<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or Sections
240.14a-12
AIM INVESTMENT SECURITIES FUNDS
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
AIM INVESTMENT SECURITIES FUNDS
AIM HIGH YIELD FUND II
AIM LIMITED MATURITY TREASURY FUND
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
TO THE SHAREHOLDERS:
AIM Investment Securities Funds (the trust) is holding a special meeting of
shareholders on Wednesday, May 3, 2000 at 3:00 p.m., Central time. The place of
the meeting is the trust's offices at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
The trust, a Delaware business trust, consists of the following series
portfolios: AIM High Yield Fund II and AIM Limited Maturity Treasury Fund. This
proxy statement relates to both of these series portfolios (together, the
funds).
The purposes of the meeting are as follows:
(1) To elect ten trustees, each of whom will serve until his or her
successor is elected and qualified.
(2) To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
(3) To approve changing the fundamental investment restrictions of
both funds.
(4) To approve changing the investment objective of AIM Limited
Maturity Treasury Fund so that it is non-fundamental.
(5) To approve changing the investment objective of AIM High Yield
Fund II and making it non-fundamental.
(6) To ratify the selection of KPMG LLP as independent accountants for
each of the funds for the fiscal year ending in 2000.
(7) To transact such other business as may properly come before the
meeting.
You may vote at the meeting if you are the record owner of shares of the
funds as of the close of business on February 18, 2000. If you attend the
meeting, you may vote your shares in person. If you expect to attend the meeting
in person, please notify the trust by calling 1-800-952-3502. If you do not
expect to
<PAGE> 3
attend the meeting, please fill in, date, sign and return the proxy
card in the enclosed envelope which requires no postage if mailed in the United
States.
It is important that you return your signed proxy card promptly so that a
quorum may be assured. If we do not hear from you after a reasonable amount of
time, you may receive a telephone call from our proxy solicitor, Shareholder
Communications Corporation, reminding you to vote your shares. You may also vote
your shares on the Internet at http://www.aimfunds.com by following instructions
that appear on the enclosed proxy insert.
Thank you for your cooperation and continued support.
By order of the Board,
Carol F. Relihan
Secretary
March 9, 2000
2
<PAGE> 4
AIM INVESTMENT SECURITIES FUNDS
AIM HIGH YIELD FUND II
AIM LIMITED MATURITY TREASURY FUND
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
Toll Free: (800) 454-0327
- --------------------------------------------------------------------------------
PROXY STATEMENT
DATED MARCH 9, 2000
- --------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
WHO IS ASKING FOR MY VOTE?
The Board of Trustees (the Board) of AIM Investment Securities Funds (the
trust) is sending you this proxy statement and the enclosed proxy card (or
cards) on behalf of the two portfolios of the trust listed above (together, the
funds). The Board is soliciting your proxy to vote at the 2000 special meeting
of shareholders of the trust (the meeting).
WHEN AND WHERE WILL THE MEETING BE HELD?
The meeting will be held at the trust's offices, 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, at 3:00 p.m., Central time, on Wednesday, May 3,
2000. If you expect to attend the meeting in person, please notify the trust by
calling 1-800-952-3502.
WHAT PROPOSALS APPLY TO MY FUND?
The following table summarizes each proposal to be presented at the meeting
and the funds whose shareholders the Board is soliciting with respect to each
proposal:
<TABLE>
<CAPTION>
PROPOSAL AFFECTED FUNDS
- -------- --------------
<S> <C>
1. Electing trustees Both funds
2. Approving a new advisory agreement with A I M Advisors, Both funds
Inc.
3. Changing the funds' fundamental investment restrictions Both funds
4. Changing the investment objective of AIM Limited Maturity Limited Maturity
Treasury Fund (Limited Maturity) so that it is
non-fundamental
5. Changing the investment objective of AIM High Yield Fund High Yield
II (High Yield) and making it non-fundamental
6. Ratifying the Board's selection of independent Both funds
accountants
7. Considering other matters Both funds
</TABLE>
1
<PAGE> 5
WHO IS ELIGIBLE TO VOTE?
The Board is sending this proxy statement, the attached notice of meeting
and the enclosed proxy card on or about March 9, 2000 to all shareholders
entitled to vote. Shareholders who owned shares of beneficial interest of any
class of a fund at the close of business on February 18, 2000 (the record date)
are entitled to vote. The number of shares outstanding on the record date for
each class of each fund is in Appendix A. Each share of beneficial interest of a
fund that you own entitles you to one vote on each proposal set forth in the
table above that applies to that fund (a fractional share has a fractional
vote).
WHAT ARE THE DIFFERENT WAYS I CAN VOTE?
Voting by Proxy
Whether you plan to attend the meeting or not, the Board urges you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the meeting and vote.
The Board has named Robert H. Graham and Gary T. Crum as proxies. If you
properly fill in your proxy card and send it to the trust in time to vote, your
proxy will vote your shares as you have directed. If you sign the proxy card but
do not make specific choices, your proxy will vote your shares with respect to
Proposals 1 through 6 as recommended by the Board.
If any other matter is presented, your proxy will vote in accordance with
his or her best judgment. At the time this proxy statement was printed, the
Board knew of no matters that needed to be acted on at the meeting other than
those discussed in this proxy statement.
If you appoint a proxy, you may revoke it at any time before it is
exercised. You can do this by sending in another proxy with a later date or by
notifying the trust's secretary in writing before the meeting that you have
revoked your proxy.
Voting in Person
If you do attend the meeting and wish to vote in person, you will be given
a ballot when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring a letter from the nominee
indicating that you are the beneficial owner of the shares on the record date
and authorizing you to vote.
Voting by Telephone
You may vote by telephone if you are contacted by Shareholder
Communications Corporation.
2
<PAGE> 6
Voting on the Internet
Shareholders of Class A, Class B and Class C shares of the funds may also
vote their shares on the Internet at http://www.aimfunds.com by following
instructions that appear on the enclosed proxy insert.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that shareholders vote FOR each of the proposals
described in this proxy statement.
WHAT IS THE QUORUM REQUIREMENT?
A quorum of shareholders is necessary to hold a valid meeting. The presence
in person or by proxy of shareholders entitled to cast one-third of all votes
entitled to be cast at the meeting shall constitute a quorum at all meetings of
the shareholders, except with respect to any matter which by law or the
Agreement and Declaration of Trust of the trust requires the separate approval
of one or more classes or series of the shares of the trust, in which case the
holders of one-third of the shares of each such class or series (or of such
classes or series voting together as a single class) entitled to vote on the
matter shall constitute a quorum.
Under rules applicable to broker-dealers, if your broker holds your shares
in its name, the broker will be entitled to vote your shares on Proposals 1 and
6 (election of trustees and ratification of selection of accountants) even if it
has not received instructions from you. Your broker will not be entitled to vote
on Proposals 2, 3, 4, 5 or 7 (approving a new advisory agreement for your fund,
changing your fund's investment restrictions, changing the investment objective
of Limited Maturity to non-fundamental, and changing the investment objective of
High Yield and making it non-fundamental and considering other matters) unless
it has received instructions from you. If your broker does not vote your shares
on Proposals 2, 3, 4, 5 or 7 because it has not received instructions from you,
these shares will be considered broker non-votes.
Broker non-votes and abstentions with respect to any proposal will count as
present for establishing a quorum.
WHAT IS THE VOTE NECESSARY TO APPROVE EACH PROPOSAL?
The affirmative vote of a plurality of votes cast is necessary to elect the
trustees, meaning that the nominees receiving the most votes will be elected
(Proposal 1). In an uncontested election of trustees, the plurality requirement
is not a factor.
3
<PAGE> 7
The affirmative vote of a majority of the outstanding voting securities of
each fund, as defined in the Investment Company Act of 1940, as amended (the
1940 Act), is required to:
- approve the funds' new advisory agreement (Proposal 2);
- approve new fundamental investment restrictions for the funds (Proposal
3);
- make the investment objective of Limited Maturity non-fundamental
(Proposal 4); and
- change the investment objective of High Yield and make it non-fundamental
(Proposal 5).
The 1940 Act defines a majority of the outstanding voting securities of a
fund (a 1940 Act majority) as the lesser of (a) the vote of holders of 67% or
more of the voting securities of the fund present in person or by proxy, if the
holders of more than 50% of the outstanding voting securities of the fund are
present in person or by proxy, or (b) the vote of the holders of more than 50%
of the outstanding voting securities of the fund. Broker non-votes and
abstentions will not count as votes cast and will have the effect of votes
against Proposals 2 through 5.
The affirmative vote of a majority of votes cast is necessary to ratify the
selection of KPMG LLP as your fund's independent accountants (Proposal 6). For
Proposal 6, abstentions will not count as votes cast and will have no effect on
the outcome of the vote.
CAN THE MEETING BE ADJOURNED?
The proxies may propose to adjourn the meeting to permit further
solicitation of proxies or for other purposes. Any such adjournment will require
the affirmative vote of a majority of the votes cast.
HOW CAN I OBTAIN MORE INFORMATION ABOUT THE FUNDS?
UPON YOUR REQUEST, EACH FUND WILL FURNISH YOU A FREE COPY OF ITS MOST
RECENT ANNUAL REPORT AND THE MOST RECENT SEMIANNUAL REPORT SUCCEEDING THE ANNUAL
REPORT, IF ANY. YOU SHOULD DIRECT YOUR REQUEST TO A I M FUND SERVICES, INC. AT
P.O. BOX 4739, HOUSTON, TX 77210-4739 OR BY CALLING 1-800-347-4246 (OR
1-800-659-1005 FOR LIMITED MATURITY INSTITUTIONAL CLASS SHAREHOLDERS).
4
<PAGE> 8
PROPOSAL 1:
ELECTION OF TRUSTEES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THE ELECTION OF TRUSTEES?
Proposal 1 applies to all shareholders of both funds.
WHO ARE THE NOMINEES FOR TRUSTEE?
For election of trustees at the meeting, the Board has approved the
nomination of Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Edward K. Dunn,
Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Prema Mathai-Davis,
Lewis F. Pennock and Louis S. Sklar, each to serve as trustee until his or her
successor is elected and qualified.
The proxies will vote for the election of these nominees unless you
withhold authority to vote for any or all of them in the proxy. Each of the
nominees has indicated that he or she is willing to serve as a trustee. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the trustees who are not interested persons of the trust,
as defined in the 1940 Act (the independent trustees), may recommend.
All of the nominees presently are trustees of the trust. The nominees also
serve as directors, trustees or officers of the following open-end management
investment companies advised or managed by A I M Advisors, Inc. (AIM): AIM
Advisor Funds, Inc., AIM Equity Funds, Inc., AIM Funds Group, AIM International
Funds, Inc., AIM Investment Securities Funds, AIM Special Opportunities Funds,
AIM Summit Fund, Inc., AIM Tax-Exempt Funds, Inc., AIM Variable Insurance Funds,
Inc., Short-Term Investments Co., Short-Term Investments Trust and Tax-Free
Investments Co. (these investment companies and their series portfolios, if any,
are referred to collectively as the AIM funds). Robert H. Graham also serves as
a director or trustee and officer of other open-end and closed-end management
investment companies managed or advised by AIM. No trustee or nominee is a party
adverse to the trust or any of its affiliates in any material pending legal
proceedings, nor does any trustee or nominee have an interest materially adverse
to the trust.
5
<PAGE> 9
The following table sets forth information concerning the nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE TRUSTEE SINCE DURING PAST 5 YEARS
- --------------------- ------------------ --------------------------------
<S> <C> <C>
+*Charles T. Bauer (81) May 5, 1993 Director and Chairman, A I M
11 Greenway Plaza Management Group Inc.; A I M
Suite 100 Advisors, Inc., A I M Capital
Houston, TX 77046-1173 Management, Inc.; A I M
Distributors, Inc.; A I M Fund
Services, Inc. and Fund
Management Company; and
Executive Vice Chairman and
Director, AMVESCAP PLC.
+Bruce L. Crockett (55) May 5, 1993 Director, ACE Limited (insurance
906 Frome Lane company). Formerly, Director,
McLean, VA 22102 President and Chief Executive
Officer, COMSAT Corporation; and
Chairman, Board of Governors of
INTELSAT (international
communications company).
+Owen Daly II (75) May 5, 1993 Formerly, Director, Cortland
Six Blythewood Road Trust Inc. (investment company),
Baltimore, MD 21210 CF & I Steel Corp., Monumental
Life Insurance Company and
Monumental General Insurance
Company; and Chairman of the
Board of Equitable
Bancorporation.
Edward K. Dunn, Jr. (64) March 10, 1998 Chairman of the Board of
2 Hopkins Plaza Directors, Mercantile Mortgage
8th Floor, Suite 805 Corporation. Formerly, Vice
Baltimore, MD 21201 Chairman of the Board of
Directors and President and
Chief Operating Officer,
Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile
Bankshares.
Jack M. Fields (48) March 11, 1997 Chief Executive Officer, Texana
Jetero Plaza, Suite E Global, Inc. (foreign trading
8810 Will Clayton Parkway company) and Twenty First
Humble, TX 77338 Century Group, Inc. (a
governmental affairs company);
and Director, Telscape
International and Administaff.
Formerly, Member of the U.S.
House of Representatives.
+**Carl Frischling (63) May 5, 1993 Partner, Kramer Levin Naftalis &
919 Third Avenue Frankel LLP (law firm). Formerly
New York, NY 10022 Partner, Reid & Priest (law
firm).
</TABLE>
+ Does not include years of service as a director or trustee of any predecessor
funds.
* Mr. Bauer is an interested person of AIM and the trust, as defined in the
1940 Act, primarily because of his position with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of AMVESCAP
PLC, which, through A I M Management Group Inc., owns all of the outstanding
stock of AIM.
** Mr. Frischling is an interested person of the trust, as defined in the 1940
Act, primarily because of payments received by his law firm from the trust
for services rendered to the independent trustees of the trust.
6
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE TRUSTEE SINCE DURING PAST 5 YEARS
- --------------------- ------------------ --------------------------------
<S> <C> <C>
***Robert H. Graham (53) May 10, 1994 Director, President and Chief
11 Greenway Plaza Executive Officer, A I M
Suite 100 Management Group Inc.; Director
Houston, TX 77046-1173 and President, A I M Advisors,
Inc.; Director and Senior Vice
President, A I M Capital
Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund
Management Company; and Director
and Chief Executive Officer,
Managed Products, AMVESCAP PLC.
Prema Mathai-Davis (49) September 10, 1998 Chief Executive Officer, YWCA of
350 Fifth Avenue, Suite 301 the U.S.A.
New York, NY 10118
+Lewis F. Pennock (57) May 5, 1993 Partner, Pennock & Cooper (law
6363 Woodway, Suite 825 firm).
Houston, TX 77057
+Louis S. Sklar (60) May 5, 1993 Executive Vice President,
The Williams Tower Development and Operations,
50th Floor Hines Interests Limited
2800 Post Oak Boulevard Partnership (real estate
Houston, TX 77056 development).
</TABLE>
+ Does not include years of service as a director to trustee of any
predecessor funds.
*** Mr. Graham is an interested person of AIM and the trust, as defined in the
1940 Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM.
WHAT ARE THE RESPONSIBILITIES OF THE BOARD?
The Board is responsible for the general oversight of the funds' business
and for assuring that the funds are managed in the best interests of each fund's
respective shareholders. The Board periodically reviews the funds' investment
performance as well as the quality of other services provided to the funds and
their shareholders by each of the fund's service providers, including AIM and
its affiliates. At least annually, the Board reviews the fees paid by the trust
for these services and the overall level of the funds' operating expenses.
WHY ARE TRUSTEES BEING ELECTED AT THE PRESENT TIME?
Under the 1940 Act, the Board may fill vacancies on the Board or appoint
new trustees only if, immediately thereafter, at least two-thirds of the
trustees will have been elected by shareholders. Currently, seven of the trust's
ten trustees have been elected by shareholders. As trustees retire, resign or
otherwise cease their service as trustees in the future, the trust may be unable
to fill the vacancies created by such action because three of the trust's ten
trustees have not been elected by shareholders. To provide the Board with the
flexibility to fill vacancies
7
<PAGE> 11
created when trustees cease their service as trustees, and in light of the fact
that only seven of the trust's trustees have been elected by shareholders, the
Board believes it is appropriate for shareholders to elect trustees at the
present time.
HOW LONG CAN TRUSTEES SERVE ON THE BOARD?
Trustees generally hold office until their successors are elected and
qualified. Pursuant to a policy adopted by the Board in 1992, each duly elected
or appointed independent trustee may continue to serve as a trustee until
December 31 of the year in which the trustee turns age 72. Independent trustees
who were 65 or older and serving on the board of one or more of the AIM funds
when the policy was adopted in 1992 may continue to serve until December 31 of
the year in which the trustee turns age 75. A trustee of the trust may resign or
be removed for cause by a vote of the holders of a majority of the outstanding
shares of the funds at any time. A majority of the Board may extend, from time
to time, the retirement date of a trustee. The Board has agreed to extend the
retirement date of Mr. Daly, who otherwise would have retired December 31, 2000,
to December 31, 2001. In making this decision, the Board took into account Mr.
Daly's experience and active participation as a trustee.
WHAT ARE SOME OF THE WAYS IN WHICH THE BOARD REPRESENTS MY INTERESTS?
The Board seeks to represent shareholder interests by:
- reviewing the funds' investment performance on an individual basis with
the funds' respective managers;
- reviewing the quality of the various other services provided to the funds
and their shareholders by each of the fund's service providers, including
AIM and its affiliates;
- discussing with senior management of AIM steps being taken to address any
performance deficiencies;
- reviewing the fees paid to AIM and its affiliates to ensure that such
fees remain reasonable and competitive with those of other mutual funds,
while at the same time providing sufficient resources to continue to
provide high-quality services in the future;
- monitoring potential conflicts between the funds and AIM and its
affiliates to ensure that the funds continue to be managed in the best
interests of their shareholders; and
- monitoring potential conflicts among funds to ensure that shareholders
continue to realize the benefits of participation in a large and diverse
family of funds.
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<PAGE> 12
WHAT ARE THE COMMITTEES OF THE BOARD?
The standing Committees of the Board are the Audit Committee, the
Investments Committee and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for:
- considering management's recommendations of independent accountants for
each fund and evaluating such accountants' performance, costs and
financial stability;
- with AIM, reviewing and coordinating audit plans prepared by the funds'
independent accountants and management's internal audit staff; and
- reviewing financial statements contained in periodic reports to
shareholders with the funds' independent accountants and management.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly,
Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The
Investments Committee is responsible for:
- overseeing AIM's investment-related compliance systems and procedures to
ensure their continued adequacy; and
- considering and acting, on an interim basis between meetings of the full
Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing
matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for:
- considering and nominating individuals to stand for election as
independent trustees as long as the trust maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act;
- reviewing from time to time the compensation payable to the independent
trustees; and
- making recommendations to the Board regarding matters related to
compensation, including deferred compensation plans and retirement plans
for the independent trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, provided (i) that such person
is a shareholder of record at the time he or she submits such names and is
entitled to vote at the meeting, and (ii) that the Nominating and Compensation
9
<PAGE> 13
Committee or the Board, as applicable, shall make the final determination of
persons to be nominated.
HOW OFTEN DOES THE BOARD MEET?
The Board typically conducts regular meetings nine times a year to review
the operations of the funds and of the other AIM funds. Typically, five of these
nine meetings are held in person, each over a two-day period. One or more
Committees of the Board generally meet in conjunction with each in-person
meeting of the Board. In addition, the Board or any Committee may hold special
meetings by telephone or in person to discuss specific matters that may require
action prior to the next regular meeting.
During the fiscal year ended July 31, 1999, the Board held 9 meetings, the
Audit Committee held 5 meetings, the Investments Committee held 4 meetings and
the Nominating and Compensation Committee held 6 meetings. All of the current
trustees and Committee members then serving attended at least 75% of the
meetings of the Board or applicable Committee held during the fiscal year ended
July 31, 1999.
WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES?
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board or any Committee attended. Each trustee who is not also an
officer of the trust is compensated for his or her services according to a fee
schedule which recognizes the fact that such trustee also serves as a director
or trustee of all of the other AIM funds. Each such trustee receives a fee,
allocated among the AIM funds for which he or she serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued for
each trustee:
<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS COMPENSATION
COMPENSATION ACCRUED BY ALL FROM ALL
TRUSTEE FROM THE TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
- ------- ----------------- -------------- ------------
<S> <C> <C> <C>
Charles T. Bauer............. $ 0 $ 0 $ 0
Bruce L. Crockett............ 1,947 37,485 103,500
Owen Daly II................. 1,947 122,898 103,500
Edward K. Dunn Jr. .......... 1,947 0 103,500
Jack M. Fields............... 1,941 15,826 101,500
Carl Frischling(4)........... 1,937 97,791 103,500
Robert H. Graham............. 0 0 0
John F. Kroeger(5)........... 198 107,896 0
Prema Mathai-Davis........... 1,798 0 101,500
Lewis F. Pennock............. 1,937 45,766 103,500
Ian W. Robinson(6)........... 1,266 94,442 25,000
Louis S. Sklar............... 1,931 90,232 101,500
</TABLE>
10
<PAGE> 14
(1) The total amount of compensation deferred by all trustees of the trust
during the fiscal year ended July 31, 1999, including earnings thereon, was
$11,681.
(2) During the fiscal year ended July 31, 1999, the total amount of expenses
allocated to the trust in respect of such retirement benefits was $2,794.
Data reflects compensation for the calendar year ended December 31, 1999.
Accruals for 1999 are based on actuarial projections from 1998.
(3) Each trustee serves as trustee or director of at least 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1999.
(4) During the fiscal year ended July 31, 1999, the trust paid $6,343.00 in
legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel,
LLP, for services rendered to the independent trustees of the trust.
(5) Mr. Kroeger was a trustee until June 11, 1998, when he resigned. On that
date, he became a consultant to the trust. Mr. Kroeger passed away on
November 26, 1998. Mr. Kroeger's widow will receive his pension as described
below under "AIM Funds Retirement Plan for Eligible Directors/Trustees."
(6) Mr. Robinson was a trustee until March 12, 1999, when he retired.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible Trustees/
Directors, each trustee (who is not an employee of any of the AIM funds, A I M
Management Group Inc. (AIM Management) or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board. Pursuant to such
retirement plan, a trustee becomes eligible to retire and receive full benefits
under the plan when he or she has attained age 65 and has completed at least
five years of continuous service with one or more of the regulated investment
companies managed, administered or distributed by AIM or its affiliates (the
applicable AIM funds). Each eligible trustee is entitled to receive an annual
benefit from the applicable AIM funds commencing on the first day of the
calendar quarter coincident with or following his or her date of retirement
equal to a maximum of 75% of the annual retainer paid or accrued by the
applicable AIM funds for such trustee during the twelve-month period immediately
preceding the trustee's retirement (including amounts deferred under a separate
agreement between the applicable AIM funds and the trustee) and based on the
number of such trustee's years of service (not in excess of 10 years of service)
completed with respect to any of the applicable AIM funds. Such benefit is
payable to each eligible trustee in quarterly installments. If an eligible
trustee dies after attaining the normal retirement date but before receipt of
all benefits under the plan, the trustee's surviving spouse (if any) shall
receive a quarterly survivor's benefit equal to 50% of the amount payable to the
deceased trustee for no more than ten years beginning the first day of the
calendar quarter following the date of the trustee's death. Payments under the
plan are not secured or funded by any applicable AIM fund.
Set forth below is a table that shows the estimated annual benefits payable
to an eligible trustee upon retirement assuming the retainer amount reflected
below and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson
11
<PAGE> 15
and Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 18, 11, 10 and 1 years,
respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL RETIREMENT
NUMBER OF YEARS OF SERVICE COMPENSATION PAID BY ALL
WITH THE APPLICABLE AIM FUNDS APPLICABLE AIM FUNDS
----------------------------- ------------------------
<S> <C>
10............................... $67,500
9............................... $60,750
8............................... $54,000
7............................... $47,250
6............................... $40,500
5............................... $33,750
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling, and Sklar and Dr. Mathai-Davis (the
deferring trustees) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring trustees may elect to defer receipt of
up to 100% of their compensation payable by the trust, and such amounts are
placed into a deferral account. Currently, the deferring trustees may select
various AIM funds in which all or part of their deferral accounts shall be
deemed to be invested. Distributions from the deferring trustees' accounts will
be paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the agreement) beginning on the date the
deferring trustee's retirement benefits commence under the plan. The Board, in
its sole discretion, may accelerate or extend the distribution of such deferral
accounts after the deferring trustee's termination of service as a trustee of
the trust. If a deferring trustee dies prior to the distribution of amounts in
his deferral account, the balance of the deferral account will be distributed to
his designated beneficiary in a single lump sum payment as soon as practicable
after such deferring trustee's death. The agreements are not funded and, with
respect to the payments of amounts held in the deferral accounts, the deferring
trustees have the status of unsecured creditors of the trust and of each other
AIM fund from which they are deferring compensation.
WHAT ARE OFFICERS PAID FOR THEIR SERVICES?
The trust does not pay its officers for the services they provide to the
trust. Instead, the officers, who are also officers or employees of AIM or its
affiliates, are compensated by AIM Management or its affiliates.
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<PAGE> 16
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 1?
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 2:
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 2 applies to all shareholders of both funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve a new advisory agreement between AIM
and the trust for your fund. The Board is asking you to vote on this new
agreement because the trust may amend its advisory agreement only with
shareholder approval. A form of the trust's proposed Master Investment Advisory
Agreement is in Appendix B. The proposed advisory agreement amends the current
advisory agreement primarily by:
- omitting references to the provision of administrative services to the
funds;
- omitting certain expense limitations that are no longer applicable;
- clarifying existing non-exclusivity provisions;
- clarifying existing delegation provisions;
- adding provisions regarding affiliated brokerage;
- adding certain provisions to fully implement the funds' securities
lending program; and
- clarifying existing liability provisions.
At a meeting held on February 3, 2000, the Board voted to recommend that
you approve a proposal to adopt the new advisory agreement.
WHO IS THE FUNDS' INVESTMENT ADVISOR?
AIM became the investment advisor for each of the funds on the dates
indicated in Appendix C. The current Master Investment Advisory Agreement, as
amended, was executed and the funds' shareholders last voted on such agreement,
on the dates indicated in Appendix C. The Board, including a majority of the
independent trustees, last approved the current advisory agreement on May 11,
1999.
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<PAGE> 17
AIM is a wholly owned subsidiary of AIM Management, a holding company that
has been engaged in the financial services business since 1976. The address of
AIM and AIM Management is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
AIM was organized in 1976, and, together with its subsidiaries, advises or
manages approximately 120 investment portfolios encompassing a broad range of
investment objectives. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail fund businesses in the United
States, Europe and the Pacific Region. A list of the principal executive officer
and the directors of AIM is in Appendix D.
DO ANY OF THE TRUST'S TRUSTEES OR EXECUTIVE OFFICERS HOLD POSITIONS WITH AIM?
Charles T. Bauer, Robert H. Graham, Gary T. Crum, Carol F. Relihan,
Melville B. Cox, Dana R. Sutton and Karen Dunn Kelley, all of whom are trustees
and/or officers of the trust, also are directors and/or officers of AIM. Each of
them also owns shares of AMVESCAP PLC and/or options to purchase shares of
AMVESCAP PLC.
WHAT ARE THE TERMS OF THE CURRENT ADVISORY AGREEMENT?
Under the terms of the current advisory agreement, AIM supervises all
aspects of the funds' operations and provides investment advisory services to
the funds. AIM obtains and evaluates economic, statistical and financial
information to formulate and implement investment programs for the funds. AIM
will not be liable to the funds or their shareholders except in the case of
AIM's willful misfeasance, bad faith, gross negligence or reckless disregard of
duty.
The current advisory agreement provides that the funds will pay or cause to
be paid all of their expenses not assumed by AIM, including without limitation:
- brokerage commissions;
- taxes;
- legal, accounting, auditing or governmental fees;
- the cost of preparing share certificates;
- custodian, transfer and shareholder service agent costs;
- expenses of issue, sale, redemption, and repurchase of shares;
- expenses of registering and qualifying shares for sale;
- expenses relating to trustee and shareholder meetings;
- the cost of preparing and distributing reports and notices to
shareholders;
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<PAGE> 18
- the fees and other expenses incurred by the funds in connection with
membership in investment company organizations;
- the cost of printing copies of prospectuses and statements of additional
information distributed to the funds' shareholders; and
- all other charges and costs of the funds' operations unless otherwise
explicitly provided.
The current advisory agreement will continue in effect from year to year
for each fund only if such continuance is specifically approved at least
annually by (i) the Board or the vote of a majority of the outstanding voting
securities of that fund (as defined in the 1940 Act), and (ii) the affirmative
vote of a majority of independent trustees by votes cast in person at a meeting
called for such purpose. The current advisory agreement provides that the Board,
a majority of the outstanding voting securities of a fund or AIM may terminate
the agreement for a fund on 60 days' written notice without penalty. The
agreement terminates automatically in the event of its assignment.
AIM may from time to time waive or reduce its fee. AIM may rescind
voluntary fee waivers or reductions at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. If AIM has agreed to contractual fee waivers or reductions, AIM may not
alter those arrangements to a fund's detriment during the period stated in the
agreement between AIM and the trust. AIM may not change provisions in the
current advisory agreement imposing expense limitations without shareholder
approval.
The annual rates at which AIM receives fees from each fund under the
current advisory agreement, as well as the dollar amounts of advisory fees net
of any expense limitations or fee waivers paid to AIM by each fund, and the
dollar amount of advisory fees (if any) waived by AIM for each fund for the
fiscal year ended July 31, 1999, are set forth in Appendix E.
WHAT ADDITIONAL SERVICES ARE PROVIDED BY AIM AND ITS AFFILIATES?
AIM and its affiliates also provide additional services to the trust and
the funds. AIM provides, or arranges for others to provide, administrative
services to the funds. Fund Management Company serves as the principal
underwriter for the Institutional Class of Limited Maturity, A I M Distributors,
Inc. serves as the principal underwriter for each of the funds' retail classes
and A I M Fund Services, Inc. serves as the funds' transfer agent. These
companies are wholly owned subsidiaries of AIM. Information concerning fees paid
to AIM and its affiliates for these services is in Appendix F.
15
<PAGE> 19
WHAT ADVISORY FEES DOES AIM CHARGE FOR SIMILAR FUNDS IT MANAGES?
The advisory fee schedules for other funds advised by AIM with similar
investment objectives as the funds are in Appendix G.
WHAT ARE THE TERMS OF THE PROPOSED ADVISORY AGREEMENT?
The primary differences between the current advisory agreement and the
proposed advisory agreement that the Board approved are:
- To omit references to the provision of administrative services to the
funds by AIM, because such services are covered by a separate
administrative services agreement between AIM and the trust;
- To omit certain expense limitations that are no longer applicable;
- To clarify non-exclusivity provisions that are set forth in the current
advisory agreement;
- To clarify delegation provisions that are set forth in the current
advisory agreement;
- To add provisions regarding affiliated brokerage;
- To add certain provisions to fully implement the funds' securities
lending program; and
- To clarify that one fund is not liable for another fund's obligations,
and that AIM's liability to one fund does not automatically extend to
another fund.
Each of these changes is discussed more fully below. Except for these
changes, the terms of the current advisory agreement and the proposed advisory
agreement are substantially similar, except for the effective dates and the
renewal dates.
Administrative Services
The trust and AIM are parties to a Master Administrative Services Agreement
dated February 28, 1997, as amended on September 28, 1998. The current advisory
agreement states that AIM will provide certain administrative services to the
funds at the Board's request. The Board has traditionally asked AIM to provide
such services to the funds. AIM then provides such services pursuant to the
Master Administrative Services Agreement.
The Board proposes to separate the advisory services and the administrative
services that AIM provides to the trust, so that the provision of administrative
services is dealt with solely in a Master Administrative Services Agreement. As
a result, the proposed advisory agreement omits all references to the Master
Administrative Services Agreement. Since this omission will not change the
administrative services that AIM provides to the trust or the compensation AIM
16
<PAGE> 20
receives for providing administrative services, the Board believes that this
change is a matter of form rather than a substantive change in the relationship
between AIM and the trust.
Expense Limitations
The current advisory agreement provides that advisory fees will be reduced
in accordance with certain expense limitations set forth in securities
regulations of the states in which the funds' shares are qualified for sale.
States can no longer impose expense limitations because federal law has
pre-empted these state regulations. Accordingly, the Board believes that this
expense limitation provision should be omitted from the proposed advisory
agreement.
Non-Exclusivity Provisions
The current advisory agreement provides that neither AIM nor the trustees
or officers of the trust owe an exclusive duty to the trust. The current
advisory agreement expressly permits AIM to render investment advisory,
administrative and other services to other entities (including investment
companies). The current advisory agreement also expressly permits the trustees
and officers of the trust to serve as partners, officers, directors or trustees
of other entities (including other investment advisory companies). The Board
believes that the non-exclusivity provision in the current advisory agreement
should be bifurcated into two separate provisions: one dealing with AIM and the
other dealing with officers and trustees of the trust.
The non-exclusivity provisions of the proposed advisory agreement are
substantially similar to the provision in the current advisory agreement.
However, the proposed advisory agreement explicitly states that the trust
recognizes that AIM's obligations to other clients may adversely affect the
trust's ability to participate in certain investment opportunities. The proposed
advisory agreement also explicitly states that AIM, in its sole discretion,
shall be entitled to determine the allocation of investment opportunities among
the AIM funds and other clients in accordance with a policy that AIM believes to
be equitable.
Delegation
The proposed advisory agreement expands the extent to which AIM can
delegate its rights, duties and obligations by expressly providing that AIM may
delegate any or all of its rights, duties or obligations under the agreement to
one or more sub-advisors. It also provides that AIM may replace sub-advisors
from time to time in accordance with applicable federal securities laws and
rules and regulations in effect or interpreted from time to time by the SEC or
with exemptive orders or other similar relief. If, in accordance with the laws,
rules, interpretations and exemptions, AIM is not required to seek shareholder
approval of a substitution in sub-advisors, it may do so upon approval of the
Board.
17
<PAGE> 21
Affiliated Brokerage
Although AIM does not currently execute trades through brokers or dealers
that are affiliated with AIM, the proposed advisory agreement includes a new
provision that would permit such trades, subject to compliance with applicable
federal securities laws.
Securities Lending
The proposed advisory agreement includes a new provision that discusses the
services to be rendered by AIM if a fund engages in securities lending
activities, as well as the compensation AIM may receive for such services.
Services to be provided include: (a) overseeing participation in the securities
lending program to ensure compliance with all applicable regulatory and
investment guidelines; (b) assisting the securities lending agent or principal
(the agent) in determining which specific securities are available for loan; (c)
monitoring the agent to ensure that securities loans are effected in accordance
with AIM's instructions and with procedures adopted by the Board; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board with respect to securities lending activities; (e) responding to agent
inquiries; and (f) performing such other duties as necessary.
As compensation for such services, a lending fund shall pay AIM a fee equal
to 25% of the net monthly interest or fee income retained or paid to the fund
from such activities. AIM currently intends to waive such fees, and has agreed
to seek Board approval prior to its receipt of all or a portion of such fees.
Liability
The proposed advisory agreement clarifies that no fund shall be liable for
the obligations of another fund, and the liability of AIM to one fund shall not
automatically render AIM liable to any other fund.
WHAT DID THE TRUSTEES CONSIDER IN APPROVING THE ADVISORY AGREEMENT?
At the request of AIM, the Board discussed the approval of the proposed
advisory agreement at a meeting held in person on February 3, 2000. The
independent trustees also discussed approval of the proposed advisory agreement
with independent counsel at that meeting. In evaluating the proposed advisory
agreement, the Board requested and received information from AIM to assist in
its deliberations. The Board considered various matters in determining the
reasonableness and fairness of the proposed changes in the current advisory
agreement with respect to each fund. In so doing, the Board considered the fact
that the changes (i) would not result in any changes in the persons providing
investment advisory services to the funds; (ii) would not result in any changes
to the types or level of services provided by AIM to the funds (other than to
have AIM provide certain additional services if a fund engages in securities
lending);
18
<PAGE> 22
(iii) would not result in any changes to the advisory fees payable by the funds
(other than to permit AIM's receipt of fees in connection with securities
lending); (iv) would clarify the terms under which AIM will provide investment
advisory services to the funds; and (v) would omit outdated, or otherwise
unnecessary, provisions from the new advisory agreement. After considering these
matters, the Board concluded that it is in the best interests of the funds and
their shareholders to approve the new advisory agreement.
The Board reached its conclusion after careful discussion and analysis. The
Board believes that it has carefully and thoroughly examined the pertinent
issues and alternatives. In recommending that you approve the proposed advisory
agreement, the independent trustees have considered what they believe to be in
your best interests. In so doing, they were advised by independent counsel,
retained by the independent trustees and paid for by the trust, as to the nature
of the matters to be considered and the standards to be used in reaching their
decision.
WHEN WILL PROPOSAL 2 BE IMPLEMENTED?
If approved, the new advisory agreement will become effective on May 26,
2000 and will expire, unless renewed, on June 30, 2001. If shareholders do not
approve the proposed advisory agreement with respect to a fund, the current
advisory agreement will continue in effect for such fund.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 2?
------------------------------------------------------------
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
------------------------------------------------------------
PROPOSALS 3(a) THROUGH 3(n):
CHANGES TO THE FUNDAMENTAL INVESTMENT
RESTRICTIONS OF EACH FUND
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
restrictions. The Board is asking you to vote on these changes because the
investment restrictions described below are fundamental and shareholders must
approve any change.
Pursuant to the 1940 Act, each fund has adopted fundamental restrictions
covering certain types of investment practices, which may be changed only with
shareholder approval. Restrictions that a fund has not specifically designated
as being fundamental are considered to be "non-fundamental" and may be changed
19
<PAGE> 23
by the Board without shareholder approval. In addition to investment
restrictions, the funds operate pursuant to investment objectives and policies.
These objectives and policies govern the investment activities of the funds and
further limit their ability to invest in certain types of securities or engage
in certain types of transactions.
The Board is proposing that you approve changes to your fund's fundamental
investment restrictions. The changes will conform these restrictions to a set of
uniform model restrictions under which most AIM funds will operate. The Board
approved the changes to your fund's fundamental investment restrictions at a
meeting held on February 3, 2000. The current fundamental investment
restrictions for each fund are in Appendix H.
WHAT ARE THE REASONS FOR THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Several of the funds' current fundamental restrictions reflect regulatory,
business or industry conditions, practices or requirements that are no longer
applicable. For example, the National Securities Markets Improvement Act of 1996
(NSMIA) preempted state laws, under which the funds previously were regulated
and which required the adoption of certain restrictions. In addition, other
fundamental restrictions reflect federal regulatory requirements that remain in
effect but are not required to be stated as fundamental, or in some cases even
as non-fundamental, restrictions. Also, as new AIM funds have been created or
acquired during recent years, substantially similar fundamental restrictions
often have been phrased in slightly different ways, sometimes resulting in minor
but unintended differences in effect or potentially giving rise to unintended
differences in interpretation.
Accordingly, the Board has approved changes to certain of the funds'
fundamental restrictions in order to simplify, modernize and make more uniform
those restrictions that are required to be fundamental. In several instances,
existing fundamental restrictions that are eliminated because they are not
required to be fundamental would be reclassified as non-fundamental
restrictions.
The Board expects that you will benefit from these changes in a number of
ways. The proposed uniform restrictions will provide the funds with as much
investment flexibility as is possible under the 1940 Act. The Board believes
that eliminating the disparities among the funds' fundamental restrictions will
enhance management's ability to manage efficiently and effectively the funds'
assets in changing regulatory and investment environments. In addition, by
reducing to a minimum those restrictions that can be changed only by shareholder
vote, each fund will be able to avoid the costs and delays associated with a
shareholder meeting if the Board decides to make future changes to a fund's
investment policies.
20
<PAGE> 24
WHAT ARE THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Each proposed change to the funds' fundamental restrictions is discussed
below. The proposed fundamental restrictions will provide the funds with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
operating under such interpretations or exemptions. Even though the funds will
have this flexibility, if the proposed fundamental restrictions are approved,
several non-fundamental investment restrictions (which function as internal
operating guidelines) will become effective. AIM must follow these
non-fundamental restrictions in managing the funds. Of course, if circumstances
change, the Board may change or eliminate any non-fundamental investment
restriction in the future without shareholder approval.
With respect to each fund and each fundamental or non-fundamental
restriction, if a percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage resulting
from a change in the values of the fund's portfolio securities or the amount of
its total assets will not be considered a violation of the restriction.
PROPOSAL 3(a):
CHANGE TO OR ADDITION OF FUNDAMENTAL
RESTRICTION ON ISSUER DIVERSIFICATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(a) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(a), the existing fundamental restriction on
issuer diversification for High Yield would be changed, and a new fundamental
restriction on portfolio diversification would be added for Limited Maturity, as
follows:
"The fund is a "diversified company" as defined in the 1940 Act.
The fund will not purchase the securities of any issuer if, as a
result, the fund would fail to be a diversified company within the
meaning of the 1940 Act, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from
time to time or are interpreted from time to time by the SEC staff
(collectively, the 1940 Act laws and interpretations) or except to
the extent that the fund may be permitted to do so by exemptive
order or similar relief (collectively, with the 1940 Act laws and
interpretations, the 1940 Act laws, interpretations and
exemptions). In complying with this restriction, however, the fund
21
<PAGE> 25
may purchase securities of other investment companies to the extent
permitted by the 1940 Act laws, interpretations and exemptions."
Discussion:
The proposed changes will permit both funds to take advantage of the 1940
Act laws, interpretations and exemptions in effect from time to time relating to
issuer diversification. Limited Maturity currently does not explicitly state
that it is diversified since it invests solely in U.S. Treasury securities and
repurchase agreements secured by U.S. Treasury securities, and such securities
are excluded from the SEC's diversification requirements. As a result, adoption
of this restriction will have no effect on the operation of Limited Maturity.
With respect to High Yield, the proposed change would eliminate minor
inconsistencies between the wording of the fund's current fundamental
diversification restriction and the uniform fundamental diversification
restriction proposed above. The Board does not expect this change to have any
material impact on the fund's current operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction regarding issuer
diversification, the fund will not, with respect to 75% of its total
assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(ii) the fund would hold more than 10% of the outstanding voting
securities of that issuer. The fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the
1940 Act and (ii) invest its assets in securities of other money
market funds and lend money to other investment companies and their
series portfolios that have AIM as an investment advisor, subject to
the terms and conditions of any exemptive orders issued by the SEC."
PROPOSAL 3(b):
CHANGE TO THE FUNDAMENTAL RESTRICTION ON
BORROWING MONEY, ISSUING SENIOR SECURITIES
AND MORTGAGING OR PLEDGING ASSETS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(b) applies to shareholders of both funds.
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<PAGE> 26
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(b), the existing fundamental restrictions
on mortgaging, pledging or hypothecating assets would be eliminated and the
existing fundamental restriction on issuing senior securities and borrowing
money would be changed to read as follows:
"The fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act laws, interpretations and exemptions."
Discussion:
The 1940 Act establishes limits on the ability of the funds to borrow money
or issue "senior securities," a term that is defined, generally, to refer to
obligations that have a priority over the trust's shares with respect to the
distribution of its assets or the payment of dividends.
The proposed restriction is substantially similar to the funds' current
investment restrictions, but it would make the funds' restriction on borrowing
money or issuing senior securities no more limiting than required by the 1940
Act laws, interpretations or exemptions, rather than just the 1940 Act laws. The
Board believes that changing the funds' fundamental restriction in this manner
will provide flexibility for future contingencies. However, the Board does not
expect this change to have any impact on the funds' current operations. High
Yield's fundamental restriction that prohibits it from purchasing portfolio
securities when borrowings from banks exceed 5% of total assets will continue as
a non-fundamental policy. A similar non-fundamental policy will be added for
Limited Maturity.
The funds are not required to have fundamental restrictions with respect to
the mortgaging, pledging or hypothecating of assets. In order to maximize the
fund's flexibility in this area, the Board believes that the restriction on
mortgaging, pledging or hypothecating assets should be eliminated. The Board
does not expect this change to have any material impact on the funds' current
operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction regarding borrowing,
the fund may borrow money in an amount not exceeding 33 1/3% of its
total assets (including the amount borrowed) less liabilities (other
than borrowings). The fund may borrow from banks, broker/dealers or
other investment companies or their series portfolios that have AIM or
an affiliate of AIM as an investment advisor (an AIM fund). The fund
may not borrow for leveraging, but may borrow for temporary or
emergency purposes, in anticipation of or in response to adverse
market conditions, or for cash management purposes. The fund may not
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<PAGE> 27
purchase additional securities when any borrowings from banks exceed
5% of the fund's total assets."
PROPOSAL 3(c):
CHANGE TO THE FUNDAMENTAL RESTRICTION
ON UNDERWRITING SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(c) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(c), the existing fundamental restriction on
underwriting securities for each of the funds would be changed to read as
follows:
"The fund may not underwrite the securities of other issuers. This
restriction does not prevent the fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the fund may be considered to be an
underwriter under the Securities Act of 1933."
Discussion:
The proposed change to this fundamental restriction expands the types of
transactions in which a fund may engage even if it would be considered an
underwriter and would eliminate differences in the wording of the funds' current
restrictions on underwriting securities.
PROPOSAL 3(d):
CHANGE TO THE FUNDAMENTAL RESTRICTION
ON INDUSTRY CONCENTRATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(d) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(d), the existing fundamental restriction on
concentration for each of the funds would be changed to read as follows:
"The fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act laws, interpretations and exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the fund's investments in (i) obligations
issued or guaranteed by
24
<PAGE> 28
the U.S. Government, its agencies or instrumentalities or (ii)
tax-exempt obligations issued by governments or political subdivisions
of governments. In complying with this restriction, the fund will not
consider a bank-issued guaranty or financial guaranty insurance as a
separate security."
Discussion:
The proposed changes to the funds' fundamental restriction on concentration
would eliminate minor inconsistencies in the wording of the funds' current
restrictions on concentration.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction regarding industry
concentration, the fund may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in
the same industry."
With respect to Limited Maturity, the United States Government is not
considered to be an industry.
PROPOSAL 3(e):
CHANGE TO THE FUNDAMENTAL RESTRICTION
ON PURCHASING OR SELLING REAL ESTATE
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(e) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(e), the existing fundamental restriction on
real estate investments for each of the funds would be changed to read as
follows:
"The fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein."
Discussion:
The proposed changes to this fundamental restriction would eliminate minor
differences in the wording of the funds' current restriction on real estate
investments and would clarify the types of real estate related securities that
are
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<PAGE> 29
permissible investments for each fund. In addition, the proposed restriction
includes an exception that permits each fund to hold real estate acquired as a
result of ownership of securities or other instruments.
PROPOSAL 3(f):
CHANGE TO THE FUNDAMENTAL RESTRICTION ON
PURCHASING OR SELLING COMMODITIES, ON PURCHASING
SECURITIES ON MARGIN, SHORT SALES OF SECURITIES
AND INVESTING IN PUTS OR CALLS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(f) applies only to shareholders of Limited Maturity.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(f), the existing fundamental restriction
that prohibits the purchase of commodities and commodity futures contracts, as
well as, margin transactions, short sales of securities and investing in puts or
calls for Limited Maturity would be changed to read as follows:
"The fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the fund from
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
Discussion:
The proposed changes to the fundamental restriction on purchasing or
selling commodities are intended to conform this restriction to similar
restrictions for other AIM funds. The fund is not required to have a fundamental
restriction on margin transactions, short sales of securities or investing in
puts or calls. However, the fund does not intend to engage in margin
transactions, short sales or puts or calls. Accordingly, the Board does not
expect this change to have any material impact on the fund's current operations.
PROPOSAL 3(g):
CHANGE TO THE FUNDAMENTAL RESTRICTIONS ON
PURCHASING OR SELLING COMMODITIES AND ON
INVESTING IN PUTS, CALLS OR COMBINATIONS THEREOF
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(g) applies only to shareholders of High Yield.
26
<PAGE> 30
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(g), the existing fundamental restrictions
on investing in commodities and on investing in puts, calls and combinations
thereof for High Yield would be changed to read as follows:
"The fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the fund from
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
Discussion:
The proposed changes to the fundamental restriction on investing in
commodities are intended to ensure that the fund will have the maximum
flexibility to enter into hedging and other transactions utilizing financial
contracts and derivative products when doing so is permitted by the fund's other
investment policies. Furthermore, the proposed restriction would allow the fund
to respond to the rapid and continuing development of derivative products. The
proposed restriction broadens the exception to the prohibition on buying and
selling physical commodities to cover all financial derivative instruments.
With respect to puts, calls and combinations thereof, there is no legal
requirement that High Yield have this fundamental restriction. In order to
maximize High Yield's flexibility in this area, the Board believes that this
restriction should be eliminated. The Board does not expect this change to have
any material impact on High Yield's current operations.
PROPOSAL 3(h):
ELIMINATION OF FUNDAMENTAL RESTRICTION
ON MARGIN TRANSACTIONS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(h) applies only to shareholders of High Yield.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(h), the existing fundamental restriction on
engaging in margin transactions for High Yield would be eliminated.
Discussion:
The fund is not required to have a fundamental restriction on margin
transactions. In order to conform the fundamental restrictions for all AIM
funds, the Board believes that the fund's fundamental restriction with regard to
margin transactions should be eliminated. However, the fund does not intend to
purchase
27
<PAGE> 31
any security on margin, except in order to obtain such short-term credits as may
be necessary for the clearance of purchases and sales of portfolio securities.
Accordingly, the Board does not expect this change to have any material impact
on the fund's current operations.
PROPOSAL 3(i):
ELIMINATION OF FUNDAMENTAL RESTRICTION
ON SHORT SALES OF SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(i) applies only to shareholders of High Yield.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(i), the existing fundamental restriction on
short sales of securities for High Yield would be eliminated.
Discussion:
The fund currently has a fundamental restriction with regard to selling
securities short. The current fundamental restriction allows short sales
"against the box," which means that a fund contemporaneously owns or has the
right to acquire at no additional cost securities identical to, or convertible
into or exchangeable for, those securities sold short, but the fundamental
restriction does not permit short sales that are not against the box. The SEC
considers short sales of securities by a fund that are not against the box to be
"senior securities." As such, they would be covered under the fundamental
restriction on issuing senior securities that shareholders are being asked to
vote on in Proposal 3(b). Therefore, the Board believes that the restriction on
short sales of securities that are not against the box is unnecessary and should
be eliminated.
The fund does not intend to make short sales of securities or maintain a
short position unless at all times when a short position is open, the fund owns
an equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold short. In no
event does the fund intend to have more than 10% of its total assets be
deposited or pledged as collateral for such sales at any one time."
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<PAGE> 32
PROPOSAL 3(j):
CHANGE TO THE FUNDAMENTAL RESTRICTION
ON MAKING LOANS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(j) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(j), the existing fundamental restriction on
making loans for each of the funds would be changed to read as follows:
"The fund may not make personal loans or loans of its assets to
persons who control or are under common control with the fund, except
to the extent permitted by 1940 Act laws, interpretations and
exemptions. This restriction does not prevent the fund from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and
participation interests."
Discussion:
The proposed changes to this fundamental restriction would eliminate minor
differences in the wording of the funds' current restriction on making loans.
With respect to Limited Maturity, the proposed restriction integrates the
fundamental restriction on lending securities and more completely describes
various types of debt instruments the funds may purchase that do not constitute
the making of a loan.
If you approve the proposed restriction, the following non-fundamental
investment restriction will become effective:
"In complying with the fundamental restriction with regard to making
loans, the fund may lend up to 33 1/3% of its total assets and may
lend money to another AIM fund, on such terms and conditions as the
SEC may require in an exemptive order."
PROPOSAL 3(k):
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT
RESTRICTION ON INVESTING ALL OF EACH FUND'S ASSETS
IN AN OPEN-END FUND
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(k) applies to shareholders of both funds.
29
<PAGE> 33
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(k), the following fundamental investment
restriction on investing in an open-end fund would be added for each of the
funds:
"The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies and restrictions as the
fund."
Discussion:
The Board has approved, subject to shareholder approval, the adoption of a
new fundamental investment restriction that would permit each of the funds to
invest all of its assets in another open-end fund. At present the Board has not
considered any specific proposal to authorize a fund to invest all of its assets
in this fashion. The Board will authorize investing a fund's assets in another
open-end fund only if the Board first determines that is in the best interests
of such fund and its shareholders.
The purpose of this proposal is to enhance the flexibility of each fund and
permit it to take advantage of potential efficiencies in the future available
through investment in another open-end fund. This structure allows several funds
with different distribution pricing structures, but the same investment
objective, policies and limitations, to combine their assets in a pooled fund
instead of managing them separately. This could lower the costs of obtaining
portfolio execution, custodial, investment advisory and other services for the
fund and could assist in portfolio management to the extent the cash flows of
each investment vehicle offset each other or provide for less volatile asset
changes. Of course, such benefits may not occur.
At present, certain of the fundamental investment restrictions of each fund
may prevent it from investing all of its assets in another registered investment
company and would require a vote of fund shareholders before such a structure
could be adopted. To avoid the costs associated with a subsequent shareholder
meeting, the Board recommends that you vote to permit all of the assets of your
fund to be invested in an open-end fund, without a further vote of shareholders,
but only if the Board subsequently determines that such action is in the best
interests of your fund and its shareholders. If you approve this proposal, the
fundamental restrictions of your fund would be changed to permit such
investment.
A fund's methods of operation and shareholder services would not be
materially affected by its investment in an open-end fund, except that the
assets of the fund might be managed as part of a larger pool. If a fund invested
all of its assets in an open-end fund, it would hold only investment securities
issued by the open-end fund, and the open-end fund would invest directly in
individual
30
<PAGE> 34
securities of other issuers. The fund otherwise would continue its normal
operations. The Board would retain the right to withdraw the fund's investments
from the open-end fund, and the fund then would resume investing directly in
individual securities of other issuers as it does currently.
AIM may benefit from the use of this structure if, as a result, overall
assets under management are increased (since management fees are based on
assets). Also, AIM's expense of providing investment and other services to the
funds may be reduced.
If you approve the proposed restriction, each fund will have the ability to
invest all of its assets in another open-end investment company. Because the
funds do not currently intend to do so, the following non-fundamental investment
restriction will become effective for each of the funds:
"Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the fund may not invest all of its
assets in the securities of a single open-end management investment
company with the same fundamental investment objectives, policies and
limitations as the fund."
PROPOSAL 3(l):
ELIMINATION OF FUNDAMENTAL RESTRICTION ON
INVESTMENTS IN OIL, GAS OR MINERAL INTERESTS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(l) applies only to shareholders of Limited Maturity.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(l), the existing fundamental restriction on
investments in oil, gas or minerals for Limited Maturity would be eliminated.
Discussion:
The fund is not required to have a fundamental restriction with respect to
oil, gas or mineral investments. In order to maximize the fund's flexibility in
this area, the Board believes that the fund's restriction on oil, gas and
mineral investments should be eliminated. This restriction was imposed by state
laws and NSMIA preempted state law requirements. Notwithstanding the elimination
of this fundamental restriction, the fund does not expect to invest at the
present time in oil, gas or other mineral exploration or development programs.
31
<PAGE> 35
PROPOSAL 3(m):
ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING
IN OBLIGATIONS NOT PAYABLE IN UNITED STATES CURRENCY
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(m) applies only to shareholders of Limited Maturity.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(m), the existing fundamental restriction on
investing in obligations not payable in United States currency for Limited
Maturity would be eliminated.
Discussion:
The fund is not required to have a fundamental restriction on investing in
obligations not payable in United States currency. However, the fund does not
intend to invest in obligations which are not payable as to principal and
interest in United States currency. Accordingly, the Board does not expect this
change to have any material impact on the fund's current operations.
PROPOSAL 3(n):
ELIMINATION OF FUNDAMENTAL RESTRICTION ON
PURCHASING ANY SECURITY THAT IS NOT A DIRECT
OBLIGATION OF THE UNITED STATES TREASURY
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(n) applies only to shareholders of Limited Maturity.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(n), the existing fundamental restriction on
purchasing any security that is not a direct obligation of the United States
Treasury for Limited Maturity would be eliminated.
Discussion:
The fund is not required to have a fundamental restriction on purchasing
any security that is not a direct obligation of the United States Treasury.
However, the fund does not intend to purchase any security unless the security
is a direct obligation of the United States Treasury or is a repurchase
agreement with respect to a direct obligation of the United States Treasury.
Accordingly, the Board does not expect this change to have any material impact
on the fund's current operations.
32
<PAGE> 36
WHEN WILL PROPOSALS 3(a) THROUGH 3(n) BE IMPLEMENTED?
If you approve each of the above proposals, the new fundamental
restrictions will replace the fundamental investment restrictions for both
funds. Accordingly, the proposed fundamental restrictions will become the only
fundamental investment restrictions under which these funds will operate. If
approved, the above restrictions may not be changed with respect to your fund
without the approval of the holders of a majority of your fund's outstanding
shares. The Board anticipates that these proposals, if approved, will be
implemented on May 26, 2000.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSALS 3(a) THROUGH 3(n)?
---------------------------------------------------------------
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS 3(a) THROUGH 3(n).
---------------------------------------------------------------
PROPOSAL 4:
CHANGING THE INVESTMENT OBJECTIVE OF
LIMITED MATURITY SO THAT IT IS NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4 applies only to shareholders of Limited Maturity.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve making the fund's investment
objective non-fundamental, rather than fundamental. The Board is asking you to
vote on this change because the investment objective of your fund presently is
fundamental and shareholders must approve any change.
The current investment objective of your fund is in Appendix I. By making
this objective non-fundamental, the Board may amend it as it deems appropriate,
without seeking a shareholder vote. The Board does not anticipate amending the
investment objective of your fund at the present time.
The Board expects that you will benefit from this proposed change because
it will have the ability to respond more quickly to new developments and
changing trends in the marketplace without incurring the time and the costs of a
shareholder vote. This should make your fund more competitive among its peers.
WHEN WILL PROPOSAL 4 BE IMPLEMENTED?
The Board anticipates that Proposal 4, if approved, will be implemented on
May 26, 2000.
33
<PAGE> 37
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 4?
---------------------------------------------------------------
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
---------------------------------------------------------------
PROPOSAL 5:
CHANGING THE INVESTMENT OBJECTIVE OF
HIGH YIELD AND MAKING IT NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 5 applies only to shareholders of High Yield.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
objective by making it non-fundamental and by deleting from it the types of
securities your fund proposes to purchase in seeking to achieve its objective.
The Board is asking you to vote on this change because the investment objective
of your fund presently is fundamental and shareholders must approve any change.
The current investment objective of your fund is in Appendix I. By making
this objective non-fundamental, the Board may change it as it deems appropriate,
without seeking shareholder approval. The Board does not anticipate making
additional changes to the investment objectives of the fund at the present time.
Your fund's current investment objective includes the types of securities
that your fund proposes to purchase to achieve its objective. The Board believes
that the basic investment objective of the fund should be separate from the
types of securities the fund may purchase to achieve its objective. This change
will permit the Board to change the types of securities the fund may purchase
without also changing the fund's investment objective.
WHAT IS THE PROPOSED CHANGE?
If the shareholders approve this proposal, the fund's investment objective
will read as follows:
"The fund's investment objective is to achieve a high level of current
income."
High Yield will also retain the investment policy of investing primarily in
publicly traded non-investment grade debt securities.
The Board expects that you will benefit from these proposed changes because
it will have the ability to respond more quickly to new developments and
34
<PAGE> 38
changing trends in the marketplace without incurring the time and costs of a
shareholder vote. This should make the fund more competitive among its peers.
WHEN WILL PROPOSAL 5 BE IMPLEMENTED?
The Board anticipates that Proposal 5, if approved, will be implemented on
May 26, 2000.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 5?
---------------------------------------------------------------
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
---------------------------------------------------------------
PROPOSAL 6:
RATIFICATION OF SELECTION OF KPMG LLP
AS INDEPENDENT ACCOUNTANTS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 6 applies to all shareholders of both funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board has selected KPMG LLP as independent accountants for each fund
for its fiscal year ending July 31, 2000. As each fund's independent
accountants, KPMG LLP will examine and verify the accounts and securities of
that fund and report on them to the Board and to that fund's shareholders. The
Board's selection will be submitted for your ratification at the meeting.
WHY HAS THE BOARD SELECTED KPMG LLP AS THE INDEPENDENT ACCOUNTANTS?
KPMG was selected primarily on the basis of its expertise as auditors of
investment companies, its independence from AIM and its affiliates, the quality
of its audit services, and the competitiveness of the fees charged for these
services. KPMG LLP also serves as independent accountants of some of the other
AIM funds.
WILL A REPRESENTATIVE FROM KPMG LLP BE AVAILABLE FOR QUESTIONS?
The Board expects that a representative of KPMG LLP will be present at the
meeting. The representative will have an opportunity to make a statement should
he or she desire to do so and will be available to respond to shareholders'
questions.
35
<PAGE> 39
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 6?
---------------------------------------------------------------
YOUR BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
---------------------------------------------------------------
GENERAL INFORMATION
WHO ARE THE EXECUTIVE OFFICERS OF THE TRUST?
Information about the executive officers of the trust is in Appendix J.
WHAT IS THE SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN HOLDERS?
Information about the ownership of each class of each fund's shares by the
trustees and the executive officers of the trust and by 5% holders of each class
is in Appendix K.
WHO ARE THE INVESTMENT ADVISOR, ADMINISTRATOR AND PRINCIPAL UNDERWRITERS OF THE
FUNDS?
A I M Advisors, Inc., whose principal address is 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, serves as the investment advisor and
administrator for the funds.
A I M Distributors, Inc. (AIM Distributors), whose principal address is 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, serves as the principal
underwriter for each of the retail classes of the funds. Fund Management
Company, whose principal address is 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, serves as the principal underwriter for each of the institutional
classes of the funds.
HAS THE TRUST HIRED A PROXY SOLICITOR?
The trust has engaged the services of Shareholder Communications
Corporation (SCC) to assist it in soliciting proxies for the meeting. The trust
estimates that the aggregate cost of SCC's services will be approximately
$[ ]. The trust will bear the cost of soliciting proxies. The trust expects
to solicit proxies principally by mail, but either the trust or SCC may also
solicit proxies by telephone, facsimile, the Internet or personal interview. The
trust may also reimburse firms and others for their expenses in forwarding
solicitation materials to the beneficial owners of shares of the funds.
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<PAGE> 40
HOW CAN I SUBMIT A PROPOSAL?
As a general matter, the funds do not hold regular meetings of
shareholders. If you wish to submit a proposal for consideration at a meeting of
shareholders of a fund, you should send such proposal to the trust at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a shareholders' meeting, the trust must receive proposals a
reasonable time before proxy materials are prepared relating to that meeting.
Your proposal also must comply with applicable law.
OTHER MATTERS
The Board does not know of any matters to be presented at the meeting other
than those set forth in this proxy statement. If any other business should come
before the meeting, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
37
<PAGE> 41
APPENDIX A
NUMBER OF SHARES OF AIM INVESTMENT SECURITIES FUNDS
OUTSTANDING ON FEBRUARY 18, 2000
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND (CLASS) FEBRUARY 18, 2000
- -------------------- ------------------
<S> <C>
AIM High Yield Fund II
Class A................................................... [ ]
Class B................................................... [ ]
Class C................................................... [ ]
AIM Limited Maturity Treasury Fund
Class A................................................... [ ]
Institutional Class....................................... [ ]
</TABLE>
A-1
<PAGE> 42
APPENDIX B
AIM INVESTMENT SECURITIES FUNDS
FORM OF MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this day of , , by and
between AIM Investment Securities Funds, a Delaware business trust (the "Trust")
with respect to its series of shares shown on the Appendix A attached hereto, as
the same may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, diversified management investment
company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Trust's Amended and Restated Agreement and Declaration of
Trust (the "Declaration of Trust") authorizes the Board of Trustees of the Trust
(the "Board of Trustees") to create separate series of shares of beneficial
interest in the Trust, and as of the date of this Agreement, the Board of
Trustees has created two separate series portfolios (such portfolios and any
other portfolios hereafter added to the Trust being referred to collectively
herein as the "Funds"); and
WHEREAS, the Trust and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Board of Trustees. The Advisor shall give the Trust
and the Funds the benefit of its best judgment, efforts and facilities in
rendering its services as investment advisor.
B-1
<PAGE> 43
2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the assets of the Funds or the activities in which such issuers engage,
or with respect to securities which the Advisor considers desirable for
inclusion in the Funds' assets;
(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Board of
Trustees;
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Board of Trustees; and
(e) take, on behalf of the Trust and the Funds, all actions which
appear to the Trust and the Funds necessary to carry into effect such
purchase and sale programs and supervisory functions as aforesaid,
including but not limited to the placing of orders for the purchase and
sale of securities for the Funds.
3. Securities Lending Duties and Fees. The Advisor agrees to provide the
following services in connection with the securities lending activities of each
Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure that
securities loans are effected in accordance with the Advisor's instructions and
with procedures adopted by the Board of Trustees; (d) prepare appropriate
periodic reports for, and seek appropriate approvals from, the Board of Trustees
with respect to securities lending activities; (e) respond to Agent inquiries;
and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in connection
with securities lending activities of each Fund, a lending Fund shall pay the
Advisor a fee equal to 25% of the net monthly interest or fee income retained or
paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate
any or all of its rights, duties and obligations under this Agreement to one or
more sub-advisors, and may enter into agreements with sub-advisors, and may
replace any such sub-advisors from time to time in its discretion, in accordance
B-2
<PAGE> 44
with the 1940 Act, the Advisers Act, and rules and regulations thereunder, as
such statutes, rules and regulations are amended from time to time or are
interpreted from time to time by the staff of the Securities and Exchange
Commission ("SEC"), and if applicable, exemptive orders or similar relief
granted by the SEC and upon receipt of approval of such sub-advisors by the
Board of Trustees and by shareholders (unless any such approval is not required
by such statutes, rules, regulations, interpretations, orders or similar
relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed to be an agent of the
Trust.
6. Control by Board of Trustees. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Trustees.
7. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as the
same may be amended from time to time under the Securities Act of 1933 and
the 1940 Act;
(c) the provisions of the Declaration of Trust, as the same may be
amended from time to time;
(d) the provisions of the by-laws of the Trust, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
8. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Funds, broker-dealer selection, and negotiation
of brokerage commission rates.
(a) The Advisor's primary consideration in effecting a security
transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration: the
best net price available; the reliability, integrity and financial
condition of the broker-dealer; and the value of the expected contribution
of the broker-dealer to the investment performance of the Funds on a
continuing basis. Accordingly, the price to the Funds in any transaction
may be less favorable than that
B-3
<PAGE> 45
available from another broker-dealer if the difference is reasonably
justified by other aspects of the fund execution services offered.
(c) Subject to such policies as the Board of Trustees may from time to
time determine, the Advisor shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer that
provides brokerage and research services to the Advisor an amount of
commission for effecting a fund investment transaction in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the Advisor's overall
responsibilities with respect to a particular Fund, other Funds of the
Trust, and to other clients of the Advisor as to which the Advisor
exercises investment discretion. The Advisor is further authorized to
allocate the orders placed by it on behalf of the Funds to such brokers and
dealers who also provide research or statistical material, or other
services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocations regularly to the
Board of Trustees indicating the brokers to whom such allocations have been
made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor does
not delegate trading responsibility to one or more sub-advisors, in making
decisions regarding broker-dealer relationships, the Advisor may take into
consideration the recommendations of any sub-advisor appointed to provide
investment research or advisory services in connection with the Funds, and
may take into consideration any research services provided to such sub-
advisor by broker-dealers.
(e) Subject to the other provisions of this Section 8, the 1940 Act,
the Securities Exchange Act of 1934, and rules and regulations thereunder,
as such statutes, rules and regulations are amended from time to time or
are interpreted from time to time by the staff of the SEC, any exemptive
orders issued by the SEC, and any other applicable provisions of law, the
Advisor may select brokers or dealers with which it or the Funds are
affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is
set forth in Appendix B attached hereto.
10. Expenses of the Funds. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of their shares shall be borne
by the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of
B-4
<PAGE> 46
preparing share certificates, custodian, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to trustee and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Trust on behalf of
the Funds in connection with membership in investment company organizations and
the cost of printing copies of prospectuses and statements of additional
information distributed to the Funds' shareholders.
11. Services to Other Companies or Accounts. The Trust understands that the
Advisor now acts, will continue to act and may act in the future as investment
manager or advisor to fiduciary and other managed accounts, and as investment
manager or advisor to other investment companies, including any offshore
entities, or accounts, and the Trust has no objection to the Advisor so acting,
provided that whenever the Trust and one or more other investment companies or
accounts managed or advised by the Advisor have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each company and account. The Trust
recognizes that in some cases this procedure may adversely affect the size of
the positions obtainable and the prices realized for the Funds.
12. Non-Exclusivity. The Trust understands that the persons employed by the
Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature. The Trust
further understands and agrees that officers or directors of the Advisor may
serve as officers or directors of the Trust, and that officers or trustees of
the Trust may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Appendix A attached hereto.
If so approved, this Agreement shall thereafter continue in force and effect
until June 30, 2001, and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually:
(a) (i) by the Board of Trustees or (ii) by the vote of "a majority of
the outstanding voting securities" of such Fund (as defined in Section
2(a)(42) of the 1940 Act); and
B-5
<PAGE> 47
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Trust trustees), by votes
cast in person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated as to the Trust or as to
any one or more of the Funds at any time, without the payment of any penalty, by
vote of the Board of Trustees or by vote of a majority of the outstanding voting
securities of the applicable Fund, or by the Advisor, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
15. Amendment. No amendment of this Agreement shall be effective unless it
is in writing and signed by the party against which enforcement of the amendment
is sought.
16. Liability of Advisor and Fund. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Trust or to the
Funds or to any shareholder of the Funds for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security. Any liability of
the Advisor to one Fund shall not automatically impart liability on the part of
the Advisor to any other Fund. No Fund shall be liable for the obligations of
any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Trust individually but are binding
only upon the assets and property of the Trust and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as shareholders of private corporations for
profit.
18. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Trust and that of the Advisor shall be 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173.
19. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the
B-6
<PAGE> 48
SEC issued pursuant to said Acts. In addition, where the effect of a requirement
of the 1940 Act or the Advisers Act reflected in any provision of the Agreement
is revised by rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. Subject to
the foregoing, this Agreement shall be governed by and construed in accordance
with the laws (without reference to conflicts of law provisions) of the State of
Texas.
20. License Agreement. The Trust shall have the non-exclusive right to use
the name "AIM" to designate any current or future series of shares only so long
as A I M Advisors, Inc. serves as investment manager or advisor to the Trust
with respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
<TABLE>
<S> <C>
AIM Investment Securities Funds
(a Delaware business trust)
Attest:
By:
- ---------------------------------------
Assistant Secretary --------------------------------------
President
(SEAL)
Attest: A I M Advisors, Inc.
- --------------------------------------- By:
Assistant Secretary
--------------------------------------
(SEAL) President
</TABLE>
B-7
<PAGE> 49
Appendix A
FUNDS AND EFFECTIVE DATES
<TABLE>
<CAPTION>
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
- ------------ ------------------
<S> <C>
AIM High Yield Fund II May 26, 2000
AIM Limited Maturity Treasury Fund May 26, 2000
</TABLE>
B-8
<PAGE> 50
Appendix B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered, an advisory fee for such Fund set forth
below. Such fee shall be calculated by applying the following annual rates to
the average daily net assets of such Fund for the calendar year computed in the
manner used for the determination of the net asset value of shares of such Fund.
AIM HIGH YIELD FUND II
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $500 million 0.625%
Next $500 million 0.55%
Amount over $1 billion 0.50%
</TABLE>
AIM LIMITED MATURITY TREASURY FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $500 million 0.20%
Amount over $500 million 0.175%
</TABLE>
B-9
<PAGE> 51
APPENDIX C
DATES OF ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
DATE LAST
SUBMITTED DATE AIM BECAME
DATE OF CURRENT TO A VOTE OF INVESTMENT
NAME OF FUND ADVISORY AGREEMENT SHAREHOLDERS ADVISOR
- ------------ --------------------- ------------------- ------------------
<S> <C> <C> <C>
AIM High Yield Fund February 28, 1998 as September 28, 1998* September 28, 1998
II amended September 28,
1998
AIM Limited Maturity February 28, 1997, as February 7, 1997** June 11, 1987
Treasury Fund amended September 28,
1998
</TABLE>
* The current advisory agreement was submitted to a vote of the initial
shareholder of the fund prior to the commencement of operations.
** The current advisory agreement was last submitted to a vote of public
shareholders of the fund in connection with a merger between A I M Management
Group Inc. and a subsidiary of INVESCO PLC.
C-1
<PAGE> 52
APPENDIX D
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF
A I M ADVISORS, INC.
The following table provides information with respect to the principal
executive officer and the directors of A I M Advisors, Inc., all of whose
business address is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH AIM PRINCIPAL OCCUPATION
- ---------------- ----------------- --------------------
<S> <C> <C>
Charles T. Bauer..... Director and Chairman See trustee table under Proposal 1
Gary T. Crum......... Director and Senior See Appendix J
Vice President
Robert H. Graham..... Director and See trustee table under Proposal 1
President
Dawn M. Hawley....... Director, Senior Vice Senior Vice President, Chief
President and Financial Officer and Treasurer,
Treasurer A I M Management Group Inc.; and
Vice President and Treasurer,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M
Fund Services, Inc., and Fund
Management Company.
Carol F. Relihan..... Director, Senior Vice See Appendix J
President, General
Counsel and
Secretary
</TABLE>
D-1
<PAGE> 53
APPENDIX E
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE NET
TOTAL NET ASSETS FEES PAID TO FEE WAIVERS FOR
FOR THE MOST AIM FOR THE THE MOST
ANNUAL RATE RECENTLY MOST RECENTLY RECENTLY
(BASED ON AVERAGE COMPLETED FISCAL COMPLETED FISCAL COMPLETED FISCAL
NAME OF FUND DAILY NET ASSETS) PERIOD OR YEAR PERIOD OR YEAR PERIOD OR YEAR
- ------------ ----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
AIM High Yield Fund 0.625% of first $ 59,124,905 $ 10,485 $135,584
II $500 million
0.55% over $500
million up to $1
billion
0.50% of the
excess over $1
billion
AIM Limited Maturity 0.20% of first $407,148,490 $850,738 $ 0
Treasury Fund $500 million
0.175% of the
excess over $500
million
</TABLE>
E-1
<PAGE> 54
APPENDIX F
FEES PAID TO AIM AND AFFILIATES
IN MOST RECENT FISCAL YEAR
The following chart sets forth the fees paid during the fiscal period or
year ended July 31, 1999 by the trust to A I M Advisors, Inc. ("AIM") for
administrative services and to affiliates of AIM. The administrative and other
services currently provided by AIM and its affiliates will continue to be
provided after the investment advisory contract with AIM is approved.
<TABLE>
<CAPTION>
AIM FUND
(ADMINISTRATIVE AIM MANAGEMENT A I M FUND
SERVICES) DISTRIBUTORS, INC.* COMPANY SERVICES, INC.
--------------- ------------------- ---------- --------------
<S> <C> <C> <C> <C>
AIM INVESTMENT SECURITIES
FUNDS.
AIM High Yield Fund II..... $64,643 $74,352 N/A $ 7,750
AIM Limited Maturity
Treasury Fund............ $70,069 $30,310 $ 0 $206,185
</TABLE>
* Net amount received from Rule 12b-1 fees. Excludes amounts reallowed to
brokers, dealers, agents and other service providers.
F-1
<PAGE> 55
APPENDIX G
ADVISORY FEE SCHEDULES FOR OTHER AIM FUNDS
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have the same
investment objective as AIM High Yield Fund II.
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE MOST FEE WAIVERS,
ANNUAL RATE RECENTLY EXPENSE CAPS
(BASED ON AVERAGE COMPLETED AND/OR EXPENSE
NAME OF FUND DAILY NET ASSETS) FISCAL YEAR REIMBURSEMENTS
- ------------------------- ------------------------- ---------------- --------------
<S> <C> <C> <C>
AIM High Yield Fund...... 0.625% of the first $200 $3,054,039,754
million;
0.55% over $200 million
up to $500 million;
0.50% over $500 million
up to $1 billion;
0.45% of the excess over
$1 billion
AIM V.I. Diversified
Income Fund............ 0.60% of first $250 $ 99,508,578
million;
0.55% of the excess over
$250 million
AIM V.I. High Yield
Fund................... 0.625% of first $200 $ 25,268,186
million;
0.55% of next $300
million;
0.50% of next $500
million;
and 0.45% of excess
over $1 billion
</TABLE>
G-1
<PAGE> 56
There are no other funds advised by AIM with investment objectives which
are substantially similar to that of AIM Limited Maturity Treasury Fund.
However, the following table provides information with respect to the annual
advisory fee rates paid to AIM by certain other treasury funds.
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE MOST FEE WAIVERS,
ANNUAL RATE RECENTLY EXPENSE CAPS
(BASED ON AVERAGE COMPLETED AND/OR EXPENSE
NAME OF FUND DAILY NET ASSETS) FISCAL YEAR REIMBURSEMENTS
- ------------------------- ------------------------- ---------------- --------------
<S> <C> <C> <C>
Treasury Portfolio........ 0.15% of first $5,203,747,106
$300 million
0.06% over
$300 million up to
$1.5 billion
0.05% of the excess
over $1.5 billion
Treasury TaxAdvantage
Portfolio............... 0.20% of the first $ 133,893,290
$250 million
0.15% over
$250 million up to
$500 million
0.10% of the excess
over $500 million
</TABLE>
G-2
<PAGE> 57
APPENDIX H
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AIM HIGH YIELD FUND II
High Yield may not:
(1) borrow money or issue senior securities or mortgage, pledge, or
hypothecate its assets, except that the Fund may enter into financial
futures contracts, reverse repurchase agreements, and borrow from banks to
pay for redemptions and for temporary purposes in an amount not exceeding
one-third of the value of its total assets (including the amount of such
borrowings) less its liabilities (excluding the amount of such borrowings)
and may secure such borrowings by pledging up to one-third of the value of
its total assets. For the purpose of this restriction, collateral
arrangements with respect to margin for a financial futures contract are
not deemed to be a pledge of assets. The Fund will not purchase securities
while borrowings in excess of 5% of its total assets are outstanding;
(2) make short sales of securities or maintain short positions,
unless, at all times when a short position is open, the Fund owns at least
an equal amount of the securities sold short or owns securities convertible
into or exchangeable for at least an equal amount of such securities sold
short, without the payment of further consideration;
(3) purchase or sell real estate or interests therein, but the Fund
may purchase and sell (a) securities which are secured by real estate, and
(b) the securities of companies which invest or deal in real estate or
interests therein, including real estate investment trusts;
(4) act as a securities underwriter;
(5) purchase or sell commodities or commodity contracts, other than
financial futures contracts and options thereon;
(6) purchase the securities of any issuer if, as a result, the Fund
would fail to be a diversified company within the meaning of the 1940 Act
and the rules and regulations promulgated thereunder, as such statute,
rules and regulations are amended from time to time; provided, however,
that the Fund may purchase securities of other investment companies to the
extent permitted by the 1940 Act and the rules and regulations promulgated
thereunder (as such statute, rules and regulations are amended from time to
time) or to the extent permitted by exemptive order or other similar
relief;
(7) concentrate 25% or more of its total assets in the securities of
issuers in a particular industry; provided, however, that securities
guaranteed by banks or subject to financial guaranty insurance are not
subject to this limitation; and provided further, that securities issued or
guaranteed by the
H-1
<PAGE> 58
U.S. Government, its agencies and instrumentalities are not included within
this restriction;
(8) make loans, except that the Fund may lend its portfolio securities
provided that the value of the securities loaned does not exceed 33 1/3% of
its total assets, and except that the Fund may enter into repurchase
agreements;
(9) purchase securities on margin, except that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities and may make margin payments in connection with
transactions in financial futures contracts and options thereon; or
(10) invest in puts, calls, or any combinations thereof, except,
however, that the Fund may invest in financial futures contracts, purchase
and sell options on financial futures contracts, may acquire and hold puts
which relate to equity securities acquired by the Fund, and may sell
covered call options.
AIM LIMITED MATURITY TREASURY FUND
Limited Maturity may not:
(1) purchase any security unless the security is a direct obligation
of the U.S. Treasury or is a repurchase agreement with respect to a direct
obligation of the U.S. Treasury;
(2) issue senior securities in the form of indebtedness, borrow money,
except from banks for temporary or emergency purposes, such as to meet
redemption requests (not for the purpose of increasing income), or borrow
through reverse repurchase agreements (which may be entered into for the
purpose of increasing income) if, as a result of any such borrowings, the
amount borrowed would exceed 33 1/3% of the value of the Fund's assets
(including the proceeds of such securities issued or money borrowed) less
its liabilities (not including the liabilities incurred in connection with
such issuance or borrowing);
(3) make loans of money other than (a) through the purchase of debt
securities in accordance with the Fund's investment program, and (b) by
entering into repurchase agreements;
(4) lend any portfolio securities if the value of the securities
loaned by it would exceed an amount equal to one-third of its total assets;
(5) mortgage, pledge or hypothecate any assets except to secure
permitted borrowings of money from banks for temporary or emergency
purposes and then only in amounts not in excess of 33 1/3% of the value of
its total assets at the time of such borrowing;
(6) underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
H-2
<PAGE> 59
securities in accordance with the Fund's investment program may be deemed
an underwriting;
(7) invest in real estate;
(8) purchase or sell commodities or commodity futures contracts,
engage in arbitrage transactions, purchase securities on margin, make short
sales or invest in puts or calls;
(9) purchase oil, gas or mineral interests;
(10) invest in any obligation not payable as to principal and interest
in United States currency; or
(11) invest 25% or more of the value of its total assets in securities
of issuers engaged in any one industry (excluding securities which are a
direct obligation of the U.S. Treasury or are repurchase agreements with
respect to a direct obligation of the U.S. Treasury).
H-3
<PAGE> 60
APPENDIX I
CURRENT INVESTMENT OBJECTIVES
AIM HIGH YIELD FUND II
The fund's investment objective is to achieve a high level of current
income by investing primarily in publicly traded non-investment grade debt
securities.
AIM LIMITED MATURITY TREASURY FUND
The fund's investment objective is to seek liquidity with minimum
fluctuation of principal value, and, consistent with this objective, the highest
total return achievable.
I-1
<PAGE> 61
APPENDIX J
EXECUTIVE OFFICERS OF AIM INVESTMENT SECURITIES FUNDS
The following table provides information with respect to the executive
officers of the trust. Each executive officer is elected by the Board and serves
until his or her successor is chosen and qualified or until his or her
resignation or removal by the Board. The business address of all officers of the
trust is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATION(S)
WITH THE TRUST OFFICER SINCE DURING PAST 5 YEARS
- ---------------------- ------------------ -------------------------------
<S> <C> <C>
Charles T. Bauer (81), May 5, 1993 See trustee table under
Chairman Proposal 1
Robert H. Graham (53), January 1, 1994 See trustee table under
President Proposal 1
Gary T. Crum (52), September 11, 1993 Director and President, A I M
Senior Vice President Capital Management, Inc.;
Director and Executive Vice
President, A I M Management
Group Inc.; Director and Senior
Vice President, A I M Advisors,
Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP
PLC
Carol F. Relihan (45), August 4, 1994 Director, Senior Vice
Senior Vice President & President, General Counsel and
Secretary Secretary, A I M Advisors,
Inc.; Senior Vice President,
General Counsel and Secretary,
A I M Management Group Inc.;
Director, Vice President and
General Counsel, Fund
Management Company; Vice
President and General Counsel,
A I M Fund Services, Inc.; and
Vice President, A I M Capital
Management, Inc. and A I M
Distributors, Inc.
Melville B. Cox (56), September 11, 1993 Vice President and Chief
Vice President Compliance Officer, A I M
Advisors, Inc., A I M Capital
Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund
Management Company
</TABLE>
J-1
<PAGE> 62
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATION(S)
WITH THE TRUST OFFICER SINCE DURING PAST 5 YEARS
- ---------------------- ------------------ -------------------------------
<S> <C> <C>
Dana R. Sutton (41), September 11, 1993 Vice President and Fund
Vice President & Treasurer Controller, A I M Advisors,
Inc.; and Assistant Vice
President and Assistant
Treasurer, Fund Management
Company
Karen Dunn Kelley (39), September 11, 1993 Senior Vice President, A I M
Vice President Capital Management, Inc. and
Vice President, A I M Advisors,
Inc.
</TABLE>
J-2
<PAGE> 63
APPENDIX K
SECURITY OWNERSHIP OF CERTAIN OWNERS
AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the ownership
of the shares of beneficial interest of each of the funds by the trustees and
executive officers of the trust. No information is given as to a fund or a class
if a trustee or officer held no shares of any or all classes of such fund as of
February 18, 2000.
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AS OF PERCENT
NAME OF TRUSTEE/OFFICER FUND (CLASS) FEBRUARY 18, 2000 OF CLASS
----------------------- ------------ ------------------- --------
<S> <C> <C> <C>
Charles T. Bauer..........................
Bruce L. Crocket..........................
Owen Daly II..............................
Edward K. Dunn Jr. .......................
Jack M. Fields............................
Carl Frischling...........................
Robert H. Graham..........................
Prema Mathai-Davis........................
Lewis F. Pennock..........................
Louis S. Sklar............................
Gary T. Crum..............................
Carol F. Relihan..........................
Melville B. Cox...........................
Dana R. Sutton............................
Karen Dunn Kelley.........................
All Trustees and Officers as a Group......
</TABLE>
* Less than 1% of the outstanding shares of the class.
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS
To the best knowledge the trust, the names and addresses of the holders of
5% or more of the outstanding shares of each of the funds as of February 18,
2000, and the amount of the outstanding shares owned of record or beneficially
by such holders, are set forth below.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND CLASS PERCENTAGE OF
ADDRESS OF SHARES OWNED OWNED OF SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD RECORD BENEFICIALLY* BENEFICIALLY*
------------ ------------ ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
</TABLE>
* The trust has no knowledge as to whether any portion or all of the shares
owned of record are also owned beneficially.
K-1
<PAGE> 64
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
PROXY PROXY
PROXY SOLICITED BY THE BOARD
OF AIM LIMITED MATURITY TREASURY FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of AIM Limited Maturity Treasury Fund, a portfolio of
AIM Investment Securities Funds, on May 3, 2000, at 3:00 p.m., Central time, and
at any adjournment thereof, all of the shares of AIM Limited Maturity Treasury
Fund which the undersigned would be entitled to vote if personally present. IF
THIS PROXY IS SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE
VOTED "FOR" EACH TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign.
When signing as executor, administrator, attorney,
trustee or guardian or as custodian for a minor,
please give full title as such. If a corporation,
please sign in full corporate name and indicate
the signer's office. If a partner, sign in the
partnership name.
-------------------------------------------------
Signature
-------------------------------------------------
Signature (if held jointly)
Dated
--------------------------------------------
<PAGE> 65
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. THE TRUSTEES
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Trustees of AIM Investment
Securities Funds, each of whom will serve until his or her successor is
elected and qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a proposal to change AIM Limited Maturity Treasury Fund's
fundamental investment restrictions.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental Restriction
on Issuer Diversification [ ] [ ] [ ]
(b) Change to the Fundamental Restriction on
Borrowing Money, Issuing Senior Securities and
Mortgaging or Pledging Assets [ ] [ ] [ ]
(c) Change to the Fundamental Restriction on
Underwriting Securities [ ] [ ] [ ]
(d) Change to the Fundamental Restriction on Industry
Concentration [ ] [ ] [ ]
</TABLE>
<PAGE> 66
<TABLE>
<S> <C> <C> <C>
(e) Change to the Fundamental Restriction on
Purchasing or Selling Real Estate [ ] [ ] [ ]
(f) Change to the Fundamental Restriction on
Purchasing or Selling Commodities, on Purchasing
Securities on Margin, Short Sales of Securities and
Investing in Puts or Calls [ ] [ ] [ ]
(g) THIS PROPOSAL IS NOT APPLICABLE TO AIM LIMITED
MATURITY TREASURY FUND.
(h) THIS PROPOSAL IS NOT APPLICABLE TO AIM LIMITED
MATURITY TREASURY FUND.
(i) THIS PROPOSAL IS NOT APPLICABLE TO AIM LIMITED
MATURITY TREASURY FUND.
(j) Modification of Fundamental Restriction on Making
Loans [ ] [ ] [ ]
(k) Approval of a New Fundamental Investment Restriction
on Investing All of Each Fund's Assets in an Open-End
Fund [ ] [ ] [ ]
(l) Elimination of Fundamental Restriction on
Investments in Oil, Gas or Mineral Interests [ ] [ ] [ ]
(m) Elimination of Fundamental Restriction on
Investing in Obligations Not Payable in United States
Currency [ ] [ ] [ ]
(n) Elimination of Fundamental Restriction on
Purchasing Any Security That is Not A Direct
Obligation of the United States Treasury [ ] [ ] [ ]
</TABLE>
4. To approve a proposal to change the investment objective of AIM Limited
Maturity Treasury Fund so that it is non-fundamental.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. THIS PROPOSAL IS NOT APPLICABLE TO AIM LIMITED MATURITY TREASURY FUND.
6. To ratify the selection of KPMG LLP as independent accountants of AIM
Limited Maturity Treasury Fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
7. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 67
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
PROXY PROXY
PROXY SOLICITED BY THE BOARD
OF AIM HIGH YIELD FUND II
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of AIM High Yield Fund II, a portfolio of AIM Investment
Securities Funds, on May 3, 2000, at 3:00 p.m., Central time, and at any
adjournment thereof, all of the shares of AIM High Yield Fund II which the
undersigned would be entitled to vote if personally present. IF THIS PROXY IS
SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED "FOR"
EACH TRUSTEE AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. All joint owners
should sign. When signing as executor,
administrator, attorney, trustee or guardian
or as custodian for a minor, please give
full title as such. If a corporation, please
sign in full corporate name and indicate the
signer's office. If a partner, sign in the
partnership name.
--------------------------------------------
Signature
--------------------------------------------
Signature (if held jointly)
Dated
---------------------------------------
<PAGE> 68
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. THE TRUSTEES
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S)'
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Trustees of AIM Investment
Securities Funds, each of whom will serve until his or her successor is
elected and qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve a proposal to change AIM High Yield Fund II's fundamental
investment restrictions.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
(a) Change to or Addition of Fundamental Restriction on
Issuer Diversification [ ] [ ] [ ]
(b) Change to the Fundamental Restriction on Borrowing Money,
Issuing Senior Securities and Mortgaging or Pledging Assets [ ] [ ] [ ]
(c) Change to the Fundamental Restriction on Underwriting
Securities [ ] [ ] [ ]
(d) Change to the Fundamental Restriction on Industry
Concentration [ ] [ ] [ ]
</TABLE>
<PAGE> 69
<TABLE>
<S> <C> <C> <C>
(e) Change to the Fundamental Restriction on Purchasing or
Selling Real Estate [ ] [ ] [ ]
(f) THIS PROPOSAL IS NOT APPLICABLE TO AIM HIGH YIELD FUND II.
(g) Change to the Fundamental Restriction on Purchasing or
Selling Commodities and on Investing in Puts, Calls or
Combinations Thereof [ ] [ ] [ ]
(h) Elimination of Fundamental Restriction on Margin
Transactions [ ] [ ] [ ]
(i) Elimination of Fundamental Restriction on Short Sales of
Securities [ ] [ ] [ ]
(j) Modification of Fundamental Restriction on Making Loans [ ] [ ] [ ]
(k) Approval of a New Fundamental Investment Restriction on
Investing All of Each Fund's Assets in an Open-End Fund [ ] [ ] [ ]
(l) THIS PROPOSAL IS NOT APPLICABLE TO AIM HIGH YIELD FUND II.
(m) THIS PROPOSAL IS NOT APPLICABLE TO AIM HIGH YIELD FUND II.
(n) THIS PROPOSAL IS NOT APPLICABLE TO AIM HIGH YIELD FUND II.
</TABLE>
4. THIS PROPOSAL IS NOT APPLICABLE TO AIM HIGH YIELD FUND II.
5. To approve changing the investment objective of AIM High Yield Fund II
and making it non-fundamental.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. To ratify the selection of KPMG LLP as independent accountants of AIM
High Yield Fund II for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
7. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 70
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
ENCLOSED YOU WILL FIND ONE OR MORE PROXY CARDS RELATING TO EACH OF THE
FUNDS FOR WHICH YOU ARE ENTITLED TO VOTE. PLEASE INDICATE YOUR VOTING
INSTRUCTIONS ON EACH OF THE ENCLOSED PROXY CARDS, DATE AND SIGN THEM,
AND RETURN THEM IN THE ENVELOPE PROVIDED. IF YOU SIGN, DATE AND RETURN
A PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE NOMINEES FOR DIRECTOR NAMED IN THE ATTACHED PROXY STATEMENT
AND "FOR" ALL OTHER PROPOSALS INDICATED ON THE CARDS. IN ORDER TO AVOID
THE ADDITIONAL EXPENSES OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY CARDS PROMPTLY. UNLESS PROXY CARDS
ARE SIGNED BY THE APPROPRIATE PERSONS AS INDICATED IN THE INSTRUCTIONS
BELOW, THEY WILL NOT BE VOTED.
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense involved in validating your vote if you fail
to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
Trust Accounts
(1) ABC Trust Account.................................. John B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78................ Jane B. Doe
Partnership Accounts
(1) The XYZ Partnership................................ Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership............... Jane B. Smith, General Partner
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGMA/UTMA.......................................... John B. Smith
(2) Estate of John B. Smith............................ John B. Smith, Jr., Executor
Corporate Accounts
(1) ABC Corp........................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp........................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer.................. John Doe
(4) ABC Corp. Profit Sharing Plan...................... John Doe, Trustee
</TABLE>
