and investment opportunities for shareholders will
increase.
THE DIRECTORS BELIEVE THAT THESE PROPOSED CHANGES, AS WELL AS THE PROPOSED
AMENDED INVESTMENT RESTRICTIONS, ARE IN THE BEST INTERESTS OF SHAREHOLDERS AND
RECOMMEND THAT SHAREHOLDERS VOTE FOR THEM. THEREFORE, WE URGE YOU TO READ THE
ENCLOSED MATERIALS AND VOTE PROMPTLY. SHOULD YOU HAVE ANY QUESTIONS, PLEASE
FEEL FREE TO CALL OUR REPRESENTATIVES AT 1-800-972-9030. THEY WILL BE HAPPY TO
ANSWER ANY QUESTIONS THAT YOU MIGHT HAVE.
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YOUR VOTE IS IMPORTANT. THE MATTERS WE ARE SUBMITTING FOR YOUR CONSIDERATION
ARE SIGNIFICANT TO THE COMPANY, THE PORTFOLIOS AND TO YOU AS A SHAREHOLDER. IF
WE DO NOT RECEIVE SUFFICIENT VOTES TO ACT ON THESE PROPOSALS, WE MAY HAVE TO
SEND ADDITIONAL MAILINGS OR CANVASS SHAREHOLDERS BY TELEPHONE. THEREFORE,
PLEASE TAKE THE TIME TO READ THE PROXY STATEMENT, TO CAST YOUR VOTE ON THE
ENCLOSED PROXY CARD, AND TO RETURN THE EXECUTED PROXY CARD IN THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
Sincerely,
/s/ Hubert Harris, Jr.
Hubert Harris, Jr.
President
INVESCO ADVISOR FUNDS, INC.
INVESCO Advisor Equity Portfolio
INVESCO Advisor Flex Portfolio
INVESCO Advisor Income Portfolio
INVESCO Advisor International Value Portfolio
INVESCO Advisor MultiFlex Portfolio
INVESCO Advisor Real Estate Portfolio
INVESCO Advisor Cash Management Portfolio
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INVESCO ADVISOR FUNDS, INC.
1315 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
[LOGO OF INVESCO APPEARS HERE]
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 9, 1997
Notice is hereby given that a special meeting of shareholders ("Meeting") of
INVESCO Advisor Equity Portfolio ("Equity Portfolio"), INVESCO Advisor Flex
Portfolio ("Flex Portfolio"), INVESCO Advisor Income Portfolio ("Income
Portfolio"), INVESCO Advisor International Value Portfolio ("International
Value Portfolio"), INVESCO Advisor MultiFlex Portfolio ("MultiFlex
Portfolio"), INVESCO Advisor Real Estate Portfolio ("Real Estate Portfolio")
and INVESCO Advisor Cash Management Portfolio ("Cash Management Portfolio")
(collectively, "Portfolios") of INVESCO Advisor Funds, Inc. ("Company") will
be held at 1355 Peachtree Street, N.E., Suite 200, Atlanta, Georgia 30309, on
Wednesday, July 9, 1997, at 3:00 p.m., Eastern Time, for the following
purposes:
1. To approve or disapprove a new Investment Advisory Agreement with A I M
Advisors, Inc. ("AIM") (SHAREHOLDERS OF ALL PORTFOLIOS);
2. For the Portfolios indicated, to approve or disapprove a new Sub-Advisory
Agreement for each such Portfolio to reflect the new investment adviser:
A. Sub-Advisory Agreement between AIM and INVESCO Capital Management, Inc.
("ICM") (FOR SHAREHOLDERS OF EQUITY PORTFOLIO, FLEX PORTFOLIO AND INCOME
PORTFOLIO ONLY);
B. Sub-Advisory Agreement between AIM and INVESCO Management & Research,
Inc. ("IMR") (FOR SHAREHOLDERS OF MULTIFLEX PORTFOLIO ONLY);
C. Sub-Advisory Agreement between AIM and INVESCO Realty Advisors, Inc.
("IRA") (FOR SHAREHOLDERS OF REAL ESTATE PORTFOLIO ONLY);
3. To approve a new Sub-Advisory Agreement with INVESCO Global Asset
Management Limited (SHAREHOLDERS OF INTERNATIONAL VALUE PORTFOLIO ONLY);
4. To elect a new Board of Directors for the Company (SHAREHOLDERS OF ALL
PORTFOLIOS);
5. To approve amended investment restrictions (SHAREHOLDERS OF ALL
PORTFOLIOS);
6. To transact such other business as may properly come before the Meeting or
any adjournment(s) thereof.
The Board of Directors of the Company has fixed the close of business on
April 30, 1997, as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Meeting or at any adjournment(s)
thereof.
A complete list of shareholders of the Portfolios entitled to vote at the
Meeting will be available and open to the examination of any shareholder of
the Portfolios for any purpose germane to the Meeting during ordinary business
hours after May 27, 1997, at the offices of the Company, 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309.
You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting in person are requested to complete, date and
sign the enclosed form of proxy and return it promptly in the enclosed
envelope that requires NO postage if mailed in the United States. The enclosed
proxy is being solicited on behalf of the Board of Directors of the Company.
<PAGE>
IMPORTANT
Please mark, sign, date and return the enclosed proxy in the accompanying
envelope as soon as possible in order to ensure a full representation at the
Meeting.
The Meeting will have to be adjourned without conducting any business if
less than one-third of the eligible shares is represented, and the Company
will have to continue to solicit votes until a quorum is obtained. The Meeting
also may be adjourned, if necessary, to continue to solicit votes if less than
the required shareholder vote has been obtained to elect the specified number
of Directors and to approve Proposals 1, 2.A, 2.B, 2.C , 3 and 5.
Your vote, then, could be critical in allowing the Company to hold the
Meeting as scheduled. By marking, signing, and promptly returning the enclosed
proxy, you may eliminate the need for additional solicitation. Your
cooperation is appreciated.
By Order of the Board of Directors
/s/ Tony D. Green
Tony D. Green
Secretary
Atlanta, Georgia
Dated: June 2, 1997
<PAGE>
INVESCO ADVISOR FUNDS, INC.
JUNE 2, 1997
[LOGO OF INVESCO APPEARS HERE]
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INVESCO ADVISOR FUNDS, INC.
1315 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 9, 1997
INTRODUCTION
The enclosed proxy is being solicited by the Board of Directors ("Board" or
"Directors") of INVESCO Advisor Funds, Inc. ("Company") on behalf of INVESCO
Advisor Equity Portfolio ("Equity Portfolio"), INVESCO Advisor Flex Portfolio
("Flex Portfolio"), INVESCO Advisor Income Portfolio ("Income Portfolio"),
INVESCO Advisor International Value Portfolio ("International Value
Portfolio"), INVESCO Advisor MultiFlex Portfolio ("MultiFlex Portfolio"),
INVESCO Advisor Real Estate Portfolio ("Real Estate Portfolio") and INVESCO
Advisor Cash Management Portfolio ("Cash Management Portfolio") (collectively,
"Portfolios"), the seven series of the Company, for use in connection with the
special meeting of shareholders of the Company ("Meeting") to be held at 1355
Peachtree Street, N.E., Suite 200, Atlanta, Georgia 30309, on Wednesday, July
9, 1997, at 3:00 p.m., Eastern Time, and at any adjournment(s) thereof for the
purposes set forth in the foregoing notice. THE COMPANY'S ANNUAL REPORT,
INCLUDING FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, IS AVAILABLE WITHOUT CHARGE UPON REQUEST FROM TONY D.
GREEN, SECRETARY OF THE COMPANY, AT 1355 PEACHTREE STREET, N.E., SUITE 200,
ATLANTA, GEORGIA 30309 (TELEPHONE NUMBER 1-800-972-9030). The approximate
mailing date of proxies and the Proxy Statement is June 2, 1997.
The primary purpose of the Meeting is to allow shareholders to consider
several proposals which are necessary in order to implement a proposed
consolidation of services for the Company with those of The AIM Family of
Funds ("AIM Funds"). As more fully described below, the Company's Directors
and its management believe that this consolidation can benefit the Portfolios
and their shareholders. Specifically, shareholders are being asked to consider
a new Investment Advisory Agreement for the Company and its Portfolios and new
Sub-Advisory Agreements for five of the Portfolios, and to elect a new Board
of Directors. As explained further below, A I M Advisors, Inc. ("AIM") will
directly advise Cash Management Portfolio, with no subadviser. Additionally,
INVESCO Global Asset Management Limited ("IGAM"), a wholly owned subsidiary of
AMVESCAP PLC ("AMVESCAP"), will act as Sub-Adviser to International Value
Portfolio under substantially the same terms as under the current Sub-Advisory
Agreement for that Portfolio. There will be no substantive changes in the
terms of the Investment Advisory Agreement or of the Sub-Advisory Agreements
for the five other Portfolios, other than the identity of the investment
adviser, the effective dates, and the reservation by AIM of rights to the
"AIM" name. The identities of the Sub-Advisers for these Portfolios, and the
services they provide, will not change. Finally, shareholders will be asked to
approve changes to certain fundamental policies to permit greater flexibility
in managing investment risks in the Portfolios.
(SHAREHOLDERS SHOULD NOTE THAT AMVESCAP WAS PREVIOUSLY KNOWN AS "INVESCO
PLC" ("INVESCO"). AS DESCRIBED FURTHER HEREIN, A MERGER WAS CONCLUDED ON
FEBRUARY 28, 1997 BETWEEN THE INVESCO ORGANIZATION AND THE AIM ORGANIZATION.
THE TERM "INVESCO" HEREIN REFERS TO THE PRE-MERGER INVESCO AND, AS THE CONTEXT
REQUIRES, ITS PRE-MERGER AFFILIATES.)
1
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The following table indicates the Portfolios being solicited with respect to
the proposals being presented at the Meeting:
<TABLE>
<C> <S> <C>
PROPOSALS PORTFOLIO
1. Approval of new Investment Advisory All seven Portfolios
Agreement between the Company and AIM
2.A. Approval of new Sub-Advisory Equity Portfolio, Flex Portfolio,
Agreement between AIM and INVESCO Income Portfolio
Capital Management, Inc. ("ICM")
2.B. Approval of new Sub-Advisory MultiFlex Portfolio
Agreement between AIM and INVESCO
Management and Research, Inc. ("IMR")
2.C. Approval of new Sub-Advisory Real Estate Portfolio
Agreement between AIM and INVESCO
Realty Advisors, Inc. ("IRA")
3. Approval of new Sub-Advisory International Value Portfolio
Agreement between AIM and IGAM
4. Election of Directors All seven Portfolios
5. Approval of amended invest- All seven Portfolios
ment restrictions
</TABLE>
If the enclosed form of proxy is duly executed and returned in time to be
voted at the Meeting, and not subsequently revoked, all shares represented by
the proxy will be voted in accordance with the instructions marked thereon. If
no instructions are given, such shares will be voted FOR the nominees for
Director hereinafter listed and FOR Proposals 1, 2.A, 2.B, 2.C, 3 and 5. One
third of the outstanding shares of the Company entitled to vote, represented
in person or by proxy, will constitute a quorum at the Meeting.
Shares held by shareholders present in person or represented by proxy at the
Meeting will be counted both for the purpose of determining the presence of a
quorum and for calculating the votes cast on the issues before the Meeting. An
abstention by a shareholder, either by proxy or by vote in person at the
Meeting, has the same effect as a negative vote. Shares held by a broker or
other fiduciary as record owner for the account of the beneficial owner are
counted toward the required quorum if the beneficial owner has executed and
timely delivered the necessary instructions for the broker to vote the shares
or if the broker has and exercises discretionary voting power. Where the
broker or fiduciary does not receive instructions from the beneficial owner
and does not have discretionary voting power as to one or more issues before
the Meeting, but grants a proxy for or votes such shares, they will be counted
toward the required quorum but will have the effect of a negative vote on any
proposals on which the broker or financial institution does not vote.
Because certain of the proposals being submitted for a vote of the
shareholders of each Portfolio are identical, the Board determined to combine
the proxy materials for the Portfolios in order to reduce the cost of
preparing, printing and mailing the proxy materials.
Execution of the enclosed proxy card will not affect a shareholder's right
to attend the Meeting and vote in person, and a shareholder giving a proxy has
the power to revoke it (by written notice to the Company, attention Tony D.
Green, at 1355 Peachtree Street, N.E., Suite 200, Atlanta, Georgia 30309,
execution of a subsequent proxy card, or oral revocation at the Meeting) at
any time before it is exercised.
2
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Shareholders of record of the Portfolios at the close of business on April
30, 1997 (the "Record Date"), are entitled to vote at the Meeting, including
any adjournment(s) thereof, and are entitled to one vote for each share, and
corresponding fractional votes for fractional shares, on each matter to be
acted upon at the Meeting. On the Record Date, 26,089,887.384 shares of the
Company's common stock, $.001 par value per share, were outstanding, including
1,678,220.328 shares of Equity Portfolio, 7,544,215.857 shares of Flex
Portfolio, 512,973.992 shares of Income Portfolio, 1,278,187.275 shares of
International Value Portfolio, 5,596,588.750 shares of MultiFlex Portfolio,
512,361.092 shares of Real Estate Portfolio and 8,967,340.090 shares of Cash
Management Portfolio. Information concerning ownership of shares of the
Portfolios is contained in Annex H.
In addition to the solicitation of proxies by use of the mail, proxies may
be solicited by officers of the Company, and by officers and employees of
INVESCO Services, Inc. ("ISI"), personally or by telephone or telegraph,
without special compensation. In addition, Shareholder Communications
Corporation ("SCC") will be retained to assist in the solicitation of proxies.
As the meeting date approaches, certain shareholders whose votes the Company
has not yet received may receive telephone calls from representatives of SCC
requesting that they authorize SCC, by telephonic or electronically
transmitted instructions, to execute proxy cards on their behalf. Telephone
authorizations will be recorded in accordance with the procedures set forth
below. ISI believes that these procedures are reasonably designed to ensure
that the identity of the shareholder casting the vote and the voting
instructions of the shareholder are accurately determined.
SCC has received an opinion of Maryland counsel that addresses the validity,
under the laws of the State of Maryland, of authorization given orally to
execute a proxy. The opinion given by Maryland counsel concludes that a
Maryland court would find that there is no Maryland law or public policy
against the acceptance of proxies signed by an orally-authorized agent,
provided it adheres to the procedures set forth below.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, social
security or employer identification number, title (if the person giving the
proxy is authorized to act on behalf of an entity, such as a corporation), and
the number of shares owned, and to confirm that the shareholder has received
the Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Company, the SCC representative has the
responsibility to explain the process, read the proposals listed on the proxy
card, and ask for the shareholder's instructions on each proposal. Although he
or she is permitted to answer questions about the process, the SCC
representative is not permitted to recommend to the shareholder how to vote,
other than to read any recommendation set forth in the proxy statement. SCC
will record the shareholder's instructions on the card. Within 72 hours, SCC
will send the shareholder a letter or mailgram confirming the shareholder's
vote and asking the shareholder to call SCC immediately if the shareholder's
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Proxy Statement or attend in person. Any proxy given
by a shareholder, whether in writing or by telephone, is revocable. A
shareholder may revoke the accompanying proxy or a proxy given telephonically
at any time prior to its use by filing with the Company a written revocation
or duly executed proxy bearing a later date. In addition, any shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given.
All costs of printing and mailing proxy materials, and the costs and
expenses of holding the Meeting and soliciting proxies, including any amount
paid to SCC (expected to range from $23,000-$28,000), will be paid by ISI and
not by the Company, the Portfolios or their shareholders.
The Board may seek one or more adjournments of the Meeting to solicit
additional shareholders, if necessary, to obtain a quorum for the Meeting, or
to obtain the required shareholder vote to elect the number of specified
Directors and approve Proposals 1, 2.A, 2.B, 2.C, 3 and 5. An adjournment
would require the
affirmative vote of the holders of a majority of the shares present at the
Meeting (or an adjournment thereof) in
3
<PAGE>
person or by proxy and entitled to vote. If adjournment is proposed in order
to obtain the required shareholder vote on a particular proposal, the persons
named as proxies will vote in favor of adjournment those shares which they are
entitled to vote in favor of such proposal and will vote against adjournment
those shares which they are required to vote against such proposal. A
shareholder vote may be taken on one or more of the proposals discussed herein
prior to any such adjournment if sufficient votes have been received and it is
otherwise appropriate.
VOTE REQUIRED FOR EACH PROPOSAL
Proposals 1 and 5 require approval by vote of the majority of the
outstanding voting securities of each Portfolio. Proposal 2.A requires
approval by vote of the majority of the outstanding voting securities of each
of the following Portfolios: Equity Portfolio, Flex Portfolio and Income
Portfolio. Proposal 2.B requires approval by vote of a majority of the
outstanding voting securities of MultiFlex Portfolio. Proposal 2.C requires
approval by a vote of the majority of the outstanding voting securities of
Real Estate Portfolio. Proposal 3 requires approval by a vote of the majority
of the outstanding voting securities of International Value Portfolio.
Proposal 4 requires that each nominee as Director be approved by a majority of
the votes present at the Meeting in person or by proxy and entitled to vote.
For purposes of Proposals 1, 2.A, 2.B, 2.C, 3 and 5, the Investment Company
Act of 1940 ("1940 Act") defines "majority of the outstanding voting
securities" of a Portfolio to be the lesser of (a) the vote of holders of 67%
or more of the voting shares of the Portfolio present in person or by proxy at
the Meeting, if the holders of more than 50% of the outstanding voting shares
of the Portfolio are present in person or by proxy, or (b) the vote of the
holders of more than 50% of the outstanding voting shares of the Portfolio.
THE PROPOSED CONSOLIDATION
Management of the Company believes that the Company, the Portfolios and
their shareholders would all benefit from consolidating the Company's service
provider arrangements with those of the AIM Funds.
The consolidation would involve the following changes:
. AIM would replace ISI as investment adviser to the Company;
. AIM would also provide portfolio management services directly to Cash
Management Portfolio; ICM would no longer serve as Sub-Adviser to that
Portfolio;
. IGAM would become Sub-Adviser to International Value Portfolio. The
investment policies for this Portfolio will not change, and the Portfolio
Manager currently responsible for this Portfolio at ICM, and his staff,
will continue in that capacity at IGAM;
. There would be no change in Sub-Advisers, or their staffs, to the
remaining Portfolios;
. The directors of the AIM Funds would also serve as Directors of the
Company; if the nominees are elected, the current Directors (listed in
Annex F) would resign upon the taking of office of their successors,
which is expected to occur at the time the new investment advisory
agreement with AIM takes effect;
. The Company's name would be changed to AIM Advisor Funds, Inc., with
corresponding changes to the names of each Portfolio; the Portfolios
would be called "Funds;" and Equity Portfolio would be renamed Large Cap
Value Fund;
. Service providers that currently are used by the AIM Funds would replace
those currently used by the Company. AIM and its affiliates would provide
distribution, operating and transfer agent services, and State Street Bank
and Trust Company would serve as custodian.
Management believes that such a consolidation would give the Company access
to AIM's greater shareholder servicing capabilities, to the full range of
investment options offered by the AIM Funds, and to the expansive distribution
network to which AIM has access. Management believes that AIM's distribution
network can increase sales of shares of the Portfolios more rapidly than would
occur without the proposed consolidation. The result would be that breakpoints
in the level of expenses to be borne by each Portfolio or class would be
reached more quickly, which should cause Portfolio and class expense ratios to
be lower.
4
<PAGE>
EVALUATION BY THE BOARD OF DIRECTORS
At a meeting held on March 26, 1997, the Directors reviewed information
presented to them regarding AIM and its qualifications to act as Adviser to
the Company. They also considered the related proposed consolidation of the
Company's advisory, marketing, administration, fund accounting and
distribution services with those of the AIM Funds, while retaining the current
Sub-Advisers for five of the Portfolios. They reviewed information presented
by management regarding the anticipated benefits to the Company and its
shareholders from the new advisory relationship and the proposed
consolidation. They noted that they had been informed that a consolidation of
this type would likely be proposed when they considered matters related to the
merger ("Merger") between a wholly owned subsidiary of INVESCO PLC and the
predecessor of A I M Management Group Inc. ("Old AIM Management"). They
considered the results of the extensive due diligence activities in which they
were involved in connection with the Merger, including their evaluation of the
reputation, qualities, performance record and ethical standards of Old AIM
Management and the AIM Funds. They noted that the proposed consolidation would
involve no increase in the Company's investment advisory, sub-advisory or
other contractual expenses and no apparent decrease in the quality of services
to be provided to the Company and to the Portfolios. They noted that possible
future reorganizations of certain Portfolios were being considered, and that
such reorganizations could result in changes in some types of expenses.
However, no such reorganizations had yet been decided upon and none could
occur without approval by shareholders of any affected Portfolio. With respect
to the proposed Investment Advisory Agreement with AIM, they noted the
considerable experience and qualifications of AIM and the fact that the terms
of the new Investment Advisory Agreement would be substantially the same as
those of the current Investment Advisory Agreement with ISI (except for the
identity of the investment adviser, the effective date of the agreement, and
the reservation by AIM of rights to the "AIM" name). With respect to Cash
Management Portfolio, for which AIM would provide portfolio management
services directly, without a sub-adviser, they noted AIM's experience in
managing AIM Money Market Fund. With respect to International Value Portfolio,
at a meeting held on May 16, 1997, they noted that the current portfolio
manager for this Portfolio, and his staff, would be transferred from ICM to
IGAM and would continue to have primary responsibility for the Portfolio. They
noted that IGAM had been formed in 1995 to centralize the provision of global
investment services to U.S. clients by INVESCO affiliates and had been
performing that function successfully. They also noted that the terms of the
Sub-Advisory Agreement with IGAM are substantially the same as those of the
Sub-Advisory Agreement with ICM.
The Directors also considered information regarding the distribution
capabilities of AIM and its affiliates, including: the asset growth of the AIM
Funds over the past six years relative to growth of the Company's assets,
including asset growth of funds that joined the AIM Funds from other groups.
They considered the significantly larger size of A I M Management Group Inc.'s
("AIM Group") sales force relative to that of ISI, and the fact that the AIM
Funds are currently sold through 2,350 broker/dealers, while the Company is
sold through only 236 broker/dealers. They noted that the Company's
shareholders would have access, through exchange privileges, to approximately
23 AIM Funds having a variety of investment objectives. They noted that access
to the Portfolios would be facilitated by proposed reductions in the minimum
required initial and subsequent investments. They were informed about the
possibility that AIM would add a new "B" class of shares to the Company (B
shares typically involve no front-end sales charge, but have a deferred sales
charge imposed on redemptions within a certain number of years). They also
noted the quality of the shareholder and transfer agent service capabilities
of A I M Fund Services, Inc., developed to handle a substantially larger
number of shareholder accounts than are now handled by ISI and its affiliates.
They noted that A I M Fund Services, Inc. has received high ratings in
industry surveys of shareholder and broker/dealer service. They also reviewed
the qualifications of other current service providers of the AIM Funds, which
would perform similar services for the Company if the consolidation is
effected, including State Street Bank and Trust Company, the proposed
custodian.
With respect to the nominees for Directors, the Directors who are not
"interested persons" as defined in the 1940 Act ("Independent Directors")
considered the nominees' extensive qualifications generally, their services as
directors and trustees of the AIM Funds, the value to the Company of having a
Board that also served
5
<PAGE>
the other AIM Funds, and the requirements of the 1940 Act regarding the
composition of the Board, including requirements of Section 15 (f) of the 1940
Act. The Independent Directors recommended approval of these nominees to the
full Board.
The Directors noted that the anticipated benefits of consolidation included
the possibility of lower expense ratios for the Portfolios. This reduction
would likely occur if the larger AIM Group distribution force was successful
in increasing sales of shares of the Portfolios. Increased sales could bring
the Portfolios' assets to sizes at which break-points in the level of expenses
of each Portfolio and class would take effect.
With respect to the new Sub-Advisory Agreements, at their March and May,
1997 meetings, the Directors noted the continued quality of services provided
by ICM, IMR and IRA to the Portfolios to which they currently provide
services, and the desirability of retaining continuity in the management of
the Portfolios' assets. They noted also that continuity of service would be
maintained for International Value Portfolio through the proposed new Sub-
Advisory Agreement with IGAM. They also noted that the terms of the proposed
new Sub-Advisory Agreements were substantially the same as those of the
current Sub-Advisory Agreements and, in particular, that there would be no
change in the provisions regarding fees and expenses payable by the
Portfolios.
Based upon the Directors' review and their evaluation of all materials
presented to them, and in consideration of all factors deemed relevant by
them, and after consultation with independent counsel to the Independent
Directors, the Board determined that each of the proposed agreements I.E., THE
NEW INVESTMENT ADVISORY AGREEMENT WITH AIM AND THE NEW SUB-ADVISORY AGREEMENTS
- -- IS FAIR AND REASONABLE AND IN THE BEST INTERESTS OF THE COMPANY, THE
PORTFOLIOS AND THEIR SHAREHOLDERS. ACCORDINGLY, THE BOARD, INCLUDING ALL OF
THE INDEPENDENT DIRECTORS, APPROVED EACH OF THE PROPOSED AGREEMENTS AND VOTED
TO RECOMMEND THAT THE COMPANY'S SHAREHOLDERS VOTE TO APPROVE THE NEW
INVESTMENT ADVISORY AGREEMENT, AND THAT THE SHAREHOLDERS OF EACH PORTFOLIO
(EXCEPT CASH MANAGEMENT PORTFOLIO) VOTE TO APPROVE THE APPLICABLE NEW SUB-
ADVISORY AGREEMENT. THEY ALSO APPROVED RECOMMENDING SHAREHOLDER APPROVAL OF
THE PROPOSED NOMINEES AS DIRECTORS. FINALLY, THEY APPROVED RECOMMENDING
SHAREHOLDER APPROVAL OF CERTAIN PORTFOLIO INVESTMENT RESTRICTIONS, AS
DESCRIBED FURTHER UNDER PROPOSAL 5 HEREIN.
PROPOSAL 1: APPROVAL OF THE PROPOSED ADVISORY AGREEMENT BETWEEN THE COMPANY
AND A I M ADVISORS, INC.
The current Investment Advisory Agreement between the Company and ISI ("ISI
Agreement"), and the proposed Investment Advisory Agreement between the
Company and AIM ("AIM Agreement"), have substantially identical terms, except
for the name of the investment adviser and the date. The ISI Agreement was
last approved by the Directors at a meeting held November 6, 1996 and by
shareholders of each Portfolio at a meeting held January 31, 1997, concerning
issues related to the Merger. The AIM Agreement was approved, subject to
shareholder approval, by a majority of the Directors, including a majority of
the Independent Directors, at a meeting held March 26, 1997.
(a) Information Concerning AIM
AIM was organized in 1976 and, together with its subsidiaries, advises 38
investment company portfolios constituting the AIM Funds and sub-advises one
investment company portfolio. As of April 30, 1997, the total assets of the
AIM Funds were approximately $64.4 billion. AIM is a wholly owned subsidiary
of AIM Group. AIM Group is a wholly owned subsidiary of AVZ Inc. and an
indirect subsidiary of AMVESCAP PLC (formerly AMVESCO PLC and INVESCO PLC).
AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997, as part of the Merger, which created one of the largest independent
investment management businesses in the world. Shareholders approved a name
change for AMVESCO PLC to AMVESCAP PLC effective May 8, 1997. AMVESCAP PLC has
approximately $165 billion in assets under management.
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Certain of the directors and officers of AIM are also nominees as Directors
of the Company. Their names, principal occupations and affiliations are shown
in the table under Proposal 4. Information regarding the AIM Funds, including
their total net assets and the fees received by AIM from such AIM Funds for
its services, is set forth in Annex G. The address of AIM, all of the
directors of AIM, A I M Distributors, Inc., A I M Fund Services, Inc., Fund
Management Company, A I M Institutional Fund Services Inc. and AIM Group is 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The addresses of
AMVESCAP PLC and AVZ Inc. are, respectively, 11 Devonshire Square, London,
England EC2M 4YR and 1315 Peachtree Street, N.E., Atlanta, Georgia 30309.
Information on the directors and executive officers of AIM is contained in
Annex I.
(b) Recent Transactions Involving Securities of AIM's Parent
Messrs. Charles T. Bauer and Robert H. Graham, nominees for election as
Directors of the Company, acquired shares of INVESCO on February 28, 1997 in
exchange for shares of Old AIM Management (the parent of AIM) which they owned
upon consummation of the Merger. The Merger is described below.
On November 4, 1996, Old AIM Management and INVESCO, a company incorporated
under the laws of England, announced the execution of an agreement and plan of
merger (the "Merger Agreement") pursuant to which Old AIM Management would
merge with and into AVZ Inc., a direct wholly owned subsidiary of INVESCO,
with AVZ Inc. being the surviving corporation. The Merger Agreement valued Old
AIM Management at approximately $1.6 billion as of November 4, 1996. The
consideration paid in connection with the Merger, which was completed on
February 28, 1997, consisted of: (i) 290 million Ordinary Shares of INVESCO,
allocated among all outstanding shares of the Common Stock of Old AIM
Management, par value $0.0025 per share ("Old Common Stock"), all outstanding
shares of the Class B Common Stock of Old AIM Management, par value $0.0025
per share, and vested and unvested options and a warrant for Old Common Stock,
and (ii) cash in an amount estimated at February 28, 1997 to be approximately
$544 million, which was allocated among Old AIM Management's stockholders and
the holders of certain vested options for Old Common Stock and a warrant for
Old Common Stock. The actual amount of the cash consideration is to be
adjusted to take into account certain transaction expenses, certain balance
sheet items and Old AIM Management's net income and dividends paid from
September 1, 1996 through the closing date of the Merger. Upon consummation of
the Merger, stockholders of Old AIM Management (which included Messrs. Bauer
and Graham), option holders and the warrant holder owned approximately 45
percent of the issued INVESCO Ordinary Shares on a fully diluted basis.
After the Merger was completed, AVZ Inc. contributed all of the assets and
liabilities of Old AIM Management to A I M Management Group Inc. (formerly, A
I M Management Group Acquisition Corp.) ("AIM Group"), a Delaware corporation
and a wholly owned subsidiary of AVZ Inc. The officers of Old AIM Management
prior to the Merger have continued as officers of AIM Group and four of the
directors of Old AIM Management prior to the Merger have continued as
directors of AIM Group. The officers and directors of AIM did not change as a
result of the Merger.
(c) The Agreements
The operative terms of the AIM Agreement are substantially identical to
those of the ISI Agreement, other than the name of the investment adviser and
the date. The form of proposed AIM Agreement is attached as Annex A. The terms
of each of the Agreements are as follows. (The ISI Agreement and the AIM
Agreement are referred to collectively as "Agreements" and ISI and AIM are
referred to as "Adviser.")
Each Agreement provides that it shall remain in force for an initial two-
year term and, thereafter, may be continued from year to year as to each
Portfolio as long as each such continuance is approved at least annually by
the Board, or by a vote of the holders of a majority of the then-outstanding
voting securities (as defined above
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under "Vote Required for Each Proposal") of the Portfolios. Any such
continuance also must be approved by a majority of the Independent Directors
of the Company at a meeting called for the purpose of voting on such
continuance. Upon sixty (60) days' written notice, each Agreement may be
terminated at any time without penalty by the Board, or by a majority of the
then-outstanding voting securities of the Company or, with respect to a
particular Portfolio, by a majority of the then-outstanding voting securities
of that Portfolio, or by the Adviser. Each Agreement provides that it will
terminate automatically in the event of its "assignment" under the 1940 Act.
The Agreements provide that the Adviser shall (either directly or by
delegation to a sub-adviser) maintain a continuous investment program for the
Company and each of the Portfolios that is consistent with the Company's and
the Portfolios' respective investment objectives and policies as set forth in
the Company's registration statement (the "Registration Statement") and
prospectuses and statements of additional information of each of the
Portfolios (the "Prospectus" and the "SAI") as in effect from time to time
under the 1940 Act and the Securities Act of 1933, as amended. In the
performance of such duties, the Adviser shall, among other things: (i) manage
the investment and reinvestment of the assets of the Company and the
Portfolios; (ii) determine what securities are to be purchased or sold for the
Company and the Portfolios and execute transactions accordingly; (iii) furnish
the Company and the Portfolios with investment analysis and research, reviews
of current economic conditions and trends and considerations respecting long-
range investment policies; (iv) make recommendations as to the manner in which
rights pertaining to the Portfolios' securities should be exercised; (v)
furnish requisite personnel necessary in connection with the Portfolios'
operations; (vi) furnish office space, facilities, equipment and supplies;
(vii) conduct periodic reviews of the Portfolios' compliance operations;
(viii) prepare and review certain required documents, reports and filings
(including filings to the Securities and Exchange Commission), except insofar
as the assistance of independent accountants or attorneys is necessary or
desirable; (ix) supply basic telephone service and other utilities; and (x)
prepare and maintain the books and records required under Rule 31a-1(b)(4),
(5), (9) and (10) under the 1940 Act. The Adviser, pursuant to the Agreement,
pays all of the costs and expenses associated with the Portfolios' operations
and activities, except those expressly assumed under the Agreement by the
Portfolios. Expenses paid by the Portfolios include, among others: (a)
brokers' commissions, issue and transfer taxes and other costs in connection
with securities transactions in which the Company is a party; (b) any interest
on indebtedness incurred by the Company; (c) extraordinary expenses (such as
unexpected franchise taxes and corporate fees); (d) distribution expenses
permissible under the Portfolios' Plan of Distribution (other than the Cash
Management Portfolio) adopted pursuant to Rule 12b-1 under the 1940 Act; and
(e) all fees paid by the Portfolios for operational services pursuant to the
Portfolios' Operating Services Agreement (discussed below).
As full compensation for its advisory services to the Company, the Adviser
receives a monthly fee. The fee is based upon a percentage of each Portfolio's
average net assets, determined daily. Specifically, the fee is calculated at
the annual rate of: with respect to each of the Equity Portfolio and the Flex
Portfolio, 0.75% of the Portfolio's average net assets; with respect to the
Real Estate Portfolio, 0.90% of the Portfolio's average net assets; with
respect to each of the MultiFlex Portfolio and the International Value
Portfolio, 1.00% of the Portfolio's average net assets; with respect to the
Income Portfolio, 0.65% of the Portfolio's average net assets (however, ISI
waives, and AIM has agreed to waive, 0.25% of the advisory fee for a three-
year period beginning October 1, 1995); and with respect to the Cash
Management Portfolio, 0.50% of the Portfolio's average net assets.
For the fiscal year ended December 31, 1996, total advisory fees paid to ISI
by the Portfolios were as follows: (i) $946,203, with respect to the Equity
Portfolio; (ii) $3,351,899, with respect to the Flex Portfolio; (iii)
$102,386, with respect to the Real Estate Portfolio; (iv) $2,164,778, with
respect to the MultiFlex Portfolio; (v) $314,843, with respect to the
International Value Portfolio; (vi) $115,744, with respect to the Income
Portfolio (without the waivers by ISI, the fees for this Portfolio would have
been $188,085); and (vii) $95,995, with respect to the Cash Management
Portfolio. Net assets of each of such Portfolios at December 31, 1996 totaled
$137,415,746; $489,917,938; $20,566,481; $266,843,132; $51,915,976;
$26,162,310; and $15,946,305, respectively.
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AIM and the Sub-Advisers permit investment and other personnel to purchase
and sell securities for their own accounts, subject to a compliance policy
governing personal investing. This policy requires AIM's and Sub-Adviser's
personnel to conduct their personal investment activities in a manner that AIM
and the Sub-Advisers believe is not detrimental to the Portfolios or AIM's and
the Sub-Advisers' other advisory clients.
The AIM Agreement expressly provides that the Company shall be entitled to
use the name "AIM" with respect to a Portfolio only so long as AIM serves as
investment manager or adviser to such Portfolio. The AIM Agreement will take
effect with respect to each Portfolio that approves the AIM Agreement at the
close of business on August 1, 1997, or on such later date as may be set by
the parties.
THE DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, RECOMMEND
THAT ALL OF THE COMPANY'S SHAREHOLDERS VOTE TO APPROVE THE AIM AGREEMENT
BETWEEN THE COMPANY AND AIM.
PROPOSALS 2.A, 2.B, AND 2.C: APPROVAL OF PROPOSED SUB-ADVISORY AGREEMENTS WITH
ICM, IMR AND IRA.
The proposed new Sub-Advisory Agreements ("New Sub-Advisory Agreements")
have terms substantially identical to those of the current Sub-Advisory
Agreements ("Current Sub-Advisory Agreements"), except for their dates and the
fact that they are now between AIM (instead of ISI) and the respective sub-
advisers ICM, IMR and IRA (collectively, "Sub-Advisers"). The New Sub-Advisory
Agreement with ICM will also reflect that ICM will no longer act as Sub-
Adviser to Cash Management Portfolio or International Value Portfolio. The
forms of proposed Sub-Advisory Agreements with ICM, IMR and IRA are attached
as Annex B, C and D, respectively.
AT A MEETING HELD APRIL 19, 1995, THE DIRECTORS, INCLUDING A MAJORITY OF THE
INDEPENDENT DIRECTORS, APPROVED AMENDMENTS TO THE CURRENT SUB-ADVISORY
AGREEMENTS TO REFLECT THE CHANGE OF THE COMPANY'S NAME TO INVESCO ADVISOR
FUNDS, INC. THE CURRENT SUB-ADVISORY AGREEMENTS WERE ALSO APPROVED BY THE
DIRECTORS , INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, AT A MEETING
HELD NOVEMBER 6, 1996, CONTINGENT UPON SHAREHOLDER APPROVAL AND CONSUMMATION
OF THE MERGER, AND BY SHAREHOLDERS OF EACH PORTFOLIO AT A MEETING HELD JANUARY
31, 1997. THE NEW SUB-ADVISORY AGREEMENTS WERE APPROVED BY A MAJORITY OF THE
DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, SUBJECT TO
SHAREHOLDER APPROVAL, AT A MEETING HELD MARCH 26, 1997. THE TERMS OF THE
CURRENT SUB-ADVISORY AGREEMENTS AND NEW SUB-ADVISORY AGREEMENTS (COLLECTIVELY,
"SUB-ADVISORY AGREEMENTS") ARE AS FOLLOWS.
Each of the Sub-Advisory Agreements provides that it shall remain in force
for an initial two year term and may be continued from year to year thereafter
with respect to the particular Portfolio as long as each such continuance is
approved at least annually by the Board or by a vote of the holders of a
majority of the then-outstanding voting securities (as defined above under
"Vote Required for Each Proposal") of the particular Portfolio. Any such
continuance must also be approved by a majority of the Independent Directors
of the Company at a meeting called for the purpose of voting on such
continuance.
Each of the Sub-Advisory Agreements may be terminated at any time without
penalty by the Adviser, the Board, a vote of a majority of the then-
outstanding voting securities of the respective Portfolio or by the applicable
Sub-Adviser. Termination by the Adviser or the Sub-Adviser requires sixty (60)
days' written notice to the other party and to the Company.
Each of the New Sub-Advisory Agreements provides, as applicable, that ICM,
as Sub-Adviser for Equity Portfolio, Flex Portfolio and Income Portfolio
(collectively, the "ICM Sub-Advised Portfolios"), IMR, as Sub-Adviser for the
MultiFlex Portfolio, and IRA, as Sub-Adviser for the Real Estate Portfolio,
subject to the supervision of the Adviser and the Board, shall maintain a
continuous investment program for the ICM Sub-Advised Portfolios, the
MultiFlex Portfolio and the Real Estate Portfolio, respectively, that is
consistent with each Portfolio's respective investment objectives and policies
as set forth in the Company's Registration
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Statement and in the Portfolio's Prospectus and SAI. (The Current Sub-Advisory
Agreement with ICM additionally covers Cash Management Portfolio and
International Value Portfolio.) In the performance of such duties, each Sub-
Adviser is obligated to provide the Portfolios it sub-advises with portfolio
management services including: (i) managing the investment and reinvestment of
the assets of the Portfolios; (ii) determining what securities are to be
purchased or sold for the Portfolios and executing transactions accordingly;
(iii) furnishing the Portfolios with investment analysis and research, reviews
of current economic conditions and trends and considerations respecting long-
range investment policies; and (iv) making recommendations as to the manner in
which rights pertaining to the Portfolios' securities should be exercised.
The ICM New Sub-Advisory Agreement provides that as compensation for its
services, ICM shall receive from the Adviser, at the end of each month, a fee
based upon each of the ICM Sub-Advised Portfolios' average daily net asset
value. Specifically, the fee is calculated at the following annual rates: with
respect to each of the Equity Portfolio and the Flex Portfolio, 0.20% of each
Portfolio's average net assets; and with respect to the Income Portfolio,
0.10% of that Portfolio's average net assets. (Fees payable to ICM with
respect to Cash Management Portfolio under the ICM Current Sub-Advisory
Agreement were at the rate of 0.10% of that Portfolio's net assets. These fees
will be retained by AIM if Proposal 1 is approved by shareholders of Cash
Management Portfolio. Fees to ICM with respect to the International Value
Portfolio were at the rate of 0.35% of the first $50 million of the
Portfolio's net assets; 0.30% on the next $50 million of the Portfolio's
average net assets and 0.25% on net assets in excess of $100 million. These
fees will be payable to IGAM if Proposal 3 is approved by shareholders of that
Portfolio.) Total fees paid by ISI to ICM with respect to each of the ICM Sub-
Advised Portfolios for the last fiscal year of the Company were: Equity
Portfolio, $252,321, Flex Portfolio, $893,840, Income Portfolio, $28,936,
International Value Portfolio, $110,187, and Cash Management Portfolio,
$19,199.
The IMR Sub-Advisory Agreement provides that as compensation for its
services, IMR shall receive from the Adviser, at the end of each month, a fee
based upon the MultiFlex Portfolio's average net asset value. Specifically,
the fee is calculated at the following annual rates: 0.35% of the first $500
million of the Portfolio's average net assets and 0.25% on assets in excess of
$500 million of the Portfolio's average net assets. Total fees paid to IMR by
ISI with respect to MultiFlex Portfolio for the last fiscal year of the
Company were $757,672.
The IRA Sub-Advisory Agreement provides that as compensation for its
services, IRA shall receive from the Adviser, at the end of each month, a fee
based upon the Real Estate Portfolio's average net assets. Specifically, the
fee is calculated at the following annual rates: 0.35% of the first $100
million of the Portfolio's average net assets and 0.25% of the Portfolio's
average net assets in excess of $100 million. Total fees paid to IRA by ISI
with respect to Real Estate Portfolio for the last fiscal year of the Company
were $39,817.
With respect to each of the Sub-Advisory Agreements, the sub-advisory fees
are paid by the Adviser, and not paid by the Portfolios or their shareholders.
Each New Sub-Advisory Agreement will take effect with respect to a Portfolio
at the later of the time the AIM Agreement takes effect or approval by
shareholders of that Portfolio is obtained.
INFORMATION CONCERNING SUB-ADVISERS
INVESCO Capital Management, Inc.
INVESCO Capital Management, Inc. ("ICM"), 1315 Peachtree Street, N.E.,
Atlanta, Georgia 30309, is a wholly owned subsidiary of INVESCO North American
Holdings, Inc. ("INAH"). INAH's offices are located at 1315 Peachtree Street,
N.E., Suite 500, Atlanta, Georgia 30309. As Sub-Adviser, ICM has primary
responsibility for providing investment advisory and research services for the
ICM Sub-Advised Portfolios. ICM also acts as adviser to INVESCO Treasurer's
Series Trust and as sub-adviser to the INVESCO Intermediate Government Bond
Fund, the INVESCO Total Return Fund, the INVESCO Value Equity Fund and the
INVESCO VIF-Total Return Portfolio, and offers investment services to U.S.
institutions and wealthy individuals.
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The principal executive officers and directors of ICM and their principal
occupations are:
Edward C. Mitchell, Jr., Chairman; Frank M. Bishop, President, CEO and
Director; Luis A. Aguilar, Executive Vice President, Secretary, and General
Counsel; Stephen A. Dana, Vice President and Director; David Hartley, Chief
Financial Officer; Terry Miller, Deputy President and Director; Tim Culler,
Chief Investment Officer, Vice President and Director; Wendell M. Starke,
Director, also Chairman of IGAM; and A.D. Frazier, Director, also Director of
IMR and IRA.
The address of each of the foregoing officers and directors is 1315
Peachtree Street, N.E., Atlanta, Georgia 30309.
INVESCO Management & Research, Inc.
INVESCO Management & Research, Inc. ("IMR"), 101 Federal Street, Boston,
Massachusetts 02110, formerly Gardner and Preston Moss, Inc., is a wholly
owned subsidiary of INAH. As Sub-Adviser, IMR has the primary responsibility
for providing investment advisory and research services for the MultiFlex
Portfolio. IMR also acts as sub-adviser to the INVESCO Multi-Asset Allocation
Fund and the INVESCO Small Company Fund and offers investment services to U.S.
institutions and wealthy individuals.
The principal executive officers and directors of IMR and their principal
occupations are:
Frank J. Keeler, Chief Executive Officer, President and Director; William M.
McCarthy, Senior Vice President and Director; and A.D. Frazier, Director, also
Director of ICM and IRA..
The address of Messrs. Keeler and McCarthy is 101 Federal Street, Boston,
Massachusetts 02110. The address of Mr. Frazier is 1315 Peachtree Street,
N.E., Atlanta, Georgia 30309.
INVESCO Realty Advisors, Inc.
INVESCO Realty Advisors, Inc. ("IRA"), One Lincoln Center, Suite 1200, 5400
LBJ Freeway LB2, Dallas, Texas 75240, is a wholly owned subsidiary of INAH. As
Sub-Adviser, IRA has the primary responsibility for providing investment
advisory and research services for the Real Estate Portfolio. IRA also offers
investment services to U.S. institutions and wealthy individuals.
The principal executive officers and directors of IRA and their principal
occupations are:
D.A. Ridley, President and Chairman of the Board; David N. Farmer, Executive
Vice President and Director; and A.D. Frazier, Director, also Director of ICM
and IMR.
The address of Messrs. Farmer and Ridley is One Lincoln Center, Suite 1200,
5400 LBJ Freeway LB2, Dallas, Texas 75240. The address of Mr. Frazier is 1315
Peachtree Street, N.E., Atlanta, Georgia 30309.
ICM, IRA and IMR are indirectly wholly owned subsidiaries of AMVESCAP.
THE DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, RECOMMEND
THAT SHAREHOLDERS OF THE ICM SUB-ADVISED PORTFOLIOS VOTE TO APPROVE THE NEW
SUB-ADVISORY AGREEMENT BETWEEN AIM AND ICM, THAT SHAREHOLDERS OF THE MULTIFLEX
PORTFOLIO VOTE TO APPROVE THE NEW SUB-ADVISORY AGREEMENT BETWEEN AIM AND IMR
AND THAT SHAREHOLDERS OF THE REAL ESTATE PORTFOLIO VOTE TO APPROVE THE NEW
SUB-ADVISORY AGREEMENT BETWEEN AIM AND IRA.
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PROPOSAL 3: APPROVAL OF PROPOSED SUB-ADVISORY AGREEMENT WITH IGAM
Due to a structural reorganization, the portfolio manager and assisting
staff of ICM who have been responsible for International Value Portfolio are
being transferred to IGAM, an AMVESCAP subsidiary formed to centralize global
investing by INVESCO affiliated companies for U.S. clients into one company.
ISI has provided the Board of Directors with information regarding IGAM. At a
meeting held May 16, 1997, the Board determined that it will be advisable to
maintain continuity in the style of management for International Value
Portfolio by terminating the ICM Sub-Advisory Agreement with respect to
International Value Portfolio and approving a new Sub-Advisory Agreement for
this Portfolio between AIM and IGAM ("IGAM Sub-Advisory Agreement"). Except
for the identities of the parties and the date, the terms of the IGAM Sub-
Advisory Agreement (see Annex E) are the same with respect to International
Value Portfolio as the terms for this Portfolio under the current ICM Sub-
Advisory Agreement, which is described above under Proposal 2. The fees
payable to IGAM by AIM under the IGAM Sub-Advisory Agreement would be at the
rate of 0.35% of the first $50 million of the Portfolio's net assets; 0.30% on
the next $50 million of the Portfolio's average net assets and 0.25% on assets
in excess of $100 million. These fees are the same as those payable to ICM
with respect to this Portfolio under the current ICM Sub-Advisory Agreement.
INFORMATION ABOUT IGAM
IGAM, located at Cedar House, 41 Cedar Avenue, Hamilton, HM12 Bermuda, was
incorporated under the laws of Bermuda on May 2, 1995 and is an indirect
wholly owned subsidiary of AMVESCAP. IGAM is registered as an investment
adviser under the Investment Advisers Act of 1940. IGAM's responsibilities
include analyzing global economic trends and establishing INVESCO's global
investment asset allocations for INVESCO affiliates in addition to managing
$11 million in assets, as of December 31, 1996. Types of clients include
individuals, investment companies, pension and profit sharing plans, trusts,
estates and charitable organizations. International Value Portfolio's current
manager, W. Lindsay Davidson, is moving to IGAM, along with substantially all
the supporting members of his staff that currently provide services to this
Portfolio under the current ICM Sub-Advisory Agreement. Mr. Davidson has
managed International Value Portfolio since its inception in May 1995, and has
served as a portfolio manager for INVESCO affiliates since 1984. If this
Proposal 3 is approved by shareholders of International Value Portfolio, Mr.
Davidson and his staff will continue to provide this Portfolio services of the
same nature and quality as those they have been providing to the Portfolio at
ICM.
The principal executive officers and directors of IGAM, their principal
occupations and addresses are:
Wendell M. Starke, Chairman, also Director of ICM; Everard T. Richards,
Deputy Chairman of Operations and Director; David A. Hartley, Treasurer and
Assistant Secretary; Michael A. Wood, Secretary; John D. Campbell, Director;
Ricardo Ricciardi, Director; and John Rogers, Director.
The business address of each of the foregoing is Cedar House, 41 Cedar
Avenue, Hamilton, HM12 Bermuda.
The IGAM Sub-Advisory Agreement will take effect on the later of the time
the AIM Agreement takes effect or approval by shareholders of International
Value Portfolio is obtained.
THE DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, RECOMMEND
THAT SHAREHOLDERS OF THE INTERNATIONAL VALUE PORTFOLIO VOTE TO APPROVE THE NEW
SUB-ADVISORY AGREEMENT BETWEEN AIM AND IGAM.
OTHER SERVICES TO BE PROVIDED BY AIM AND ITS AFFILIATES
Subject to shareholder approval of the Investment Advisory Agreement with
AIM, the Board of Directors has also approved other service agreements for the
Company with AIM and its affiliates. These agreements are substantially
identical to current agreements between the Company and ISI and its
affiliates. These agreements are described below.
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(a) Operating Services
ISI currently provides operating services pursuant to an Operating Services
Agreement with the Company. If shareholders approve the Proposals in this
Proxy Statement, the Company will enter into an Operating Services Agreement,
with substantially identical terms, with AIM. Under the Operating Services
Agreement, each Portfolio pays to the Adviser an annual fee of 0.45% of daily
net assets of the Portfolio for providing or arranging to provide accounting,
legal (except litigation), dividend disbursing, transfer agent, registrar,
custodial, shareholder reporting, sub-accounting and recordkeeping services
and functions. The agreement provides that the Adviser pays all fees and
expenses associated with these and other functions, including, but not limited
to, registration fees, shareholder meeting fees, and proxy statement and
shareholder report expenses.
The combined effect of the Advisory Agreements, Operating Services
Agreement, and Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act
is to place a cap or ceiling on the total expenses of each Portfolio, other
than brokerage commissions, interest, taxes, litigation, directors' fees and
expenses, and other extraordinary expenses. ISI has voluntarily agreed to
adhere to maximum expense ratios for the Portfolios. At a Board meeting held
March 26, 1997, AIM agreed to assume ISI's commitment for a period of three
years from the effective date of the Merger, which was February 28, 1997,
provided that expense ratios might change within this period in the event one
or more Portfolios were reorganized or merged with another fund. Any such
reorganization or merger would require approval by shareholders of the
affected Portfolio(s).
Pursuant to these commitments, ISI has, and AIM will, waive its fees or
reimburse the Portfolio to assure that expenses do not exceed the following
expense ratios: if, in any calendar quarter, the average net assets of each of
the Equity or Flex Portfolios are less than $500 million, each Portfolio's
expenses shall not exceed 1.55% for Class A and 2.20% for Class C; on the next
$500 million of net assets, expenses shall not exceed 1.50% for Class A and
2.15% for Class C; on the next $1 billion of net assets, expenses shall not
exceed 1.45% for Class A and 2.10% for Class C; and on all assets over $2
billion, expenses shall not exceed 1.40% for Class A and 2.05% for Class C.
If, in any calendar quarter, the average net assets of the MultiFlex or
International Value Portfolios are less than $100 million, expenses shall not
exceed 1.80% for Class A and 2.45% for Class C; on the next $400 million of
net assets, expenses shall not exceed 1.75% for Class A and 2.40% for Class C;
on the next $500 million, expenses shall not exceed 1.70% for Class A and
2.35% for Class C; on the next $1 billion of net assets, expenses shall not
exceed 1.65% for Class A and 2.30% for Class C; and on all assets over $2
billion, expenses shall not exceed 1.60% for Class A and 2.25% for Class C.
If, in any calendar quarter, the average net assets of the Real Estate
Portfolio are less than $500 million, expenses shall not exceed 1.70% for
Class A and 2.35% for Class C; on the next $500 million, expenses shall not
exceed 1.65% for Class A and 2.30% for Class C; and on all assets over $1
billion, expenses shall not exceed 1.60% for Class A and 2.25% for Class C. In
any calendar year, the expenses of the Income Portfolio may not exceed 1.35%
for Class A and 1.70% for Class C, and the expenses of the Cash Management
Portfolio may not exceed 0.95% of average net assets. AIM has also agreed to
assume the remaining term of ISI's commitment to reimburse the Income
Portfolio for a three-year period beginning October 1, 1995, so that the
expenses shall not exceed 1.10% for Class A and 1.45% for Class C of average
net assets per annum.
The Operating Services Agreement fees paid by each Portfolio during the last
fiscal year were: Flex Portfolio, $2,233,908; Equity Portfolio, $630,611;
MultiFlex Portfolio, $965,775; International Value Portfolio, $157,351; Real
Estate Portfolio, $56,854; Income Portfolio, $144,644; and Cash Management
Portfolio, $95,973.
(b) Distribution
ISI currently serves as the Company's distributor. If the consolidation is
implemented, the Directors have approved a Distribution Agreement between the
Company and A I M Distributors, Inc. ("Distributor"), under which the
Distributor would serve as principal underwriter of the Company. All of the
Distributor's outstanding shares of voting stock are owned by AIM. The
Distributor is also the principal underwriter for other investment companies.
The Distributor acts as agent upon the receipt of orders from investors. The
Distributor's principal office is located at 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173.
13
<PAGE>
The Distributor receives payments for distribution-related activities from
the Equity, Income, Flex, MultiFlex, Real Estate and International Value
Portfolios pursuant to the plans of distribution adopted pursuant to Rule 12b-
1 under the 1940 Act, as described under "Plans of Distribution" in the
Company's current prospectus and in the Company's Statement of Additional
Information under "Distribution of Shares." The Cash Management Portfolio does
not have a plan of distribution under Rule 12b-1.
(c) Other Services
The Directors have also approved the following other service agreements, to
take effect if shareholders approve the Proposals in this Proxy Statement: a
transfer agent agreement with A I M Fund Services, Inc. and a custody
agreement with State Street Bank and Trust Company. (State Street Bank and
Trust Company is a custodian and investment manager, with $2.9 trillion in
assets under custody.) The costs of these services will be covered pursuant to
the Operating Services Agreement.
PROPOSAL 4: ELECTION OF DIRECTORS
The present Board of Directors has approved the nomination of the following
persons as Directors of the Company. The nominees who are not identified as
being "interested persons" of the Company were selected by the current
Independent Directors, serving as a nominating committee for independent
directors, and approved by the full Board. All of the nominees presently serve
as directors, trustees or officers of the AIM Funds.
The proxies will vote for the election of the nominees named below unless
authority to vote for any or all of the nominees is withheld in the proxy.
Each of the nominees has indicated that he is willing to serve as a Director.
If any or all of the nominees should become unavailable for election due to
events not now known or anticipated, the persons named as proxies will vote
for such other nominee or nominees as the Directors who are not "interested
persons" of the Company, as defined in the 1940 Act, may recommend. If
elected, the nominees will take office at the time the AIM Agreement takes
effect.
The following table sets forth certain information concerning the nominees
for Directors:
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING
NAME (AGE) PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
---------- ---------------------------------------------
<C> <S>
Charles T. Bauer (78)* (1) Chairman of the Board of Directors, A I M
Management Group Inc., A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and
Director and Vice Chairman, AMVESCAP PLC.
(2) Director/Trustee of the AIM Funds
Bruce L. Crockett (53) (1) Formerly, Director, President and Chief Executive
Officer, COMSAT Corporation (includes COMSAT World
Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International
Ventures); President and Chief Operating Officer,
COMSAT Corporation; President, World Systems Division,
COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT (each of the COMSAT companies listed above is
an international communication, information and
entertainment-distribution services company).
(2) Director/Trustee of the AIM Funds.
Owen Daly II (72) (1) Formerly, Director, CF&I Steel Corp., Monumental
Life Insurance Company and Monumental General Insurance
Company; and Chairman of the Board of Equitable
Bancorporation.
(2) Director/Trustee of the AIM Funds; and Director,
Cortland Trust Inc. (investment company).
Jack Fields (45) (1) Formerly, member of U.S. House of Representatives.
(2) Director/Trustee of the AIM Funds.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING
NAME (AGE) PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
---------- ---------------------------------------------
<C> <S>
Carl Frischling (60)** (1) Partner, Kramer, Levin, Naftalis & Frankel (law
firm). Formerly, Partner, Reid & Priest (law firm);
and prior thereto, Partner, Spengler Carlson Gubar
Brodsky & Frischling (law firm).
(2) Director of ERD Waste, Inc. (waste management
company), Aegis Consumer Finance (auto leasing
company) and Lazard Funds, Inc. (investment
companies).
(3) Director/Trustee of the AIM Funds.
Robert H. Graham (50)*** (1) Director, President and Chief Executive Officer,
A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., A I M
Institutional Fund Services, Inc. and Fund Management
Company; and Director and Executive Vice President,
AMVESCAP PLC.
(2) Director/Trustee of the AIM Funds.
John F. Kroeger (72) (1) Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
(2) Director/Trustee of the AIM Funds; and Director,
Flag Investors International Fund, Inc., Flag
Investors Emerging Growth Fund, Inc., Flag Investors
Telephone Income Fund, Inc., Flag Investors Equity
Partners Fund, Inc., Total Return U.S. Treasury Fund,
Inc., Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag Investors
Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag
Investors Real Estate Securities Fund, Inc., Alex
Brown Cash Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment companies).
Lewis F. Pennock (54) (1) Attorney in private practice in Houston, Texas.
(2) Director/Trustee of the AIM Funds.
Ian W. Robinson (74) (1) Formerly, Executive Vice President and Chief
Financial Officer, Bell Atlantic Management Services,
Inc. (provider of centralized management services to
telephone companies); Executive Vice President, Bell
Atlantic Corporation (parent of seven telephone
companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and
Diamond State Telephone Company.
(2) Director/Trustee of the AIM Funds.
Louis S. Sklar (57) (1) Executive Vice President, Development and
Operations, Hines Interests Limited Partnership (real
estate development).
(2) Director/Trustee of the AIM Funds.
</TABLE>
- --------
* Mr. Bauer would be an "interested person" of the Company, as defined in the
1940 Act, primarily because of his positions with AIM, and its affiliated
companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC.
** Mr. Frischling would be an "interested person" of the Company, as defined
in the 1940 Act, primarily because of payments received by his law firm for
services to the AIM Funds.
*** Mr. Graham would be an "interested person" of the Company, as defined in
the 1940 Act, primarily because of his position with AIM and its
affiliated companies, as set forth above, and through his ownership of
stock of AMVESCAP PLC.
The Company does not hold regular annual meetings at which Directors are
elected.
Information concerning the current Directors and executive officers of the
Company is contained in Annex F.
15
<PAGE>
If the nominees are elected, it is anticipated that the Company's Board
would have three standing committees: an audit committee, an investments
committee and a nominating and compensation committee. The audit committee
would have responsibility for meeting with the Company's auditors to review
audit procedures and results and to consider any matters arising from an audit
to be brought to the attention of the Board, and for considering such other
matters as the Board might determine. The investments committee would be
responsible for reviewing the Portfolios' compliance with applicable
investment policies and restrictions, brokerage allocation, portfolio
investment pricing issues, interim dividend and distribution issues, and any
other matters determined by the Board. The nominating and compensation
committee would be responsible for considering and nominating individuals to
stand for election as Directors (including names submitted by shareholders for
consideration), reviewing policies for compensating the Directors who are not
"interested persons" of the Company, as defined by the 1940 Act, and for
considering such other matters as the Board may determine.
COMPENSATION OF NOMINEES
Each Nominee for Director is reimbursed for expenses incurred in attending
each meeting of the Board of Directors or Trustees of the AIM Funds or any
committee thereof. Each Nominee who is not also an officer of AIM or an AIM
affiliate is compensated for his services according to a fee schedule which
recognizes the fact that such Nominee also serves as a Director or Trustee of
other AIM Funds. Each such Nominee receives a fee, allocated among the AIM
Funds, which consists of an annual retainer component and a meeting fee
component. It is anticipated that similar compensation arrangements will apply
to the Nominees if they are elected as Directors of the Company.
Set forth below is information regarding compensation paid, accrued or
estimated for the calendar year ending December 31, 1996 for each Nominee:
<TABLE>
<CAPTION>
RETIREMENT TOTAL
ESTIMATED BENEFITS ACCRUED COMPENSATION
COMPENSATION FROM BY ALL AIM FROM ALL AIM
TRUSTEE THE COMPANY(1) FUNDS FUNDS(2)
- ------- ----------------- ---------------- ------------
<S> <C> <C> <C>
Charles T. Bauer................ $ -0- $ -0- $ -0-
Bruce L. Crockett............... 7,832 38,621 68,000
Owen Daly II.................... 7,832 82,607 68,000
Jack Fields (3)................. 7,832 -0- -0-
Carl Frischling................. 7,832 56,683 68,000
Robert H. Graham................ -0- -0- -0-
John F. Kroeger................. 7,832 83,654 66,000
Lewis F. Pennock................ 7,832 33,702 67,000
Ian W. Robinson................. 7,832 64,973 68,000
Louis S. Sklar.................. 7,832 47,593 66,500
</TABLE>
- --------
(1) Figures estimate what would have been paid for the calendar year ended
December 31, 1996 based on rates applicable for that year modified to
reflect changes in director compensation for the AIM Funds approved in
March 1997.
(2) Each Nominee serves as a director or trustee of the ten registered
investment companies advised by AIM (comprised of 38 portfolios). Data
reflect total compensation earned during the calendar year ended December
31, 1996. Does not include accrued retirement benefits or earnings on
deferred compensation.
(3) Mr. Fields commenced serving as a director/trustee of the AIM Funds on
March 11, 1997.
16
<PAGE>
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Retirement Plan"), each Nominee who is an "Eligible
Director/Trustee" (as defined in the Retirement Plan) may be entitled to
certain benefits upon retirement from the boards of the AIM Funds. Pursuant to
the Retirement Plan, the normal retirement date is the date on which the
Eligible Director/Trustee has attained age 65 and has completed at least five
years of continuous service with one or more of the AIM Funds. Each Eligible
Director/Trustee is entitled to receive an annual benefit from the AIM Funds
commencing on the first day of the calendar quarter coincident with or
following his date of retirement equal to 75% of the retainer paid or accrued
by the AIM Funds for such Eligible Director/Trustee during the twelve-month
period immediately preceding the Eligible Director's/Trustee's retirement
(including amounts deferred under a separate agreement between the AIM Funds
and the Eligible Director/Trustee) for the number of such Eligible
Director's/Trustee's years of service (not in excess of ten years of service)
completed with respect to any of the AIM Funds. If an Eligible
Director/Trustee dies (a) before the normal retirement date, no benefits are
payable; (b) after attaining the normal retirement date but before receipt of
any benefits under the Retirement Plan commences, the Eligible
Director's/Trustee's surviving spouse (if any) shall receive a quarterly
survivor's benefit equal to 50% of the amount payable to the deceased Eligible
Director/Trustee for no more than ten years beginning the first day of the
calendar quarter following the date of the Eligible Director's/Trustee's
death. Payments under the Retirement Plan are not secured or funded by any AIM
Fund.
Set forth below is a table that shows the estimated annual benefits payable
to an Eligible Director/Trustee upon retirement assuming various final annual
compensation and years of service classifications. The estimated credited
years of service for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock,
Robinson and Sklar are 9, 10, 19, 19, 15, 9 and 7, respectively, although, as
noted above, the benefits payable are based upon no more than ten years of
service.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
NUMBER OF YEARS OF ANNUAL RETAINER PAID BY
SERVICE WITH THE AIM FUNDS ALL AIM FUNDS
-------------------------- -----------------------
<S> <C> <C> <C>
$80,000 $86,500 $89,500
------- ------- -------
10............................................... $60,000 $64,875 $67,125
9............................................... 54,000 58,388 60,413
8............................................... 48,000 51,900 53,700
7............................................... 42,000 45,413 46,988
6............................................... 36,000 38,925 40,275
5............................................... 30,000 32,438 33,563
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "Deferring Directors/Trustees") have each executed a
Deferred Compensation Agreement (collectively, the "DC Agreements"). Pursuant
to the DC Agreements, the Deferring Directors/Trustees may elect to defer
receipt of up to 100% of their compensation payable by the AIM Funds, and such
amounts are placed into a deferral account. Currently, the Deferring
Directors/Trustees may select various AIM Funds in which all or part of their
deferral accounts shall be deemed to be invested. Distributions from the
Deferring Directors'/Trustees' deferral accounts will be paid in cash
generally in equal quarterly installments over a period of five or ten years
(depending on the DC Agreement) beginning on the date the Deferring
Director's/Trustee's retirement benefits commence under the Retirement Plan.
The boards of the AIM Funds, in their sole discretion, may accelerate or
extend the distribution of such deferral accounts after a Deferring
Director's/Trustee's termination of service as a Trustee or Director. If a
Deferring Director/Trustee dies prior to the distribution of amounts in his
deferral account, the balance of the deferral account will be distributed to
his designated beneficiary in a single lump
17
<PAGE>
sum payment as soon as practicable after such Deferring Director's/Trustee's
death. The DC Agreements are not funded and, with respect to the payments of
amounts held in the deferral accounts, the Deferring Directors/Trustees have
the status of unsecured creditors of the AIM Funds from which they are
deferring compensation.
THE DIRECTORS RECOMMEND THAT ALL SHAREHOLDERS VOTE IN FAVOR OF ALL THE
NOMINEES AS DIRECTORS.
PROPOSAL 5: APPROVAL OF AMENDED INVESTMENT RESTRICTIONS
At their meeting held May 16, 1997, the directors determined that it would
be advisable to provide the Portfolios with additional flexibility to engage
in options and futures transactions in order to hedge against various types of
risks, such as changes in the prices of portfolio investments (held or to be
purchased), changes in interest rates or currency exchange rates, or to give a
Portfolio exposure (or increased exposure) to certain parts of the market
("asset allocation"). The Portfolios' investment restrictions currently permit
the Portfolios to engage in transactions in financial futures and options,
except that Equity Portfolio and Cash Management Portfolio may not engage in
options transactions and only Income Portfolio, Flex Portfolio and MultiFlex
Portfolio may enter into interest rate futures contracts. The restrictions
currently also refer to specific types of futures and options. This
specificity has the effect of preventing a Portfolio from engaging in other
types of options and futures transactions that could be helpful for hedging
against certain types of risks and performing efficient portfolio management.
The directors noted that many other investment companies have broader
authority to invest in futures and options. They determined that this broader
authority (which would be subject to limits described below) is desirable for
the Portfolios because it would provide them with more flexibility in managing
risk. They determined that it would be desirable for Equity Portfolio to have
the ability to engage in options transactions to the same extent as the other
Portfolios (although the restriction against option trading by Cash Management
Portfolio will not be changed). They also were persuaded that the flexibility
to engage in interest rate futures might on occasion, be useful for Portfolios
that presently do not have that authority. They also noted that the
Portfolios' transactions in options and futures are, and would continue to be,
limited by rules of the U.S. Commodity Futures Trading Commission ("CFTC") and
the Portfolios' Policy Statement on Derivatives Investments. The CFTC rules
provide, among other things, that funds, such as the Portfolios, can engage in
options and futures transactions solely for "bona fide hedging purposes" (as
defined by the CFTC), plus other such transactions for which aggregate initial
margin and premiums will not exceed five percent of the value of the fund's
portfolio net of unrealized gains and losses on such transactions. The
Portfolios will engage in options and futures transactions only for hedging
and asset allocation purposes and not for speculation. The Portfolios'
investment restrictions do not limit the extent to which a Portfolio may
engage in bona fide hedging transactions, but these transactions are subject
to various limitations under CFTC rules designed to assure that they are used
for a proper hedging purpose.
As described in the Company's current prospectus, there are costs and risks
associated with engaging in options and futures transactions. A Portfolio may
be unable to close out an options position at a favorable price, or because an
exercise notice has been received, or because of limited market liquidity, or
because trading restrictions have been imposed in the options market. In such
cases, a Portfolio might lose the value of the premium paid for the option.
Where options are purchased as hedges against price movements, price movements
may not correlate as anticipated for the transaction. Many of these risks are
also present with futures--i.e., lack of correlation in price movements, lack
of liquidity, and market trading limits. A portfolio may be required to
segregate liquid assets in connection with its futures and options
transactions or to "cover" these transactions with portfolio instruments. For
example, where options are written on a Portfolio's securities, the Portfolio
will be restricted in trading those securities while the options are
outstanding and will give up certain opportunities for realizing price
appreciation. With both futures and options, a Portfolio may lose more than if
the transaction had not been engaged in if markets develop in an unanticipated
manner.
Despite these risks, the Directors believe there are advantages available to
the Portfolios from engaging in options and futures transactions for hedging
and asset allocation purposes, and they believe more flexible policies are
desirable.
18
<PAGE>
The affected investment restrictions of the Portfolios are as follows
[underlined language is proposed to be added; bracketed language is proposed
to be eliminated]:
The Portfolios may not:
Make short sales of securities or maintain a short position. All
Portfolios, except the [Equity and] Cash Management Portfolio[s], may,
however, purchase or sell options on futures and write, purchase and sell
puts and calls [write covered call options and cash secured put options].
Purchase or sell commodities or commodity contracts, except as set forth in
the Prospectus and in this Statement of Additional Information for
purchases and sales of options and futures, and options on futures on
underlying financial instruments [transactions in commodity futures
contracts, foreign currency futures contracts, and stock index futures
contracts. The Income, Flex and MultiFlex Portfolios may enter into
interest rate futures contracts if immediately after such a commitment the
sum of the then aggregate futures market prices of financial instruments
required to be delivered under open futures contract sales and the
aggregate purchase prices under future contract purchases would not exceed
30% of the applicable Portfolio's total assets].
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS OF EACH PORTFOLIO VOTE TO APPROVE
THE PROPOSED AMENDED INVESTMENT RESTRICTIONS.
OTHER BUSINESS
The management of the Company has no business to bring before the Meeting
other than the matters described above. Should any other business be presented
at the Meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Company does not hold annual meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of
proxy for a subsequent shareholders' meeting should send their written
proposals to the Secretary of the Company, 1355 Peachtree Street, N.E., Suite
200, Atlanta, Georgia 30309. The Company has not received any shareholder
proposals to be presented at this Meeting.
By Order of the Board of Directors,
/s/ Tony D. Green
Tony D. Green
Secretary
June 2, 1997
19
<PAGE>
[This Page Intentionally Left Blank]
20
<PAGE>
ANNEX A
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, as made the day of , 199 , by and between A I
M Advisors, Inc. (the "Adviser"), a Delaware corporation, and AIM Advisor
Funds, Inc., a Maryland corporation (the "Fund").
W I T N E S S E T H :
WHEREAS, the Fund is a corporation organized under the laws of the State of
Maryland; and
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), as a diversified, open-end management
investment company and is currently divided into seven series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments (such series as are presently
structured being designated as the AIM Advisor Large Cap Value Fund, AIM
Advisor Income Fund, AIM Advisor Flex Fund, AIM Advisor MultiFlex Fund, AIM
Advisor Real Estate Fund, AIM Advisor International Value Fund, and AIM
Advisor Cash Management Fund. Such series, together with any future series,
are hereinafter referred to as the "Series"); and
WHEREAS, the Fund desires that the Adviser manage its investment operations
and provide it with certain other services, and the Adviser desires to manage
said operations and to provide such other services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Investment Management Services. The Adviser hereby agrees to manage the
investment operations of the Fund's Series, subject to the terms of this
Agreement and to the supervision of the Fund's directors (the "Directors").
The Adviser agrees to perform, or arrange for the performance of, the
following specific services for the Fund:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act"), and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund, and
to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analyses and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the
Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the Adviser
is authorized to employ such brokers or dealers as may, in the Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the
21
<PAGE>
commission to be paid therefor, the Adviser is authorized to consider the full
range and quality of a broker's services which benefit the Fund, including but
not limited to research and analytical capabilities, reliability of
performance, sale of Fund shares, and financial soundness and responsibility.
Research services prepared and furnished by brokers through which the Adviser
effects securities transactions on behalf of the Fund may be used by the
Adviser in servicing all of its accounts, and not all such services may be
used by the Adviser in connection with the Fund. In the selection of a broker
or dealer for execution of any negotiated transaction, the Adviser shall have
no duty or obligation to seek advance competitive bidding for the most
favorable negotiated commission rate for such transaction; or to select any
broker solely on the basis of its purported or "posted" commission rate for
such transaction, provided, however, that the Adviser shall consider such
"posted" commission rates, if any, together with any other information
available at the time as to the level of commissions known to be charged on
comparable transactions by other qualified brokerage firms, as well as all
other relevant factors and circumstances, including the size of any
contemporaneous market in such securities, the importance to the Fund of
speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable
best price and execution on a particular transaction, the Adviser may consider
the sale of Fund shares by a broker or dealer in selecting among qualified
broker-dealers.
2. Other Services and Facilities. The Adviser shall, in addition, supply at
its own expense all supervisory and administrative services and facilities
necessary in connection with the day-to-day operations of the Fund's Series
(except those associated with the preparation and maintenance of certain
required books and records and certain sub-accounting services, which services
and facilities are provided under separate Accounting Services, Transfer
Agency and Administrative Services Agreements between the Adviser and A I M
Fund Services, Inc., and those operational services which are necessary for
the day-to-day operations of the Fund's Series, which services are provided
under a separate Operating Services Agreement dated August 1, 1997, between
the Fund and the Adviser (the "Operating Services Agreement"). These services
shall include, but not be limited to: supplying the Fund with officers,
clerical staff and other employees, if any, who are necessary in connection
with the Fund's operations; furnishing office space, facilities, equipment,
and supplies; conducting periodic compliance reviews of the Fund's operations;
preparation and review of certain required documents, reports and filings
(including required reports to the Securities and Exchange Commission (the
"SEC"), and other corporate documents of the Fund), except insofar as the
assistance of independent accountants or attorneys is necessary or desirable;
supplying basic telephone service and other utilities; and preparing and
maintaining the books and records required to be prepared and maintained by
the Fund pursuant to Rule 31a-1(b)(4), (5), (9), and (10) under the Investment
Company Act. All books and records prepared and maintained by the Adviser for
the Fund under this Agreement shall be the property of the Fund and, upon
request therefor, the Adviser shall surrender to the Fund such of the books
and records so requested.
3. Payment of Costs and Expenses. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies reasonably
necessary to provide the services required to be provided by the Adviser under
this Agreement. The Adviser shall pay all of the costs and expenses associated
with the Fund's operations and activities, except those expressly assumed by
the Fund under this Agreement, which shall consist of:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund in connection with securities transactions to which
the Fund is a party or in connection with securities owned by the Fund's
Series;
(b) the interest on indebtedness, if any, incurred by the Fund;
22
<PAGE>
(c) extraordinary expenses, including unexpected franchise or income
taxes, or business license and other corporate fees (not including SEC and
state securities registration fees) that are not anticipated which the Fund
will be required to pay to federal, state, county, city, or other
governmental agents, and fees and disbursements of Fund counsel in
connection with litigation by or against the Fund;
(d) the expenses of distributing shares of the Fund but only if and to
the extent permissible under a plan of distribution adopted by the Fund
pursuant to Rule 12b-1 under the Investment Company Act; and
(e) all fees paid by the Fund for operational services which are
necessary for the day-to-day operations of the Fund's Series under the
Operating Services Agreement.
4. Use of Affiliated Companies. In connection with the rendering of the
services required to be provided by the Adviser under this Agreement, the
Adviser may, to the extent it deems appropriate and subject to compliance with
the requirements of applicable laws and regulations, and upon receipt of
written approval of the Fund, make use of its affiliated companies and their
employees; provided that the Adviser shall supervise and remain fully
responsible for all such services in accordance with and to the extent
provided by this Agreement, and further provided that all costs and expenses
associated with the providing of services by any such companies or employees
and required by this Agreement to be borne by the Adviser shall be borne by
the Adviser or its affiliated companies.
5. Compensation of the Adviser. For the services to be rendered and the
charges and expenses to be assumed by the Adviser hereunder, the Fund shall
pay to the Adviser an advisory fee which will be computed daily and paid as of
the last day of each month, using for each daily calculation the most recently
determined net asset value of each of the Fund's Series, as determined by
valuations made in accordance with the Fund's procedures for calculating its
net asset value as described in the Fund's Prospectus and/or Statement of
Additional Information. The advisory fee to the Adviser shall be computed at
the annual rates indicated in Schedule A hereto. During any period when the
determination of the Fund's net asset value is suspended by the Directors of
the Fund, the net asset value of a share of the Fund as of the last business
day prior to such suspension shall, for the purpose of this Paragraph 5, be
deemed to be the net asset value at the close of each succeeding business day
until it is again determined.
No advisory fee shall be paid to the Adviser with respect to any assets of
the Fund's Series which may be invested in any other investment company for
which the Adviser serves as investment adviser or sub-adviser. The fee
provided for hereunder shall be prorated in any month in which this Agreement
is not in effect for the entire month. If, in any given year, the sum of a
Series' expenses exceeds the state-imposed annual expense limitation, if any
to which the Fund is subject, the Adviser will be required to reimburse that
Series for such excess expenses promptly. Interest, taxes and extraordinary
items such as litigation costs are not deemed expenses for purposes of this
paragraph and shall be borne by that Series in any event. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and shall not be deemed to be expenses for purposes of this
paragraph.
6. Avoidance of Inconsistent Positions and Compliance with Laws. In
connection with purchases or sales of securities for the investment portfolios
of the Fund's Series, neither the Adviser nor its officers or employees will
either act as a principal or agent for any party other than the Fund's Series
or receive any commissions. The Adviser will comply with all applicable laws
in acting hereunder including, without limitation, the Investment Company Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
7. Duration and Termination. With respect to each of the Fund's Series, this
Agreement is subject to approval by a majority of the outstanding voting
securities of that Series, and shall become effective as of the date so
written above with respect to each Series for which such approval has been
obtained, and unless sooner terminated as hereinafter provided, shall remain
in force with respect to each such Series for an initial term ending two years
from the date of execution, and from year to year thereafter, but only as long
as such
23
<PAGE>
continuance is specifically approved at least annually (i) by a vote of a
majority of the outstanding voting securities of such Series or by the
Directors of the Fund, and (ii) by a majority of the Directors of the Fund who
are not interested persons of the Adviser or the Fund by votes cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may, on 60 days' prior written notice, be terminated as to
the Fund or as to any one or more of the Series without the payment of any
penalty, by the Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund's Series, as the case may be, or by
the Adviser. This Agreement shall immediately terminate in the event of its
assignment, unless an order is issued by the SEC conditionally or
unconditionally exempting such assignment from the provisions of Section 15(a)
of the Investment Company Act, in which event this Agreement shall remain in
full force and effect subject to the terms and provisions of said order. In
interpreting the provisions of this paragraph 7, the definitions contained in
Section 2(a) of the Investment Company Act and the applicable rules under the
Investment Company Act (particularly the definitions of "interested person,"
"assignment" and "vote of a majority of the outstanding voting securities")
shall be applied.
The Adviser agrees to furnish to the Directors of the Fund such information
on an annual basis as may reasonably be necessary to evaluate the terms of
this Agreement.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in
paragraph 5 earned prior to such termination.
8. Non-Exclusive Services. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to others,
including, without limitation, other investment companies with similar
objectives to those of the Fund's Series. The Adviser may, when it deems such
to be advisable, aggregate orders for its other customers together with any
securities of the same type to be sold or purchased for the Fund's Series in
order to obtain best execution and lower brokerage commissions. In such event,
the Adviser shall allocate the shares so purchased or sold, as well as the
expenses incurred in the transaction, in the manner it considers to be most
equitable and consistent with its fiduciary obligations to the Fund's Series
and the Adviser's other customers. It is understood that directors, officers,
employees and shareholders of the Fund are or may become interested in the
Adviser and its affiliates, as directors, officers, employees and shareholders
or otherwise and that directors, officers, employees and shareholders of the
Adviser, and its affiliates are or may become interested in the Fund as
directors, officers and employees.
9. Miscellaneous Provisions.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Amendments Hereof. No provision of this Agreement may be orally changed or
discharged, but may only be modified by an instrument in writing signed by the
Fund and the Adviser. In addition, no amendment to this Agreement shall be
effective unless approved by (1) the vote of a majority of the Directors of
the Fund, including a majority of the Directors who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such amendment, and (2) the vote of a
majority of the outstanding voting securities of any of the Fund's Series as
to which such amendment is applicable (other than an amendment which can be
effective without shareholder approval under applicable law).
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
24
<PAGE>
Applicable Law. This Agreement shall be construed in accordance with the
laws of the State of Texas. To the extent that the applicable laws of the
State of Texas, or any of the provisions herein, conflict with applicable
provisions of the Investment Company Act, the latter shall control.
10. License Agreement. The Fund shall have the non-exclusive right to use
the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Fund with respect to such series of shares.
IN WITNESS WHEREOF, the Adviser and the Fund each has caused this Agreement
to be duly executed on its behalf by an officer thereunto duly authorized, on
the date first above written.
AIM ADVISOR FUNDS, INC.
By:
------------------------------------
President
ATTEST:
- -----------------------------------
Secretary
A I M ADVISORS, INC.
By:
------------------------------------
President
ATTEST:
- -----------------------------------
Secretary
25
<PAGE>
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
OF AIM ADVISOR FUNDS, INC.
Pursuant to Clause 5 of the Investment Advisory Agreement, fees payable
thereunder to the Adviser shall be calculated by applying the following annual
rates to the average daily net assets of each Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor Large Cap Fund................................ 0.75%
AIM Advisor Flex Fund..................................... 0.75%
AIM Advisor Real Estate Fund.............................. 0.90%
AIM Advisor MultiFlex Fund................................ 1.00%
AIM Advisor International Value Fund...................... 1.00%
AIM Advisor Income Fund................................... 0.65%
AIM Advisor Cash Management Fund.......................... 0.50%
</TABLE>
26
<PAGE>
ANNEX B
SUB-ADVISORY AGREEMENT
AGREEMENT made this day of , 199 , by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Capital
Management, Inc., a Delaware corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, AIM Advisor Funds, Inc. (the "Fund"), is engaged in business as a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with the Fund
(the "AIM Investment Advisory Agreement"), pursuant to which AIM is required
to provide investment and advisory services to the Fund's series, and, upon
receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to three of the Fund's seven series (the AIM Advisor Large Cap Value Fund, the
AIM Advisor Income Fund, and the AIM Advisor Flex Fund series, hereinafter
referred to as the "Series"), on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below,
subject to the broad supervision of AIM and the Board of Directors of the
Fund, for the period and on the terms and conditions set forth in this
Agreement. The Sub-Adviser hereby accepts such assignment and agrees during
such period, at its own expense, to render such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized herein,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund. The Sub-Adviser hereby agrees to
manage the investment operations of the Fund's Series, subject to the
supervision of the Fund's directors (the "Directors") and AIM. Specifically,
the Sub-Adviser agrees to perform the following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolios securities;
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
27
<PAGE>
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund or
AIM, and to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the Sub-
Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the Sub-
Adviser is authorized to employ such brokers or dealers as may, in the Sub-
Adviser's best judgment, implement the policy of the Fund to obtain prompt and
reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser
is authorized to consider the full range and quality of a broker's services
which benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on
behalf of the Fund may be used by the Sub-Adviser in servicing all of its
accounts, and not all such services may be used by the Sub-Adviser in
connection with the Fund. In the selection of a broker or dealer for execution
of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable
negotiated commission rate for such transaction, or to select any broker
solely on the basis of its purported or "posted" commission rate for such
transaction, provided, however, that the Sub-Adviser shall consider such
"posted" commission rates, if any, together with any other information
available at the time as to the level of commissions known to be charged on
comparable transactions by other qualified brokerage firms, as well as all
other relevant factors and circumstances, including the size of any
contemporaneous market in such securities, the importance to the Fund of
speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable
best price and execution on a particular transaction, the Sub-Adviser may
consider the sale of Fund shares by a broker or dealer in selecting among
qualified broker-dealers.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and
shall, at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the
extent expressly assumed by the Sub-Adviser herein and except to the extent
required by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay
all costs and expenses in connection with the operations of the Fund's Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses assumed by
the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of the Fund's Series, as determined
by a valuation made
28
<PAGE>
in accordance with the Fund's procedures for calculating its net asset value
as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub-Adviser shall be computed at the
annual rates indicated in Schedule A hereto. During any period when the
determination of the Series' net asset value is suspended by the Directors of
the Fund, the net asset value of a share of the Fund's Series as of the last
business day prior to such suspension shall, for the purpose of this Article
III, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee shall be paid
to the Sub-Adviser with respect to any assets of the Fund's Series which may
be invested in any other investment company for which the Sub-Adviser serves
as investment adviser or sub adviser. The fee provided for hereunder shall be
prorated in any month in which this Agreement is not in effect for the entire
month. The Sub-Adviser shall be entitled to receive fees hereunder only for
such periods as the AIM Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers,
employees and shareholders of the Sub-Adviser, AIM and their affiliates are or
may become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund's Series, neither the Sub-Adviser nor any of its
directors, officers or employees will either act as a principal or agent for
any party other than the Fund's Series or receive any commissions. The Sub-
Adviser will comply with all applicable laws in acting hereunder including,
without limitation, the Investment Company Act; the Investment Advisers Act of
1940, as amended; and all rules and regulations duly promulgated under the
foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
With respect to each Series, this Agreement is subject to approval by a
majority of the outstanding voting securities of that Series, and shall become
effective as of the date so written above with respect to each Series for
which approval has been obtained, and shall remain in force for an initial
term of two years from the date of execution, and from year to year thereafter
until its termination in accordance with this Article VI, but only so long as
such continuance is specifically approved at least annually by (i) the
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund's Series, and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any such party cast
in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated as to any services at any time, without the
payment of any penalty, by AIM, by the Fund by vote of the Directors of the
Fund or by vote of a majority of the outstanding voting securities of the
Fund's Series, or by the Sub-Adviser. A termination by AIM or the Sub-Adviser
shall require sixty days' written notice to the other party and to the Fund,
and a termination by the Fund shall require such notice to each of the
parties. This Agreement shall automatically terminate in the event of its
assignment to the extent required by the Investment Company Act and the rules
thereunder.
29
<PAGE>
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such amendment, and (2) the vote of a majority of the
outstanding voting securities of any of the Fund's Series as to which such
amendment is applicable (other than an amendment which can be effective
without shareholder approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Texas and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
A I M ADVISORS, INC.
By:
------------------------------------
President
ATTEST:
- ---------------------------------
Secretary
INVESCO CAPITAL MANAGEMENT, INC.
By:
------------------------------------
President
ATTEST:
- ---------------------------------
Secretary
31
<PAGE>
SCHEDULE A
TO
ICM SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Capital Management, Inc. ("ICM"), fees payable
thereunder to ICM shall be calculated by applying the following annual rates
to the average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor Large Cap Value Fund.......................... 0.20%
AIM Advisor Flex Fund..................................... 0.20%
AIM Advisor Income Fund................................... 0.10%
</TABLE>
32
<PAGE>
ANNEX C
SUB-ADVISORY AGREEMENT
AGREEMENT made this day of , 199 , by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Management &
Research, Inc., a Massachusetts corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO ADVISOR FUNDS, INC. (the "Fund") is engaged in business as
a diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with the Fund
(the "AIM Investment Advisory Agreement"), pursuant to which AIM is required
to provide investment and advisory services to the Fund's series, and, upon
receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to one of the Fund's series (the AIM Advisor MultiFlex Fund, hereinafter
referred to as the "Series") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below,
subject to the broad supervision of AIM and the Board of Directors of the
Fund, for the period and on the terms and conditions set forth in this
Agreement. The Sub-Adviser hereby accepts such assignment and agrees during
such period, at its own expense, to render such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized herein,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
The Sub-Adviser hereby agrees to manage the investment operations of the
Fund's Series, subject to the supervision of the Fund's directors (the
"Directors") and AIM. Specifically, the Sub-Adviser agrees to perform the
following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolios securities;
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any prospectus and/or statement of additional information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
33
<PAGE>
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund or
AIM, and to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the Sub-
Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the Sub-
Adviser is authorized to employ such brokers or dealers as may, in the Sub-
Adviser's best judgment, implement the policy of the Fund to obtain prompt and
reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser
is authorized to consider the full range and quality of a broker's services
which benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on
behalf of the Fund may be used by the Sub-Adviser in servicing all of its
accounts, and not all such services may be used by the Sub-Adviser in
connection with the Fund. In the selection of a broker or dealer for execution
of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable
negotiated commission rate for such transaction, or to select any broker
solely on the basis of its purported or "posted" commission rate for such
transaction, provided, however, that the Sub-Adviser shall consider such
"posted" commission rates, if any, together with any other information
available at the time as to the level of commissions known to be charged on
comparable transactions by other qualified brokerage firms, as well as all
other relevant factors and circumstances, including the size of any
contemporaneous market in such securities, the importance to the Fund of
speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable
best price and execution on a particular transaction, the Fund's adviser may
consider the sale of Fund shares by a broker or dealer in selecting among
qualified broker-dealers.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and
shall, at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the
extent expressly assumed by the Sub-Adviser herein and except to the extent
required by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay
all costs and expenses in connection with the operations of the Fund's Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses assumed by
the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of the Fund's Series, as determined
by a valuation made
34
<PAGE>
in accordance with the Fund's procedures for calculating its net asset value
as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub-Adviser shall be computed at the
annual rate indicated in Schedule A hereto. During any period when the
determination of the Series' net asset value is suspended by the Directors of
the Fund, the net asset value of a share of the Fund's Series as of the last
business day prior to such suspension shall, for the purpose of this Article
III, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee shall be paid
to the Sub-Adviser with respect to any assets of the Fund's Series which may
be invested in any other investment company for which the Sub-Adviser serves
as investment adviser or sub adviser. The fee provided for hereunder shall be
prorated in any month in which this Agreement is not in effect for the entire
month. The Sub-Adviser shall be entitled to receive fees hereunder only for
such periods as the AIM Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers,
employees and shareholders of the Sub-Adviser, AIM and their affiliates are or
may become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS
AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund's Series, neither the Sub-Adviser nor any of its
directors, officers or employees will either act as a principal or agent for
any party other than the Fund's Series or receive any commissions. The Sub-
Adviser will comply with all applicable laws in acting hereunder including,
without limitation, the Investment Company Act; the Investment Advisers Act of
1940, as amended; and all rules and regulations duly promulgated under the
foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement having been approved by a majority of the outstanding voting
securities of the Series, shall become effective as of the date so written
above, and shall remain in force for an initial term of two years from the
date of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of the Fund's
Series, and (ii) a majority of those Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by AIM, the Fund by vote of the Directors of the Fund, or by vote of
a majority of the outstanding voting securities of the Fund's Series, or by
the Sub-Adviser. A termination by AIM or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Fund, and a termination by
the Fund shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act and the Rules thereunder.
35
<PAGE>
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for
the purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of any of the Fund's Series as to which such
amendment is applicable (other than an amendment which can be effective
without shareholder approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Texas and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
36
<PAGE>
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
A I M ADVISORS, INC.
By:__________________________________
President
ATTEST:
_____________________________________
Secretary
INVESCO MANAGEMENT & RESEARCH, INC.
By:__________________________________
President
ATTEST:
_____________________________________
Secretary
37
<PAGE>
SCHEDULE A
TO
IMR SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M Advisors,
Inc. and INVESCO Management & Research, Inc. ("IMR"), fees payable thereunder
to the IMR shall be calculated by applying the following annual rates to the
average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor MultiFlex Fund 0.35% on assets to $500 million;
0.25% on assets in excess of $500 million.
</TABLE>
38
<PAGE>
ANNEX D
SUB-ADVISORY AGREEMENT
AGREEMENT made this day of , 199 , by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Realty Advisors,
Inc., a Texas corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, AIM Advisor Funds, Inc. (the "Fund") is engaged in business as a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with the Fund
(the "AIM Investment Advisory Agreement"), pursuant to which AIM is required
to provide investment and advisory services to the Fund's series, and, upon
receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to one of the Fund series, (the AIM Advisor Real Estate Fund, hereinafter
referred to as the "Series") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below,
subject to the broad supervision of AIM and the Board of Directors of the
Fund, for the period and on the terms and conditions set forth in this
Agreement. The Sub-Adviser hereby accepts such assignment and agrees during
such period, at its own expense, to render such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized herein,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
The Sub-Adviser hereby agrees to manage the investment operations of the
Series, subject to the supervision of the Fund's directors (the "Directors")
and AIM. Specifically, the Sub-Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Series, and to execute all purchases and sales
of portfolios securities;
(b) to maintain a continuous investment program for the Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
39
<PAGE>
(c) to determine what securities are to be purchased or sold for the
Series, unless otherwise directed by the Directors of the Fund or AIM, and
to execute transactions accordingly;
(d) to provide to the Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the Sub-
Adviser;
(e) to determine what portion of the Series should be invested in the
various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Series, the Sub-Adviser is
authorized to employ such brokers or dealers as may, in the Sub-Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub-Adviser is authorized
to consider the full range and quality of a broker's services which benefit
the Fund, including but not limited to research and analytical capabilities,
reliability of performance, sale of Fund shares, and financial soundness and
responsibility. Research services prepared and furnished by brokers through
which the Sub-Adviser effects securities transactions on behalf of the Series
may be used by the Sub-Adviser in servicing all of its accounts, and not all
such services may be used by the Sub-Adviser in connection with the Fund. In
the selection of a broker or dealer for execution of any negotiated
transaction, the Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated commission rate for such
transaction, or to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however, that the
Sub-Adviser shall consider such "posted" commission rates, if any, together
with any other information available at the time as to the level of
commissions known to be charged on comparable transactions by other qualified
brokerage firms, as well as all other relevant factors and circumstances,
including the size of any contemporaneous market in such securities, the
importance to the Fund of speed, efficiency, and confidentiality of execution,
the execution capabilities required by the circumstances of the particular
transactions, and the apparent knowledge or familiarity with sources from or
to whom such securities may be purchased or sold. Where the commission rate
reflects services, reliability and other relevant factors in addition to the
cost of execution, the Sub-Adviser shall have the burden of demonstrating that
such expenditures were bona fide and for the benefit of the Fund. Transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable
best price and execution on a particular transaction, the Sub-Adviser may
consider the sale of Fund shares by a broker or dealer in selecting among
qualified broker-dealers.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and
shall, at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the
extent expressly assumed by the Sub-Adviser herein and except to the extent
required by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay
all costs and expenses in connection with the operations of the Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses assumed by
the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of the Series, as determined by a
valuation made in
40
<PAGE>
accordance with the Fund's procedures for calculating its net asset value as
described in the Fund's Prospectus and/or Statement of Additional Information.
The advisory fee to the Sub-Adviser shall be computed at the annual rate
indicated in Schedule A hereto. During any period when the determination of
the Series' net asset value is suspended by the Directors of the Fund, the net
asset value of a share of the Series as of the last business day prior to such
suspension shall, for the purpose of this Article III, be deemed to be the net
asset value at the close of each succeeding business day until it is again
determined. However, no such fee shall be paid to the Sub-Adviser with respect
to any assets of the Series which may be invested in any other investment
company for which the Sub-Adviser serves as investment adviser or sub-adviser.
The fee provided for hereunder shall be prorated in any month in which this
Agreement is not in effect for the entire month. The Sub-Adviser shall be
entitled to receive fees hereunder only for such periods as the AIM Investment
Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers,
employees and shareholders of the Sub-Adviser, AIM and their affiliates are or
may become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS
AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Series, neither the Sub-Adviser nor any of its directors,
officers or employees will either act as a principal or agent for any party
other than the Series or receive any commissions. The Sub-Adviser will comply
with all applicable laws in acting hereunder including, without limitation,
the Investment Company Act; the Investment Advisers Act of 1940, as amended;
and all rules and regulations duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement having been approved by a majority of the outstanding voting
securities of the Series, shall become effective as of the date so written
above, and shall remain in force for an initial term of two years from the
date of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of the Series,
and (ii) a majority of those Directors who are not parties to this Agreement
or interested persons of any such party cast in person at a meeting called for
the purpose of voting on such approval.
This Agreement may be terminated as to any services at any time, without the
payment of any penalty, by AIM, by the Fund by vote of the Directors of the
Fund or by vote of a majority of the outstanding voting securities of the
Series, or by the Sub-Adviser. A termination by AIM or the Sub-Adviser shall
require sixty days' written notice to the other party and to the Fund, and a
termination by the Fund shall require such notice to each of the parties. This
Agreement shall automatically terminate in the event of its assignment to the
extent required by the Investment Company Act and the rules thereunder.
41
<PAGE>
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such amendment, and (2) the vote of a majority of the
outstanding voting securities of the Series (other than an amendment which can
be effective without shareholder approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Texas and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
42
<PAGE>
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
A I M ADVISORS, INC.
By:__________________________________
President
ATTEST:
By:__________________________________
Secretary
INVESCO REALTY ADVISORS, INC.
By:__________________________________
President
ATTEST:
By:__________________________________
Secretary
43
<PAGE>
SCHEDULE A
TO
IRA SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M and
INVESCO Realty Advisors, Inc.. ("IRA"), fees payable thereunder to the IRA
shall be calculated by applying the following annual rates to the average
daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor Real Estate Fund 0.35% of assets to $100 million;
0.25% of assets in excess of $100 million.
</TABLE>
44
<PAGE>
ANNEX E
SUB-ADVISORY AGREEMENT
AGREEMENT made this day of , 199 , by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Global Asset
Management Limited, a Bermuda company (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, AIM Advisor Funds, Inc. (the "Fund"), is engaged in business as a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with the Fund
(the "AIM Investment Advisory Agreement"), pursuant to which AIM is required
to provide investment and advisory services to the Fund's series, and, upon
receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to one of those Fund's series, the AIM Advisor International Value Fund,
hereinafter referred to as the "Series"), on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below,
subject to the broad supervision of AIM and the Board of Directors of the
Fund, for the period and on the terms and conditions set forth in this
Agreement. The Sub-Adviser hereby accepts such assignment and agrees during
such period, at its own expense, to render such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized herein,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund. The Sub-Adviser hereby agrees to
manage the investment operations of the Fund's Series, subject to the
supervision of the Fund's directors (the "Directors") and AIM. Specifically,
the Sub-Adviser agrees to perform the following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolios securities;
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
45
<PAGE>
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund or
AIM, and to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the Sub-
Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the Sub-
Adviser is authorized to employ such brokers or dealers as may, in the Sub-
Adviser's best judgment, implement the policy of the Fund to obtain prompt and
reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser
is authorized to consider the full range and quality of a broker's services
which benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on
behalf of the Fund may be used by the Sub-Adviser in servicing all of its
accounts, and not all such services may be used by the Sub-Adviser in
connection with the Fund. In the selection of a broker or dealer for execution
of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable
negotiated commission rate for such transaction, or to select any broker
solely on the basis of its purported or "posted" commission rate for such
transaction, provided, however, that the Sub-Adviser shall consider such
"posted" commission rates, if any, together with any other information
available at the time as to the level of commissions known to be charged on
comparable transactions by other qualified brokerage firms, as well as all
other relevant factors and circumstances, including the size of any
contemporaneous market in such securities, the importance to the Fund of
speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable
best price and execution on a particular transaction, the Sub-Adviser may
consider the sale of Fund shares by a broker or dealer in selecting among
qualified broker-dealers.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and
shall, at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the
extent expressly assumed by the Sub-Adviser herein and except to the extent
required by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay
all costs and expenses in connection with the operations of the Fund's Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses assumed by
the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily
46
<PAGE>
calculation the most recently determined net asset value of the Fund's Series,
as determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rates indicated in Schedule A hereto. During any
period when the determination of the Series' net asset value is suspended by
the Directors of the Fund, the net asset value of a share of the Fund's Series
as of the last business day prior to such suspension shall, for the purpose of
this Article III, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined. However, no such fee
shall be paid to the Sub-Adviser with respect to any assets of the Fund's
Series which may be invested in any other investment company for which the
Sub-Adviser serves as investment adviser or sub adviser. The fee provided for
hereunder shall be prorated in any month in which this Agreement is not in
effect for the entire month. The Sub-Adviser shall be entitled to receive fees
hereunder only for such periods as the AIM Investment Advisory Agreement
remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers,
employees and shareholders of the Sub-Adviser, AIM and their affiliates are or
may become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund's Series, neither the Sub-Adviser nor any of its
directors, officers or employees will either act as a principal or agent for
any party other than the Fund's Series or receive any commissions. The Sub-
Adviser will comply with all applicable laws in acting hereunder including,
without limitation, the Investment Company Act; the Investment Advisers Act of
1940, as amended; and all rules and regulations duly promulgated under the
foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement having been approved by a majority of the outstanding voting
securities of the Series, shall become effective as of the date so written
above, and shall remain in force for an initial term of two years from the
date of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of the Fund's
Series, and (ii) a majority of those Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated as to any services at any time, without the
payment of any penalty, by AIM, by the Fund by vote of the Directors of the
Fund or by vote of a majority of the outstanding voting securities of the
Fund's Series, or by the Sub-Adviser. A termination by AIM or the Sub-Adviser
shall require sixty days' written notice to the other party and to the Fund,
and a termination by the Fund shall require such notice to each of the
parties. This Agreement shall automatically terminate in the event of its
assignment to the extent required by the Investment Company Act and the rules
thereunder.
47
<PAGE>
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such amendment, and (2) the vote of a majority of the
outstanding voting securities of any of the Fund's Series as to which such
amendment is applicable (other than an amendment which can be effective
without shareholder approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Texas and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
48
<PAGE>
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
A I M ADVISORS, INC.
By:__________________________________
President
ATTEST:
By:__________________________________
Secretary
INVESCO GLOBAL ASSET MANAGEMENT
LIMITED
By:__________________________________
President
ATTEST:
By:__________________________________
Secretary
49
<PAGE>
SCHEDULE A
TO
IGAM SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Global Asset Management Limited ("IGAM"), fees
payable thereunder to IGAM shall be calculated by applying the following
annual rates to the average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor 0.35% on assets to $50 million;
International Value 0.30% on assets over $50 million to $100 million;
Fund 0.25% on assets in excess of $100 million.
</TABLE>
50
<PAGE>
ANNEX F
PRESENT DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANY
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE FOR
NAME, ADDRESS AND AGE POSITION WITH COMPANY THE PAST FIVE YEARS
--------------------- --------------------------- ------------------------
<C> <C> <S>
Charles W. Brady*+ Chairman Chief Executive Officer
1315 Peachtree Street, N.E. and Director, AMVESCAP
Atlanta, GA 30309 PLC, and of various
Age:61 subsidiaries; Chairman
of the Board, INVESCO
Treasurer's Series Trust
and The Global Health
Sciences Fund.
Fred A. Deering+# Vice Chairman Formerly, Chairman of
Security Life Center the Executive Committee
1290 Broadway and Chairman of the
Denver, CO Board, Security Life of
Age: 69 Denver Insurance
Company; Former
Director, Midwestern
United Life Insurance
Company; Director, ING
American Holdings
Company and First ING
Life Insurance Company
of New York; Vice
Chairman, INVESCO
Treasurer's Series
Trust; Trustee, The
Global Health Sciences
Fund.
Hubert L. Harris, Jr.*+ President, Chief Accounting President of the Fund
1315 Peachtree Street, N.E. and Financial Officer, and (4/91-present);
Atlanta, GA 30309 Director Chairman of INVESCO
Age: 53 Services, Inc.(5/96-
present); President,
INVESCO Services, Inc.
(1/90-4/96); Director,
AMVESCAP PLC, and Chief
Executive Officer of
INVESCO Individual
Services Group; member
of Executive Committee
of the Alumni Board of
Trustees of Georgia
Institute of Technology;
President and Trustee,
The Global Health
Sciences Fund and
Trustee, INVESCO
Treasurer's Series
Trust.
Victor L. Andrews** Director Professor Emeritus,
4625 Jettridge Drive Chairman Emeritus and
Atlanta, GA Chairman of the CFO
Age: 66 Roundtable, Department
of Finance, Georgia
State University;
President, Andrews
Financial Associates,
Inc.; former member of
the faculties, Harvard
Business School and the
Sloan School of
Management of MIT;
Director, The
Southeastern Thrift and
Bank Fund, Inc. and The
Sheffield Funds, Inc.;
Trustee, INVESCO
Treasurer's Series
Trust.
Bob R. Baker+** Director President and Chief
1775 Sherman Street, #1000 Executive Officer, AMC
Denver, CO 80203 Cancer Research Center
Age: 60 (since 1/89);
Trustee, INVESCO
Treasurer's Series
Trust.
Lawrence H. Budner# Director Trust Consultant;
7608 Glen Albens Circle Formerly, Senior Vice
Dallas, TX 75225 President and Senior
Age: 66 Trust Officer of
InterFirst Bank, Dallas,
TX; Trustee, INVESCO
Treasurer's Series
Trust.
Daniel D. Chabris+# Director Financial Consultant;
15 Sterling Road Formerly, Assistant
Armonk, NY 10504 Treasurer, Colt
Age: 73 Industries, Inc., New
York, NY; Trustee,
INVESCO Treasurer's
Series Trust.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE FOR
NAME, ADDRESS AND AGE POSITION WITH COMPANY THE PAST FIVE YEARS
--------------------- ----------------------- ------------------------
<C> <C> <S>
Kenneth T. King** Director Retired; Formerly
4080 North Circulo Manzanillo Chairman, The Capital
Tucson, AZ 85715 Life Insurance Company,
Age: 71 Providence Washington
Insurance Company, and
Director of numerous
subsidiaries thereof;
Trustee, INVESCO
Treasurer's Series
Trust.
John W. McIntyre# Director Retired; Formerly
Seven Piedmont Center Chairman and Chief
Suite 100 Executive Officer,
Atlanta, GA 30305 Citizens and Southern
Age: 66 National Bank; Trustee,
INVESCO Treasurer's
Series Trust, The Global
Health Sciences Fund and
Gables Residential
Trust.
Tony D. Green Treasurer and Secretary Senior Vice President,
1355 Peachtree Street, N.E. INVESCO Services, Inc.
Atlanta, GA 30309 (since 7/93); Secretary,
Age: 50 INVESCO Services, Inc.
(since 4/95); formerly,
Principal for Mutual
Fund Operations, Edward
D. Jones & Co; Treasurer
and Secretary, INVESCO
Treasurer's Series Trust
(since 7/95).
Mark F. Moots, Jr. Assistant Treasurer and Chief Financial Officer,
1355 Peachtree Street, N.E. Assistant Secretary INVESCO Services, Inc.
Atlanta, GA 30309 (since 5/96); Compliance
Age: 32 and Accounting Manager,
INVESCO Services, Inc.
(8/95-4/96); Chief
Financial Officer,
Caldwell & Orkin, Inc.
and Treasurer, C&O Funds
Distributor, Inc. (1992-
1995).
</TABLE>
- --------
* Messrs. Brady and Harris are "interested persons" (as that term is defined
in the 1940 Act) of the Fund because of their affiliation with ISI and/or
its affiliated companies.
** Member of the management liaison committee of the Fund.
# Member of the audit committee of the Fund.
+ Member of the executive committee of the Fund. The executive committee acts
upon the current and ordinary business of the Fund between meetings of the
Board of Directors. Except for certain powers which, under applicable law,
may only be exercised by the full Board of Directors, the executive committee
may exercise all powers and authority of the Board of Directors in the
management of the business of the Fund. All decisions are subsequently
submitted for ratification by the Board of Directors.
During the year ended December 31, 1996, the Company's Board of Directors
met five times, including one special meeting. The Company currently has five
standing committees of its Board of Directors: the Audit Committee, the
Valuation Committee, the Compensation Committee, the Management Liaison
Committee and the Executive Committee. During the year ended December 31,
1996, the Audit Committee met four times, the Management Liaison Committee met
four times, and the Compensation Committee met once. During such year, all of
the Directors attended at least 75% of the meetings of the Board of Directors
and all committees, except Charles Brady and Kenneth King who each missed the
special meeting and one regular meeting.
ICM serves as investment adviser of INVESCO Treasurer's Series Trust. Mr.
Brady is also Chairman of the Board, Mr. Deering is Vice Chairman, and all of
the Directors of the Fund, with the exception of Mr. Harris, are directors or
trustees of the following investment companies: INVESCO Diversified Funds,
Inc.; INVESCO Dynamics Fund, Inc.; INVESCO Emerging Opportunity Funds, Inc.;
INVESCO Growth Fund, Inc.; INVESCO Income Funds, Inc.; INVESCO Industrial
Income Fund, Inc.; INVESCO International Funds, Inc.; INVESCO Money Market
Funds, Inc.; INVESCO Multiple Asset Funds, Inc.; INVESCO Specialty Funds,
Inc.; INVESCO Strategic Portfolios, Inc.; INVESCO Tax-Free Income Funds, Inc.;
INVESCO Value Trust; and INVESCO Variable Investment Funds, Inc.
52
<PAGE>
DIRECTOR COMPENSATION
The following table sets forth, for the fiscal period ended December 31,
1996: the compensation paid by the Fund to its seven (formerly eight)
independent directors for services rendered in their capacities as directors
of the Fund; the retirement benefits accrued as Fund expenses with respect to
the Defined Benefit Deferred Compensation Plan discussed below; and the total
compensation paid by all of the mutual funds distributed by ISI and INVESCO
Funds Group, Inc., including the fund, INVESCO Treasurer's Series Trust and
The Global Health Sciences Fund (collectively, the "INVESCO Complex") (50
portfolios in total) to these directors for services rendered in their
capacities as directors or trustees.
<TABLE>
<CAPTION>
RETIREMENT TOTAL
BENEFITS ESTIMATED COMPENSATION
AGGREGATE ACCRUED AS ANNUAL FROM INVESCO
COMPENSATION PART OF FUND BENEFITS UPON COMPLEX PAID
NAME OF PERSON, POSITION FROM FUND (1) EXPENSES (2) RETIREMENT (3) TO DIRECTORS (1)
- ------------------------ ------------ ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Fred A. Deering, Vice
Chairman of the Board.. $ 8,816 $ 1,814 $ 1,766 $ 98,850
Victor L. Andrews....... 8,600 1,714 2,044 84,350
Bob R. Baker............ 8,635 1,530 2,739 84,350
Lawrence H. Budner...... 8,352 1,714 2,044 80,350
Daniel D. Chabris....... 8,635 1,956 1,453 84,850
A. D. Frazier, Jr.(4)... 7,840 0 0 81,500
Kenneth T. King......... 7,759 1,883 1,602 71,350
John W. McIntyre........ 8,294 0 0 90,350
------- ------- ------- --------
TOTAL................... $66,933 $10,611 $11,468 $676,450
% of Assets............. 0.0066%(5) 0.0011%(5) -- 0.0044%(6)
</TABLE>
- --------
(1) The vice chairman of the board, the chairman of the audit, management
liaison, and compensation committees, and the members of the executive
committee each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the
election of the directors.
(3) These figures represent the Company's share of the estimated annual
benefits to be paid by the INVESCO Complex (excluding the Global Health
Sciences Fund which does not participate in any retirement plan) upon the
director's retirement, calculated using the current method of allocating
director compensation among the mutual funds in the INVESCO Complex. These
estimated benefits assume retirement at age 72 and that the basic retainer
payable to the directors will be adjusted periodically for inflation, for
increases in the number of mutual funds in the INVESCO Complex, and for
other reasons during the period in which retirement benefits are accrued
on behalf of the respective directors. This results in lower estimated
benefits for directors who are closer to retirement and higher estimated
benefits for directors who are further from retirement. With the exception
of Messrs. Frazier and McIntyre, each of these directors has served as a
director/trustee of one or more mutual funds in the INVESCO Complex for
the minimum five-year period required to be eligible to participate in the
Defined Benefit Deferred Compensation Plan.
(4) Effective November 1, 1996, Mr. Frazier was employed by AMVESCO PLC.
Because it was possible that Mr. Frazier would be employed with AMVESCO
PLC, effective May 1, 1996, he was deemed to be an "interested person" of
the Fund and of the other funds in the INVESCO Complex. Effective November
1, 1996, Mr. Frazier ceased to receive any director's fees or other
compensation from the Fund or other investment companies in the INVESCO
Complex for his services as a director. Effective February 28, 1997, Mr.
Frazier resigned as a director of the Company.
(5) Total as a percentage of the Fund's net assets as of December 31, 1996.
(6) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1996.
53
<PAGE>
Messrs. Brady and Harris, as "interested persons" of the Fund and other
investment companies in the INVESCO Complex, receive compensation as officers
or employees of ISI or its affiliated companies, and do not receive any
director's fees or other compensation from the Company or other investment
companies in the INVESCO Complex for their services as directors.
The boards of directors/trustees of the mutual funds in the INVESCO Complex
(excluding The Global Health Services Fund) have adopted a Defined Benefit
Deferred Compensation Plan for the non-interested directors and trustees of
the funds. Under this plan, each director or trustee who is not an interested
person of the funds (as defined in the 1940 Act) and who has served for at
least five years (a "qualified director") is entitled to receive, upon
retiring from the boards at the retirement age of 72 (or the retirement age of
73 or 74, if the retirement date is extended by the boards for one or two
years, but less than three years) continuation of payment for one year (the
"first year retirement benefit") of the annual basic retainer payable by the
funds to the qualified director at the time of his retirement (the "basic
retainer"). Commencing with any such director's second year of retirement, and
commencing with the first year of retirement of a director whose retirement
has been extended by the board for three years, a qualified director shall
receive quarterly payments at an annual rate equal to 40% of the basic
retainer. These payments will continue for the remainder of the qualified
director's life or ten years, whichever is longer (the "reduced retainer
payments"). If a qualified director dies or becomes disabled after age 72 and
before age 74 while still a director of the funds, the first year retirement
benefit and the reduced retainer payments will be made to him or to his
beneficiary or estate. If a qualified director becomes disabled or dies either
prior to age 72 or during his/her 74th year while still a director of the
funds, the director will not be entitled to receive the first year retirement
benefit; however, the reduced retainer payments will be made to his
beneficiary or estate. The plan is administered by a committee of three
directors who are also participants in the plan and one director who is not a
plan participant. The cost of the plan will be allocated among the funds in
the INVESCO Complex (excluding The Global Health Sciences Fund) in a manner
determined to be fair and equitable by the committee. The Fund is not making
any payments to directors under the plan as of the date of this Statement of
Additional Information. The Fund has no stock options or other pension or
retirement plans for management or other personnel and pays no salary or
compensation to any of its officers.
54
<PAGE>
ANNEX G
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
TOTAL AGGREGATE
NET ASSETS NET FEES WAIVERS
ANNUAL RATES FOR THE MOST PAID TO AIM FOR THE MOST
(BASED ON AVERAGE DAILY NET RECENTLY FOR THE MOST RECENTLY
ASSETS) COMPLETED RECENTLY COMPLETED COMPLETED
FOR AIM FUNDS FISCAL YEAR FISCAL YEAR* FISCAL YEAR
--------------------------- --------------- ------------------ ------------
<S> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
0.80% of the first $150
million.
0.625% of the excess over $150
million. $ 2,750,563,943 $16,492,564 $ 0
AIM Blue Chip Fund
0.75% of the first $350
million.
0.625% of the excess over $350
million. $ 128,548,354 $ 256,773** $ 26,433
AIM Capital Development Fund
0.75% of the first $350
million.
0.625% of the excess over $350
million. $ 273,687,609 $ 280,248*** $ 144,946
AIM Charter Fund
1.00% of the first $30
million.
0.75% over $30 million up to
$150 million.
0.625% of the excess over $150
million. $ 3,192,471,415 $16,529,891 $ 156,975
AIM Constellation Fund
1.00% of the first $30
million.
0.75% over $30 million up to
$150 million.
0.625% of the excess over $150
million. $11,548,540,962 $57,614,412 $1,869,383
AIM Weingarten Fund
1.00% of the first $30
million.
0.75% over $30 million up to
$350 million.
0.625% of the excess over $350
million. $ 5,305,435,087 $29,960,379 $1,458,804
AIM FUNDS GROUP
AIM Balanced Fund
0.75% of the first $150
million.
0.50% of the excess over $150
million. $ 571,270,994 $ 2,151,655 $ 0
AIM Global Utilities Fund
0.60% of the first $200
million.
0.50% over $200 million up to
$500 million.
0.40% over $500 million up to
$1 billion.
0.30% of the excess over $1
billion. $ 243,531,479 $ 1,397,762 $ 0
AIM Growth Fund
0.80% of the first $150
million.
0.625% of excess over $150
million. $ 508,689,539 $ 2,874,943 $ 0
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
TOTAL AGGREGATE WAIVERS
NET ASSETS NET FEES FOR THE
ANNUAL RATES FOR THE MOST PAID TO AIM MOST
(BASED ON AVERAGE DAILY NET RECENTLY FOR THE MOST RECENTLY
ASSETS) COMPLETED RECENTLY COMPLETED COMPLETED
FOR AIM FUNDS FISCAL YEAR FISCAL YEAR* FISCAL YEAR
--------------------------- --------------- ------------------ -----------
<S> <C> <C> <C>
AIM High Yield Fund
0.625% of the first $200
million.
0.55% over $200 million to
$500 million.
0.50% over $500 million to $1
billion.
0.45% of the excess over $1
billion. $ 2,341,034,366 $ 9,277,005 $ 0
AIM Income Fund
0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to $1
billion.
0.30% of the excess over $1
billion. $ 371,526,394 $ 1,510,254 $ 0
AIM Intermediate Government
Fund
0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to $1
billion.
0.30% of the excess over $1
billion. $ 253,787,441 $ 1,188,121 $ 0
AIM Money Market Fund
0.55% of the first $1 billion.
0.50% of the excess over $1
billion. $ 694,523,395 $ 4,136,659 $ 0
AIM Municipal Bond Fund
0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to $1
billion.
0.30% of the excess over $1
billion. $ 312,581,802 $ 1,417,007 $ 0
AIM Value Fund
0.80% of the first $150
million.
0.625% of excess over $150
million. $ 9,975,994,310 $50,259,125 $1,562,359
AIM INTERNATIONAL FUNDS, INC.
AIM Global Aggressive Growth
Fund
0.90% of the first $1 billion.
0.85% of the excess over $1
billion. $ 1,726,533,976 $ 8,751,918 $ 0
AIM Global Growth Fund
0.85% of the first $1 billion.
0.80% of the excess over $1
billion. $ 236,819,172 $ 1,162,771 $ 0
AIM Global Income Fund
0.70% of the first $1 billion.
0.65% of the excess over $1
billion. $ 38,713,770 $ 0 $ 182,596
AIM International Equity Fund
0.95% of the first $1 billion.
0.90% of the excess over $1
billion. $ 1,476,749,468 $10,085,495 $ 299,147
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
TOTAL AGGREGATE WAIVERS
NET ASSETS NET FEES FOR THE
ANNUAL RATES FOR THE MOST PAID TO AIM MOST
(BASED ON AVERAGE DAILY NET RECENTLY FOR THE MOST RECENTLY
ASSETS) COMPLETED RECENTLY COMPLETED COMPLETED
FOR AIM FUNDS FISCAL YEAR FISCAL YEAR* FISCAL YEAR
--------------------------- --------------- ------------------ -----------
<S> <C> <C> <C>
AIM INVESTMENT SECURITIES FUNDS
Limited Maturity
Treasury Portfolio
0.20% of the first $500
million.
0.175% of the excess over
$500 million. $ 502,515,805 $ 933,207 $ 0
AIM SUMMIT FUND, INC.
1.00% of the first $10
million.
0.75% over $10 million to
$150 million.
0.625% over $150 million. $ 1,261,008,244 $ 7,360,028**** $ 0
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
0.35% $ 56,880,192 $ 125,537 $ 0
AIM Tax-Exempt Bond Fund of
Connecticut
0.50% $ 38,118,475 $ 49,597 $ 144,775
Intermediate Portfolio
0.30% of the first $500
million.
0.25% over $500 million to $1
billion.
0.20% of the excess over $1
billion. $ 173,341,780 $ 276,828 $ 0
AIM VARIABLE INSURANCE FUNDS,
INC.
AIM V.I. Capital Appreciation
Fund
0.65% of the first $250
million.
0.60% of the excess over $250
million. $ 370,063,165 $ 1,884,838 $ 0
AIM V.I. Diversified Income
Fund
0.60% of the first $250
million.
0.55% of the excess over $250
million. $ 63,623,771 $ 306,235 $ 0
AIM V.I. Global Utilities Fund
0.65% of the first $250
million.
0.60% of the excess over $250
million. $ 13,575,573 $ 57,054 $ 15,954
AIM V.I. Government Securities
Fund
0.50% of the first $250
million.
0.45% of the excess over $250
million. $ 24,526,516 $ 107,471 $ 0
AIM V.I. Growth Fund
0.65% of the first $250
million.
0.60% of the excess over $250
million. $ 178,637,892 $ 916,484 $ 0
AIM V.I. Growth and Income
Fund
0.65% of the first $250
million.
0.60% of the excess over $250
million. $ 209,331,631 $ 678,242 $ 0
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
TOTAL AGGREGATE WAIVERS
NET ASSETS NET FEES FOR THE
ANNUAL RATES FOR THE MOST PAID TO AIM MOST
(BASED ON AVERAGE DAILY NET RECENTLY FOR THE MOST RECENTLY
ASSETS) COMPLETED RECENTLY COMPLETED COMPLETED
FOR AIM FUNDS FISCAL YEAR FISCAL YEAR* FISCAL YEAR
--------------------------- --------------- ------------------ -----------
<S> <C> <C> <C>
AIM V.I. International Equity
Fund
0.75% of the first $250
million.
0.70% of the excess over $250
million. $ 165,738,078 $ 924,578 $ 0
AIM V.I. Money Market Fund
0.40% of the first $250
million.
0.35% of the excess over $250
million. $ 63,529,493 $ 264,855 $ 0
AIM V.I. Value Fund
0.65% of the first $250
million.
0.60% of the excess over $250
million. $ 369,735,146 $ 1,955,091 $ 0
SHORT-TERM INVESTMENTS CO.
Liquid Assets Portfolio
0.15% $ 2,086,944,322 $ 125,264 $2,562,094
Prime Portfolio
0.20% of the first $100
million.
0.15% over $100 million up to
$200 million.
0.10% over $200 million up to
$300 million.
0.06% over $300 million up to
$1.5 billion. 0.05% over $1.5
billion. $ 6,151,948,355 $ 3,007,431 $ 0
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio
0.15% of the first $300
million.
0.06% over $300 million up to
$1.5 billion.
0.05% of the excess over $1.5
billion. $ 3,703,891,140 $ 2,227,788 $ 0
Treasury TaxAdvantage
Portfolio
0.20% of the first $250
million.
0.15% over $250 million up to
$500 million.
0.10% of the excess over $500
million. $ 457,196,150 $ 675,795 $ 116,126
TAX-FREE INVESTMENTS CO.
Cash Reserve Portfolio
0.25% of the first $500 mil-
lion.
0.20% of the excess over $500
million. $ 1,004,111,157 $ 2,346,148 $ 625,513
</TABLE>
- --------
* AIM reimbursed expenses with respect to the following Funds: AIM Global
Growth Fund, $11,719; AIM Global Income Fund, $18,300; Liquid Assets
Portfolio, $116,930; Prime Portfolio, $61,100; Treasury Portfolio,
$113,500; Treasury TaxAdvantage Portfolio, $25,600; and Cash Reserve
Portfolio, $20,000.
** For the period 06/03/96 through 10/31/96.
*** For the period 06/17/96 through 10/31/96.
**** Of the $7,360,028 paid to AIM, $2,442,907 was paid by AIM to TradeStreet
Investment Associates, Inc. pursuant to a sub-advisory agreement.
58
<PAGE>
ANNEX H
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF THE PORTFOLIOS
The following table sets forth, as of the Record Date, the record ownership
of each Portfolio's issued and outstanding common stock by each 5% or greater
shareholder. The Directors and executive officers of the Company and the
nominees for Directors did not own 1% or more of the outstanding shares of any
Portfolio as of the Record Date. The Company has no knowledge regarding
beneficial ownership.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENT OF
OF RECORD OWNER RECORD OWNERSHIP COMMON STOCK
- ---------------- ---------------- ------------
<S> <C> <C>
EQUITY PORTFOLIO
Merrill Lynch, Pierce, Fenner & Smith, Inc. 274,477.000 16.35%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, E., 3rd Fl.
Jacksonville, FL 32246
FLEX PORTFOLIO
Merrill Lynch, Pierce, Fenner & Smith, Inc. 932,748.000 12.36%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, E., 3rd Fl.
Jacksonville, FL 32246
INCOME PORTFOLIO
Merrill Lynch, Pierce, Fenner & Smith, Inc. 52,372.000 10.21%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, E., 3rd Fl.
Jacksonville, FL 32246
INTERNATIONAL VALUE PORTFOLIO
Merrill Lynch, Pierce, Fenner & Smith, Inc. 652,411.000 51.04%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, E., 3rd Fl.
Jacksonville, FL 32246
MULTIFLEX PORTFOLIO
Merrill Lynch, Pierce, Fenner & Smith, Inc. 491,224.000 8.78%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, E., 3rd Fl.
Jacksonville, FL 32246
REAL ESTATE PORTFOLIO
Merrill Lynch, Pierce, Fenner & Smith, Inc. 32,926.000 6.43%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, E., 3rd Fl.
Jacksonville, FL 32246
</TABLE>
59
<PAGE>
ANNEX I
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS
OF AIM
Set forth below is certain information regarding the directors and the
principal executive officer of AIM.
<TABLE>
<CAPTION>
NAME POSITION WITH AIM PRINCIPAL OCCUPATION
---- ----------------- --------------------
<C> <C> <S>
Charles T. Bauer Director See Director table under Proposal 4.
Gary T. Crum Director Director and President, A I M Capital
Management, Inc.; Director and Senior
Vice President, A I M Management
Group, Inc. and AIM; Director, A I M
Distributors, Inc.; and Director,
AMVESCAP PLC.
Robert H. Graham Director and President See Director table under Proposal 4.
William H. Kleh Director Director and Senior Vice President,
AIM; Director and Vice President, A I
M Capital Management, Inc.; Director,
Fund Management Company.; Senior Vice
President, A I M Management Group,
Inc.; and Vice President, A I M
Distributors, Inc.
J. Abbott Sprague Director Director and President, A I M
Institutional Fund Services, Inc. and
Fund Management Company; Director and
Senior Vice President, AIM; and
Senior Vice President, A I M
Management Group, Inc.
</TABLE>
<PAGE>
PROXY INVESCO ADVISOR CASH MANAGEMENT PORTFOLIO PROXY
-----------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR CASH MANAGEMENT PORTFOLIO HELD OF
RECORD BY THE UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF
SHAREHOLDERS, OR ANY ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME
ON JULY 9, 1997 AT 1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA
30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR CASH
--------------------
MANAGEMENT PORTFOLIO:
- ---------------------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-1-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR CASH MANAGEMENT PORTFOLIO WILL BE CAST FOR
PROPOSALS 1 AND 5, AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF ANY
OTHER MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE NOT
AWARE A REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY
AUTHORIZES PROXY HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
DATED JUNE 2, 1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-2-
<PAGE>
PROXY INVESCO ADVISOR EQUITY PORTFOLIO PROXY
--------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR EQUITY PORTFOLIO HELD OF RECORD BY
THE UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF SHAREHOLDERS, OR
ANY ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME ON JULY 9, 1997 AT
1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA 30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR EQUITY
----------------------
PORTFOLIO:
- ----------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2.A. APPROVAL OF NEW SUB-ADVISORY AGREEMENT BETWEEN A I M ADVISORS, INC. AND
INVESCO CAPITAL MANAGEMENT, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-3-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR EQUITY PORTFOLIO WILL BE CAST FOR
PROPOSALS 1, 2.A AND 5, AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE
NOT AWARE A REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY
AUTHORIZES PROXY HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
DATED June 2, 1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-4-
<PAGE>
PROXY INVESCO ADVISOR MULTIFLEX PORTFOLIO PROXY
-----------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR MULTIFLEX PORTFOLIO HELD OF RECORD BY
THE UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF SHAREHOLDERS, OR
ANY ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME ON JULY 9, 1997
AT 1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA 30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR MULTIFLEX
-------------------------
PORTFOLIO:
- ---------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2.B. APPROVAL OF NEW SUB-ADVISORY AGREEMENT BETWEEN A I M ADVISORS, INC. AND
INVESCO MANAGEMENT & RESEARCH, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-5-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR MULTIFLEX PORTFOLIO WILL BE CAST FOR
PROPOSALS 1, 2.B AND 5, AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE
NOT AWARE A REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY
AUTHORIZES PROXY HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
DATED JUNE 2, 1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-6-
<PAGE>
PROXY INVESCO ADVISOR REAL ESTATE PORTFOLIO PROXY
-------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR REAL ESTATE PORTFOLIO HELD OF RECORD
BY THE UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF SHAREHOLDERS, OR
ANY ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME ON JULY 9, 1997 AT
1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA 30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR REAL ESTATE
---------------------------
PORTFOLIO:
- ----------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2.C. APPROVAL OF NEW SUB-ADVISORY AGREEMENT BETWEEN A I M ADVISORS, INC. AND
INVESCO REALTY ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-7-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR REAL ESTATE PORTFOLIO WILL BE CAST FOR
PROPOSALS 1, 2.C AND 5, AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE
NOT AWARE A REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY
AUTHORIZES PROXY HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
DATED JUNE 2, 1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-8-
<PAGE>
PROXY INVESCO ADVISOR INTERNATIONAL VALUE PORTFOLIO PROXY
---------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR INTERNATIONAL VALUE PORTFOLIO HELD OF
RECORD BY THE UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF
SHAREHOLDERS, OR ANY ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME
ON JULY 9, 1997 AT 1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA
30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR
---------------
INTERNATIONAL VALUE PORTFOLIO:
- ------------------------------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
3. APPROVAL OF NEW SUB-ADVISORY AGREEMENT BETWEEN A I M ADVISORS, INC. AND
INVESCO GLOBAL ASSET MANAGEMENT LIMITED.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-9-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR INTERNATIONAL VALUE PORTFOLIO WILL BE CAST
FOR PROPOSALS 1, 3 AND 5,AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE
NOT AWARE A REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY
AUTHORIZES PROXY HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
DATED JUNE 2, 1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-10-
<PAGE>
PROXY PROXY
INVESCO ADVISOR FLEX PORTFOLIO,
-------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR FLEX PORTFOLIO HELD OF RECORD BY THE
UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF SHAREHOLDERS, OR ANY
ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME ON JULY 9, 1997 AT
1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA 30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR FLEX
--------------------
PORTFOLIO:
- ---------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2.A. APPROVAL OF NEW SUB-ADVISORY AGREEMENT BETWEEN A I M ADVISORS, INC. AND
INVESCO CAPITAL MANAGEMENT, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-11-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR FLEX PORTFOLIO WILL BE CAST FOR PROPOSALS
1, 2.A AND 5, AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF ANY OTHER
MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE NOT AWARE A
REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY AUTHORIZES PROXY
HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE UNDERSIGNED
ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT DATED June 2,
1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-12-
<PAGE>
PROXY PROXY
INVESCO ADVISOR INCOME PORTFOLIO
--------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF INVESCO ADVISOR FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JULY 9, 1997 3:00 P.M. EASTERN TIME
THE UNDERSIGNED HEREBY REVOKES ALL PREVIOUS PROXIES FOR HIS OR HER SHARES AND
APPOINTS HUBERT L. HARRIS, JR. AND TONY D. GREEN, AND EACH OF THEM, WITH THE
POWER OF SUBSTITUTION, AS PROXIES, AND HEREBY AUTHORIZES THEM TO VOTE AS
DESIGNATED BELOW, AS EFFECTIVELY AS THE UNDERSIGNED COULD DO IF PERSONALLY
PRESENT, ALL THE SHARES OF INVESCO ADVISOR INCOME PORTFOLIO HELD OF RECORD BY
THE UNDERSIGNED ON APRIL 30, 1997, AT THE SPECIAL MEETING OF SHAREHOLDERS, OR
ANY ADJOURNMENT THEREOF, TO BE HELD AT 3:00 P.M. EASTERN TIME ON JULY 9, 1997 AT
1355 PEACHTREE STREET, N.E., SUITE 200, ATLANTA, GEORGIA 30309.
THE FOLLOWING PROPOSALS APPLY TO SHARES YOU HOLD IN INVESCO ADVISOR INCOME
----------------------
PORTFOLIO:
- ---------
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT WITH A I M ADVISORS, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2.A. APPROVAL OF NEW SUB-ADVISORY AGREEMENT BETWEEN A I M ADVISORS, INC. AND
INVESCO CAPITAL MANAGEMENT, INC.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. ELECTION OF BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
/_/FOR ALL NOMINEES LISTED BELOW /_/WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED TO THE CONTRARY BELOW) FOR ALL THE NOMINEES LISTED BELOW
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES T. BAUER, BRUCE L. CROCKETT, OWEN DALY II, JACK FIELDS, CARL
FRISCHLING, ROBERT H. GRAHAM, JOHN F. KROEGER, LEWIS F. PENNOCK, IAN W.
ROBINSON, LOUIS S. SKLAR
5. APPROVAL OF AMENDED INVESTMENT RESTRICTIONS.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
6. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT(S) THEREOF.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE)
-13-
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND WHEN PROPERLY
EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES HELD
BY THE UNDERSIGNED OF INVESCO ADVISOR INCOME PORTFOLIO WILL BE CAST FOR
PROPOSALS 1, 2.A AND 5, AND FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS. IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING OF WHICH THE DIRECTORS WERE
NOT AWARE A REASONABLE TIME BEFORE THE SOLICITATION, THE UNDERSIGNED HEREBY
AUTHORIZES PROXY HOLDERS TO VOTE IN THEIR DISCRETION ON SUCH MATTERS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
DATED June 2, 1997.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR BELOW. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE
OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS A CORPORATE OFFICER, PLEASE GIVE
FULL TITLE. PLEASE DATE THE PROXY.
_______________________________________
_______________________________________
Signature
Dated: _______________________, 1997
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
-14-
