<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
G.T. GLOBAL VARIABLE INVESTMENT SERIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
G.T. GLOBAL VARIABLE INVESTMENT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CA 94111
APRIL 3, 1998
DEAR SHAREHOLDER:
As you may be aware, the financial industry has seen many mergers and
acquisitions over the last few years. A number of well-known, high profile
organizations have recently combined to build even stronger companies with
greater resources. These same strategic objectives motivated the pending
acquisition of GT Global and its sister divisions--including LGT Asset
Management and Chancellor LGT Asset Management, collectively known as the Asset
Management Division of Liechtenstein Global Trust--by AMVESCAP PLC, the parent
corporation of AIM Management Group and INVESCO. A special meeting of G.T.
Global Variable Investment Series and G.T. Global Variable Investment Trust
Shareholders (each a "Company;" collectively, the "Companies") regarding the
acquisition ("Special Meeting") will be held on May 20, 1998.
Attached are the Notice and Proxy Statement for the Special Meeting which
describe a number of matters on which you, the Shareholder, are being asked to
vote: (i) election of each Company's Board of Trustees; (ii) approval of a new
investment management and administration agreement and a sub-advisory and
sub-administration agreement; (iii) approval of changes to fundamental
investment restrictions for the Funds; (iv) approval of an agreement and plan of
conversion and termination for each Company; and (v) ratification of the
selection of independent accountants. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU
APPROVE THESE PROPOSALS.
The proposed acquisition of GT Global by AMVESCAP offers the following
opportunities for Shareholders:
- Continuity of objectives, policies and investment style.
- Expanded investment team strength to manage your investments.
- Business synergies between the two organizations, including increased
product diversification, global brand enhancement and broadened geographic
coverage.
Your vote is important. Please take a moment now to sign and return your
proxy card(s) in the enclosed postage-paid envelope. If you have any questions
concerning the proposals to be considered at the Special Meeting, please contact
the Funds' Transfer Agent at 1-800-223-2138. If you have a question about your
contract, please call General American Life Insurance Company at 1-800-237-6580.
Sincerely,
/s/ WILLIAM J. GUILFOYLE
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
[LOGO]
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CA 94111
APRIL 3, 1998
DEAR SHAREHOLDER:
As you may be aware, the financial industry has seen many mergers and
acquisitions over the last few years. A number of well-known, high profile
organizations have recently combined to build even stronger companies with
greater resources. These same strategic objectives motivated the pending
acquisition of GT Global and its sister divisions--including LGT Asset
Management and Chancellor LGT Asset Management, collectively known as the Asset
Management Division of Liechtenstein Global Trust--by AMVESCAP PLC, the parent
corporation of AIM Management Group and INVESCO. A special meeting of G.T.
Global Variable Investment Series and G.T. Global Variable Investment Trust
Shareholders (each a "Company"; collectively, the "Companies") regarding the
acquisition ("Special Meeting") will be held on May 20, 1998.
Attached are the Notice and Proxy Statement for the Special Meeting which
describe a number of matters on which you, the Shareholder, are being asked to
vote: (i) election of each Company's Board of Trustees; (ii) approval of a new
investment management and administration agreement and a sub-advisory and
sub-administration agreement; (iii) approval of changes to fundamental
investment restrictions for the Funds; (iv) approval of an agreement and plan of
conversion and termination for each Company; and (v) ratification of the
selection of independent accountants. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU
APPROVE THESE PROPOSALS.
The proposed acquisition of GT Global by AMVESCAP offers the following
opportunities for Shareholders:
- Continuity of objectives, policies and investment style.
- Expanded investment team strength to manage your investments.
- Business synergies between the two organizations, including increased
product diversification, global brand enhancement and broadened geographic
coverage.
Your vote is important. Please take a moment now to sign and return your
proxy card(s) in the enclosed postage-paid envelope. If you have any questions
concerning the proposals to be considered at the Special Meeting, please contact
the Funds' Transfer Agent at 1-800-223-2138. If you have a question about your
contract, please call Security Equity Life Insurance Company at 1-800-533-8282.
Sincerely,
/s/ WILLIAM J. GUILFOYLE
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
[LOGO]
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CA 94111
APRIL 3, 1998
DEAR SHAREHOLDER:
As you may be aware, the financial industry has seen many mergers and
acquisitions over the last few years. A number of well-known, high profile
organizations have recently combined to build even stronger companies with
greater resources. These same strategic objectives motivated the pending
acquisition of GT Global and its sister divisions--including LGT Asset
Management and Chancellor LGT Asset Management, collectively known as the Asset
Management Division (AMD) of Liechtenstein Global Trust--by AMVESCAP PLC, the
parent corporation of AIM Management Group and INVESCO. A special meeting of
G.T. Global Variable Investment Series and G.T. Global Variable Investment Trust
Shareholders (each a "Company;" collectively, the "Companies") regarding the
acquisition ("Special Meeting") will be held on May 20, 1998.
Attached are the Notice and Proxy Statement for the Special Meeting which
describe a number of matters on which you, the Shareholder, are being asked to
vote: (i) election of each Company's Board of Trustees; (ii) approval of a new
investment management and administration agreement and a sub-advisory and
sub-administration agreement; (iii) approval of changes to fundamental
investment restrictions for the Funds; (iv) approval of an agreement and plan of
conversion and termination for each Company; and (v) ratification of the
selection of independent accountants. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU
APPROVE THESE PROPOSALS.
The proposed acquisition of GT Global by AMVESCAP offers the following
opportunities for Shareholders:
- Continuity of objectives, policies and investment style.
- Expanded investment team strength to manage your investments.
- Business synergies between the two organizations, including increased
product diversification, global brand enhancement and broadened geographic
coverage.
Your vote is important. Please take a moment now to sign and return your
proxy card(s) in the enclosed postage-paid envelope. If you have any questions
concerning the proposals to be considered at the Special Meeting, please contact
the Funds' Transfer Agent at 1-800-223-2138. If you have a question about your
contract, please call American Enterprise Life Insurance Company at
1-800-333-3437.
Sincerely,
/s/ WILLIAM J. GUILFOYLE
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
[LOGO]
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CA 94111
APRIL 3, 1998
DEAR SHAREHOLDER:
As you may be aware, the financial industry has seen many mergers and
acquisitions over the last few years. A number of well-known, high profile
organizations have recently combined to build even stronger companies with
greater resources. These same strategic objectives motivated the pending
acquisition of GT Global and its sister divisions--including LGT Asset
Management and Chancellor LGT Asset Management, collectively known as the Asset
Management Division of Liechtenstein Global Trust--by AMVESCAP PLC, the parent
corporation of AIM Management Group and INVESCO. A special meeting of G.T.
Global Variable Investment Series and G.T. Global Variable Investment Trust
Shareholders (each a "Company;" collectively, the "Companies") regarding the
acquisition ("Special Meeting") will be held on May 20, 1998.
Attached are the Notice and Proxy Statement for the Special Meeting which
describe a number of matters on which you, the Shareholder, are being asked to
vote: (i) election of each Company's Board of Trustees; (ii) approval of a new
investment management and administration agreement and a sub-advisory and
sub-administration agreement; (iii) approval of changes to fundamental
investment restrictions for the Funds; (iv) approval of an agreement and plan of
conversion and termination for each Company; and (v) ratification of the
selection of independent accountants. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU
APPROVE THESE PROPOSALS.
The proposed acquisition of GT Global by AMVESCAP offers the following
opportunities for Shareholders:
- Continuity of objectives, policies and investment style.
- Expanded investment team strength to manage your investments.
- Business synergies between the two organizations, including increased
product diversification, global brand enhancement and broadened geographic
coverage.
Your vote is important. Please take a moment now to sign and return your
proxy card(s) in the enclosed postage-paid envelope. If you have any questions
concerning the proposals to be considered at the Special Meeting, please contact
the Funds' Transfer Agent at 1-800-223-2138. If you have a question about your
contract, please call American Centurion Life Assurance Company at
1-800-504-0469.
Sincerely,
/s/ WILLIAM J. GUILFOYLE
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE>
IMPORTANT NEWS FOR GT GLOBAL VARIABLE FUNDS SHAREHOLDERS
We encourage you to read the attached proxy statement in full; however, the
following questions and answers represent some typical concerns that
shareholders might have regarding this proxy statement.
WHY IS GT GLOBAL SENDING ME THIS PROXY?
As you may know, AMVESCAP PLC, the parent company of AIM Funds and INVESCO
Funds, has entered into an agreement to acquire GT Global and Chancellor LGT
Asset Management, Inc. ("Chancellor LGT"), the Funds' investment manager. As
part of this acquisition, some changes are being recommended with respect to
your Fund.
WHAT AM I BEING ASKED TO VOTE ON?
The proposals you are being asked to vote on are:
1. Election of the Board of Trustees;
2(a). Approval of a new investment management and administration agreement;
2(b). Approval of a sub-advisory and sub-administration agreement;
3. Approval of changes to the fundamental investment restrictions;
4. Reorganization of the Companies to conform to the organization of
certain AIM Funds; and
5. Ratification of the selection of independent public accountants.
HOW WILL THE ACQUISITION OF GT GLOBAL BY AMVESCAP AFFECT ME?
The Boards of the GT Global Variable Funds believe that the acquisition will
be beneficial for a number of reasons, including:
- AIM's performance record as an investment manager and reputation in the
fund industry, and AMVESCAP's investment resources and commitment to the
fund industry
- Additional shareholder services support provided by the larger
organization
WILL THE INVESTMENT OBJECTIVE OF MY FUND CHANGE?
The investment objective of your Fund will not change.
WHAT IS THE BENEFIT OF CONVERTING A FUND TO A DELAWARE BUSINESS TRUSTS?
The reorganization is being proposed primarily to modernize the
organizational documents under which the Fund operates; the reorganization will
not substantially affect the way your Fund operates. The Board Members believe
that the Delaware business trust organizational form offers a number of
advantages over the Fund's current organizational form, including greater
flexibility to conduct business. Also, since several AIM Funds are organized as
Delaware business trusts, administrative efficiencies and consistency among the
Funds would be achieved.
HOW WILL THE EXPENSES FOR MY FUND BE AFFECTED?
The fees and expenses payable by your Fund are not expected to increase as a
result of any of the changes you are voting on. In fact, it is possible that
expenses may be lowered due to increased sales and reduced redemptions.
i
<PAGE>
HOW DO THE BOARD MEMBERS RECOMMEND THAT I VOTE?
The Board Members recommend that you vote FOR all of the proposals on the
enclosed proxy card.
HOW DO I VOTE?
You should indicate your vote on the enclosed proxy card and return it in
the enclosed postage-paid envelope.
WHY ARE MULTIPLE PROXY CARDS ENCLOSED?
You have been sent a proxy card for each Fund you own, because each requires
a separate vote. Please sign, date and return each proxy card in the enclosed
postage-paid envelope.
WHEN IS THE DEADLINE FOR VOTING?
All votes must be received prior to the Special Meeting, which will be held
at 1:00 p.m. on May 20, 1998.
ii
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1998
TO THE SHAREHOLDERS:
Notice is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of each of the above-listed investment companies ("Companies") will be
held at 50 California Street, 26th Floor, San Francisco, California, on May 20,
1998, at 1:00 p.m., Pacific time, for the following purposes:
(1) To elect each Company's Board of Trustees;
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series
of each Company (each, a "Fund," and collectively, the "Funds");
(3) To approve changes to the fundamental investment restrictions of each
Fund;
(4) To approve an agreement and plan of conversion and termination with
respect to each Company;
(5) To ratify the selection of Coopers & Lybrand L.L.P. as each Company's
independent public accountants; and
(6) To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 17, 1998, are
entitled to notice of, and to vote at, the Special Meeting. Your attention is
called to the accompanying Proxy Statement. Whether or not you attend the
Special Meeting, we urge you to PROMPTLY COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD, so that a quorum will be present and a maximum number of shares may
be voted.
BY ORDER OF THE BOARDS,
/s/ HELGE KRIST LEE
HELGE KRIST LEE
SECRETARY
SAN FRANCISCO, CALIFORNIA
APRIL 3, 1998
YOUR VOTE IS VERY IMPORTANT. PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD PROMPTLY.
<PAGE>
PROXY STATEMENT
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
50 CALIFORNIA STREET
26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 20, 1998
------------------------
This Proxy Statement is being furnished to shareholders of each of the
above-listed investment companies ("Companies") as well as variable annuity
contract owners who beneficially own interests therein, in connection with the
solicitation of proxies by the Boards of Trustees. These proxies are to be used
at the Special Meeting of Shareholders and at any adjournment thereof (the
"Special Meeting" or "Meeting") to be held at the offices of the Companies, 50
California Street, 26th Floor, San Francisco, California 94111, on May 20, 1998,
at 1:00 p.m. Pacific time. Only shareholders of record at the close of business
on March 17, 1998 ("Shareholders"), are entitled to notice of and to vote at the
Meeting. Copies of this Proxy Statement and the accompanying materials will
first be mailed to Shareholders on or about April 7, 1998.
Each Company is composed of one or more separate series or portfolios, each
of which is referred to herein as a "Fund." Shares of the Funds are offered for
investment exclusively to separate accounts ("Separate Accounts") that fund the
benefits under variable annuity contracts ("VA Contracts") offered by certain
life insurance companies ("Participating Insurance Companies"). In accordance
with their view of applicable law, the Participating Insurance Companies will
solicit voting instructions from the owners of the VA Contracts relating to each
Fund ("Contract Owners") with respect to the matters set forth in this Proxy
Statement. In connection with the solicitation of voting instructions, the
Participating Insurance Companies will furnish a copy of this Proxy Statement to
all Contract Owners.
Each Company's shares of beneficial interest are referred to as "Shares" and
the holders of Shares are "Shareholders." Each Company's Board of Trustees is
referred to as a "Board" and the trustees are "Board Members." Each full
outstanding share of each Fund is entitled to one vote, and each fractional
outstanding share of each Fund is entitled to a proportionate share of one vote,
with respect to each proposal. Shares of each Fund shall vote on each proposal.
Information about the vote necessary with respect to each proposal is discussed
below in connection with the proposal.
Set forth below is a list reflecting the formal name of each Fund and the
short-hand name as used in this proxy statement. All proposals apply to all
Funds.
G.T. GLOBAL VARIABLE INVESTMENT SERIES
<TABLE>
<CAPTION>
NAME AS USED
FUND NAME IN THIS PROXY STATEMENT
- ---------------------------------------------------------------------------- ------------------------------------
<S> <C>
GT Global Variable New Pacific Fund New Pacific Fund
GT Global Variable Europe Fund Europe Fund
GT Global Variable America Fund America Fund
GT Global Variable International Fund International Fund
GT Global Money Market Fund Money Market Fund
</TABLE>
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT TRUST
<TABLE>
<CAPTION>
NAME AS USED
FUND NAME IN THIS PROXY STATEMENT
- -------------------------------------------------------------------------- --------------------------------------
<S> <C>
GT Global Variable Latin America Fund Latin America Fund
GT Global Variable Infrastructure Fund Infrastructure Fund
GT Global Variable Natural Resources Fund Natural Resources Fund
GT Global Variable Telecommunications Fund Telecommunications Fund
GT Global Variable Growth & Income Fund Growth & Income Fund
GT Global Variable Strategic Income Fund Strategic Income Fund
GT Global Variable Emerging Markets Fund Emerging Markets Fund
GT Global Variable Global Government Income Fund Global Government Income Fund
GT Global Variable U.S. Government Income Fund U.S. Government Income Fund
</TABLE>
If the accompanying proxy card is properly executed and returned in time to
be voted at the Special Meeting, the Shares covered thereby will be voted in
accordance with the instructions marked thereon. Executed proxies that are
unmarked will be voted in favor of the nominees for Board Members; in accordance
with the recommendation of your Board as to all other proposals described in
this Proxy Statement and relating to your Fund; and, at the discretion of the
proxyholders, on any other matter that may properly have come before the Special
Meeting or any adjournments thereof. All Shares of the Funds held on behalf of
Contract Owners will be voted by the Participating Insurance Companies in
accordance with voting instructions received from Contract Owners. The
Participating Insurance Companies will vote Shares of the Funds that they are
entitled to vote for which no voting instructions are received in the same
proportion as Shares of the Funds for which instructions have been received.
Any proxy given pursuant to this solicitation may be revoked at any time
before its exercise by giving written notice to the Secretary of your Company or
by the issuance of a subsequent proxy. To be effective, such revocation must be
received by the Secretary of your Company prior to the Special Meeting. In
addition, a shareholder may revoke a proxy by attending the Meeting and voting
in person. The solicitation of proxies will be made primarily by mail but also
may be made by telephone, telegraph, telecopy and personal interviews.
Authorization to execute proxies may be obtained by telephonic or electronically
transmitted instructions.
The presence in person or by proxy of Shareholders entitled to cast
one-third of all the votes entitled to be cast at the Meeting shall constitute a
quorum at the Meeting with respect to that Company. If a quorum is not present
at the Meeting or if a quorum is present but sufficient votes to approve any of
the proposals described in the Proxy Statement are not received, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those Shares represented at the Meeting in
person or by proxy. A Shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
Broker non-votes are Shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as Shares present
for purposes of determining whether a quorum is present, but will not be voted
for or against any adjournment or proposal or for or against any adjournment to
permit further solicitation of proxies. Accordingly, abstentions and broker
non-votes effectively will be a vote against adjournment or against any proposal
where the required vote is a percentage of the Shares present or outstanding.
Abstentions and broker non-votes will not be counted, however, as votes cast for
purposes of determining whether sufficient votes have been received to approve a
proposal.
Information as to the number and ownership of outstanding Shares of each
Company and each Fund as of March 17, 1998 (the "Record Date"), is set forth in
Exhibit A.
2
<PAGE>
PROPOSAL NO. 1:
ELECTION OF BOARD MEMBERS
RELEVANT FUNDS. Proposal 1 applies to all Funds.
PROPOSAL. It is the intention of each proxyholder named on the accompanying
proxy card to vote FOR the election of the nominees listed below unless the
Shareholder or Contract Owner specifically indicates on his or her proxy card a
desire to withhold authority to vote for any nominee. The Boards do not
contemplate that any of the nominees who have consented to being nominated will
be unable to serve as Board Members for any reason, but if that should occur
prior to the Meeting, the proxies will be voted for such other nominee(s) as the
Boards may recommend. If elected, each nominee will hold office until his/her
successor is duly elected and qualified.
Messrs. Anderson, Bayley and Patterson and Miss Quigley have served as Board
Members of each Company since February 1993. Mr. Guilfoyle, President of GT
Global, Inc., the principal distributor of the GT Global Mutual Funds ("GT
Global"), has served as a Board Member since February 1997.
INFORMATION REGARDING NOMINEES FOR ELECTION AT THE SPECIAL MEETING
<TABLE>
<CAPTION>
POSITION(S) WITH
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS THE COMPANIES
- --------------------------------------------------------------------------------------------- ------------------
<S> <C>
William J. Guilfoyle, Age 39*................................................................ Board Member and
Chairman of the
Board
Mr. Guilfoyle is President, GT Global since 1995; Director, GT Global since 1991; Senior Vice
President and Director of Sales and Marketing, GT Global from May 1992 to April 1995;
Director, Liechtenstein Global Trust AG (holding company of the various international LGT
companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency ("G.T.
Insurance") since 1992; President and Chief Executive Officer, G.T. Insurance since 1995;
Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April 1993 to
November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992 to 1993. Mr.
Guilfoyle is also a director or trustee of each of the other investment companies registered
under the 1940 Act that is managed or administered by Chancellor LGT.
C. Derek Anderson, Age 56.................................................................... Board Member
Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment partnership);
Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking firm); Director,
Anderson Capital Management, Inc., since 1988; Director, PremiumWear, Inc. (formerly
Munsingwear, Inc.) (a casual apparel company); and Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a director or trustee of each of the other investment
companies registered under the 1940 Act that is managed or administered by Chancellor LGT.
Frank S. Bayley, Age 58...................................................................... Board Member
Mr. Bayley is a partner of the law firm of Baker & McKenzie; and Director and Chairman, C.D.
Stimson Company (a private investment company). Mr. Bayley also is a director or trustee of
each of the other investment companies registered under the 1940 Act that is managed or
administered by Chancellor LGT.
- -------------------
* Mr. Guilfoyle is deemed to be an "interested person" of the Companies, as defined in the
Investment Company Act of 1940, as amended ("1940 Act"), by virtue of his association with
GT Global and Chancellor LGT Asset Management, Inc. ("Chancellor LGT"), the Companies'
investment manager and administrator, or their affiliates and of his office with the
Companies.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) WITH
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS THE COMPANIES
- --------------------------------------------------------------------------------------------- ------------------
<S> <C>
Arthur C. Patterson, Age 54.................................................................. Board Member
Mr. Patterson is a Managing Partner, Accel Partners (a venture capital firm). He also serves
as a director of Viasoft and PageMart, Inc. (both public software companies), as well as
several other privately held software and communications companies. Mr. Patterson also is a
director or trustee of each of the other investment companies registered under the 1940 Act
that is managed or administered by Chancellor LGT.
Ruth H. Quigley, Age 63...................................................................... Board Member
Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley also is a director
or trustee of each of the other investment companies registered under the 1940 Act that is
managed or administered by Chancellor LGT.
</TABLE>
The above information provides each Board Member's business experience
during at least the past five years. Corresponding information with respect to
the executive officers of the Companies is provided below. See "Other
Information--Executive Officers of the Companies."
To the knowledge of each Company's management, as of the Record Date, none
of the Board Members and officers of each Company was a Contract Owner of any of
the Funds.
There were eight meetings of the Boards held during each Company's fiscal
year ended December 31, 1997. Each Board has an Audit Committee comprised of
Miss Quigley and Messrs. Anderson, Bayley and Patterson. The purpose of the
Audit Committee is to oversee the annual audit of each Company and review the
performance of the Companies' independent accountants. During each Company's
last completed fiscal year, the Audit Committee met once. Each Board Member of
each Company attended at least 75% of the total number of meetings of the Board
and the Audit Committee.
Each Board Member serves in total as a director or trustee of 12 registered
investment companies managed or administered by Chancellor LGT ("Fund Complex").
Each Company pays each Board Member, who is not a director, trustee, officer or
employee of Chancellor LGT, or any affiliated company, an annual fee plus a
meeting fee for each Board or committee meeting attended by such Board Member
and reimburses travel and other out-of-pocket expenses incurred in connection
with attending such meetings. The table below summarizes the compensation of the
Companies' Board Members for the fiscal year ended December 31, 1997. The table
also provides the total compensation of the Board Members by the Fund Complex
for the 1997 calendar year.
4
<PAGE>
COMPENSATION TABLE
G.T. GLOBAL VARIABLE INVESTMENT SERIES
<TABLE>
<CAPTION>
TOTAL COMPENSATION
COMPENSATION FROM THE COMPANY AND
NAME OF PERSON(1) FROM THE COMPANY THE FUND COMPLEX(2)
- ------------------------------------------------------------------------ ----------------- ---------------------
<S> <C> <C>
C. Derek Anderson....................................................... $ 2,000.00 $ 103,653.66
Frank S. Bayley......................................................... $ 2,000.00 $ 106,555.73
Arthur C. Patterson..................................................... $ 2,000.00 $ 89,700.00
Ruth H. Quigley......................................................... $ 2,000.00 $ 98,037.50
</TABLE>
G.T. GLOBAL VARIABLE INVESTMENT TRUST
<TABLE>
<CAPTION>
TOTAL COMPENSATION
COMPENSATION FROM THE COMPANY AND
NAME OF PERSON(1) FROM THE COMPANY THE FUND COMPLEX(2)
- ------------------------------------------------------------------------ ----------------- ---------------------
<S> <C> <C>
C. Derek Anderson....................................................... $ 2,659.00 $ 103,653.66
Frank S. Bayley......................................................... $ $2,659.00 $ 106,555.73
Arthur C. Patterson..................................................... $ $2,659.00 $ 89,700.00
Ruth H. Quigley......................................................... $ $2,659.00 $ 98,037.50
</TABLE>
- ------------------------
(1) Mr. Guilfoyle received no compensation from any of the Companies.
(2) The Board Members do not receive any pension or retirement benefits as
compensation for their services to the Companies.
REQUIRED VOTE. With respect to each Company, a plurality of all the votes
cast at the meeting is required to elect each nominee.
EACH BOARD RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE BOARD MEMBERS
LISTED IN PROPOSAL 1.
PROPOSALS NO. 2(a) AND 2(b):
APPROVAL OF INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENTS AND
SUB-ADVISORY AND SUB-ADMINISTRATION AGREEMENTS
RELEVANT FUNDS. Proposal 2 applies to all Funds.
BACKGROUND. On January 30, 1998, Liechtenstein Global Trust, AG ("LGT"),
the indirect parent organization of Chancellor LGT and GT Global, Inc.
(together, "GT Global") and LGT Holding (International) AG, Zurich, entered into
an agreement (the "Purchase Agreement") with AMVESCAP PLC ("AMVESCAP") and AMD
Acquisition Corp., pursuant to which AMVESCAP will acquire LGT's Asset
Management Division, which includes GT Global and certain other affiliates (the
"Purchase"). As a result of the Purchase, the current investment management and
administration contracts (collectively, the "Current Management Contracts") will
automatically terminate. Accordingly, shareholders of the Funds are being asked
to approve new Investment Management and Administration Contracts (collectively,
the "New Management Agreements") and new Sub-Advisory and Sub-Administration
Contracts (collectively, the "New Sub-Advisory Agreements") (the New Management
Agreements and the New Sub-Advisory Agreements are collectively referred to as
the "New Agreements"). Under the New Agreements, A I M Advisors, Inc. ("AIM"), a
wholly owned subsidiary of AMVESCAP, would serve as investment manager
5
<PAGE>
and administrator, and Chancellor LGT (whose name would be changed following
consummation of the Purchase) would serve as sub-adviser and sub-administrator,
to each of the Funds. See "Information Concerning AMVESCAP, AIM and Chancellor
LGT." Forms of the New Agreements are attached hereto as Exhibits B and C. The
Board of each Company has approved the New Management Agreement and New
Sub-Advisory Agreement with respect to each Fund, subject to the approval of its
respective shareholders.
At a meeting held on March 24, 1998, the Boards of each Company, including a
majority of the Board Members who are not "interested persons" of the Company
(as defined in the 1940 Act) ("Independent Board Members"), approved the New
Agreements, subject to shareholder approval. A description of the New Agreements
is provided below under "Terms of the New Agreements." Such description is only
a summary and is qualified by reference to the attached Exhibits B and C. A
summary of the Boards' considerations is provided below under "Board
Considerations."
In approving the New Agreements, the Boards took into account that, except
for the change in the investment manager and the establishment of sub-advisory
relationships, there are no material differences between the provisions of the
Current Management Contracts and the New Agreements. The Boards also noted that
the costs and expenses associated with the Purchase will be paid for by LGT and
AMVESCAP and not by the Funds or their Shareholders. Further, based on the
representations of AIM and Chancellor LGT regarding their intentions, the Boards
do not anticipate currently that there will be substantial changes in the way in
which the Funds are managed or operated, except as noted below. Following the
Closing Date, as defined below, AIM intends to carefully study the investment
performance of each of the Funds, as well as the combined resources of AMVESCAP
and Chancellor LGT, in order to determine what steps, if any, may be taken to
ensure strong investment performance of the Funds into the future. It is
anticipated that as a result of such study, AIM may recommend, among other
things, various actions such as reorganizations or mergers involving certain
Funds, as well as changes in or adjustments to the investment personnel assigned
to manage certain Funds. Any proposals along these lines would be presented to
the Boards for their approval. Moreover, implementation of certain of these
proposals may require shareholder approval.
If the conditions set forth in the Purchase Agreement are not met or waived
or if the Purchase Agreement is terminated, the Purchase will not be
consummated, and the Current Management Contracts will remain in effect. If the
New Agreements are approved, and the Purchase is thereafter consummated, the New
Agreements will be executed and become effective on or about the Closing Date.
SHAREHOLDER APPROVAL REQUIREMENTS. Approval of the New Management Agreement
and New Sub-Advisory Agreement on behalf of each Fund requires the affirmative
vote of a "majority of the outstanding voting securities" of that Fund, which
for this purpose means the affirmative vote of the lesser of (i) more than 50%
of the outstanding shares of the Fund or (ii) 67% or more of the shares of the
Fund present at the meeting if more than 50% of the outstanding shares of such
Fund are represented at the meeting in person or by proxy. For each Fund, each
of the New Management Agreement and the New Sub-Advisory Agreement is completely
contingent upon the approval of the other, and neither will be implemented
unless both are approved. If the New Agreements are not approved with respect to
any Fund and the Purchase is consummated, the Board of the relevant Company will
determine what further action to take. Because the Purchase is not contingent on
the approval of the New Agreements, it is possible that the Purchase will be
consummated even if one or more Funds do not approve the New Agreements. In such
case, GT Global (including Chancellor LGT) would be acquired by AMVESCAP and the
Current Management Contracts would automatically terminate. As a result, for any
Fund or Funds that had not approved the New Agreements, the Board would need to
make new arrangements for obtaining advisory services. Such steps could include
the hiring of AIM and GT Global to provide services on an interim basis, and
AMVESCAP has indicated its willingness to permit AIM and GT Global to provide
such services if so requested.
6
<PAGE>
PURCHASE OF LGT'S ASSET MANAGEMENT DIVISION BY AMVESCAP. On January 30,
1998, LGT and LGT Holding (International) AG, Zurich (together, the "Sellers")
entered into the Purchase Agreement with AMVESCAP and AMD Acquisition Corp., a
wholly owned subsidiary of AMVESCAP (the "Buyer"), pursuant to which the Buyer
will purchase the global asset management business of the Sellers by acquiring
the shares of, and equity interests in, the subsidiaries of the Sellers that
conduct such business (the "Transferred Companies"). Under the Purchase
Agreement, the Buyer shall pay the Sellers $1.3 billion, which shall be (i)
reduced (or increased) to the extent that the closing tangible net worth of the
Transferred Companies at closing is less than (or greater than) zero, (ii)
reduced to the extent that annualized asset management fees (without giving
effect to market and currency fluctuations) of the Transferred Companies at
closing, in respect of which client consents have been obtained, are less than
92.5% of base investment management fees and (iii) adjusted in respect of
certain transaction-related fees and expenses (including, among other things,
mutual fund shareholder and other client consent costs). Thus, failure by
Shareholders of the Companies to approve the New Agreements may result in the
Buyer paying, and the Sellers receiving, a lower amount for the sale of the
Transferred Companies, but will not necessarily preclude a closing of the
Purchase.
The closing is expected to occur on or about May 29, 1998 (the "Closing
Date") subject to the satisfaction or waiver of certain conditions that include,
among other things: (i) the annualized asset management fees (without giving
effect to market and currency fluctuations) being at least 60% of base
management fees; (ii) approval of the Purchase by AMVESCAP shareholders; (iii)
certain governmental approvals and other third party consents having been
received; (iv) representations and warranties made by the parties being true and
correct in all material respects at the closing; and (v) no party being subject
to any order prohibiting the consummation of the Purchase.
The Purchase Agreement may be terminated at any time prior to the Closing
Date (i) by the mutual consent of the Buyer and LGT; (ii) by written notice by
any party after September 30, 1998; (iii) by the Sellers if, by a specified
date, AMVESCAP's shareholders have not approved the transaction; or (iv) under
the other circumstances set forth in the Purchase Agreement.
BOARD CONSIDERATIONS. At a series of meetings held in February and March
1998 with the Boards, representatives of AMVESCAP, the INVESCO Global operating
group of AMVESCAP ("INVESCO"), AIM, Chancellor LGT and GT Global discussed with
the Boards the anticipated effects of the Purchase on the advisory, sub-advisory
and related relationships with the Funds. At these meetings, these
representatives provided information to Board Members concerning the specific
terms of the Purchase Agreement, the anticipated advisory and sub-advisory
relationships with the Funds, and the proposed plans for ongoing management and
operation of the Funds. Throughout this period, the Boards and their counsel
requested and received additional information from AIM, GT Global and their
counsel, and held telephone conferences regarding the Purchase and its potential
impact on the Funds and their shareholders.
In connection with their review, the Boards obtained substantial information
regarding: the management, financial position and business of AMVESCAP and AIM
and their affiliates, including INVESCO; the history of AIM's and its
affiliates' business and operations; the performance of the investment companies
advised by AIM, INVESCO and their respective affiliates; the impact of the
Purchase on the Funds and their shareholders; the plans of AMVESCAP and its
affiliates with respect to GT Global and the Funds; performance and financial
information about each of the Funds; and information about other funds and their
fees and expenses. The Boards also received information regarding the terms of
the Purchase and comprehensive financial information including: AMVESCAP's plans
for financing the Purchase; the impact of the financing on AIM; AMVESCAP's plans
for the compensation and retention of personnel currently employed by GT Global
and the Transferred Companies who currently provide services to the Companies,
including an employee stabilization plan being implemented at GT Global; and
information concerning employment contracts with senior management of GT Global.
7
<PAGE>
In connection with their deliberations, the Boards evaluated the
above-referenced information and considered, among other things, the following
factors (the order of which is no indication of the importance given to each):
(1) the expectation that the investment objectives, policies and management
strategies of the Funds after the Purchase will not materially change; (2) the
expectation that substantially the same investment teams and management
personnel will manage the Funds on a day-to-day basis through Chancellor LGT as
sub-adviser to the Funds, which will be supported where appropriate by
investment and other personnel of AMVESCAP, INVESCO, AIM and their affiliates
who are experienced in managing and administering similar investment products;
(3) the expectation that the investment expertise available to the Funds will be
enhanced by the combined AMVESCAP/Chancellor LGT management team and, in
particular, that AIM's depth and experience in managing U.S. equity funds and
money market funds will complement Chancellor LGT's traditional strength in
managing global and foreign funds and that INVESCO's depth and experience in
managing global and foreign funds also will be available to Chancellor LGT; (4)
the continued employment of and retention incentives for senior management of GT
Global and the continued maintenance of investment personnel by Chancellor LGT
and its affiliates in multiple locations throughout the world; (5) the ability
of AMVESCAP to provide sufficient capital to support the operations of AIM and
GT Global and AMVESCAP's commitment to paying compensation adequate to attract
and retain top quality personnel; (6) AIM's demonstrated capacity to market and
distribute variable annuity products, and its commitment to evaluate
arrangements to enhance sales of the Funds; (7) the commitment of AIM to
maintain the Funds' current expense caps for at least two years and the
expectation that the expense ratios of the Funds may be reduced to the extent
assets increase through increased sales and reduced redemption levels; (8) the
additional administrative and shareholder services which can be provided by a
larger organization such as AIM; (9) the overall advantages of being managed by
the AMVESCAP organization which will have approximately $250 billion under
management and operations throughout the world following the closing, especially
in light of increasingly competitive conditions in the financial services
industry, including the increasing presence in the industry of large and
well-capitalized companies which are spending substantial amounts to engage
personnel and to provide services to competing investment companies; and (10)
the continuity of experience offered by the Companies' Boards.
In reaching their determinations, the Boards also considered the fact that
the new advisory and sub-advisory relationships are intended to conform to the
safe harbor provided by Section 15(f) of the 1940 Act for new advisory and other
arrangements arising from the sale of fund management businesses such as
Chancellor LGT's. Under the Purchase Agreement, AMVESCAP has agreed to conduct
its business and to use its reasonable best efforts to cause each of its
affiliates to conduct its business so as to assure that, insofar as is within
AMVESCAP's or its affiliates' control (i) for a period of three years after the
closing of the Purchase, at least 75% of the members of the Boards of the
Companies would be Independent Board Members; and (ii) for a period of two years
after the closing of the Purchase, there would not be imposed on the Funds an
"unfair burden" (as defined in the 1940 Act) as a result of the Purchase.
The Boards also evaluated the New Management Agreements and the New
Sub-Advisory Agreements. The Boards assured themselves that the New Agreements
for each of the Funds, including the terms relating to the services to be
provided and the fees and expenses payable by each such Fund, are not materially
different from the Current Management Contracts for each such Fund, except that
AIM rather than Chancellor LGT will be the investment manager and administrator
for each Fund and Chancellor LGT will be the sub-adviser and sub-administrator
for each Fund.
At the Board meetings held during February and March 1998, the Boards
received presentations by AMVESCAP, AIM, INVESCO, Chancellor LGT, and GT Global,
Inc. and considered each of the foregoing factors. During this time period, the
Independent Board Members also met separately and conferred with their counsel,
who is not counsel to the Funds, AMVESCAP or its affiliates or Chancellor LGT or
its affiliates. Based upon these considerations, on March 24, 1998, the Boards
unanimously
8
<PAGE>
approved the New Management Agreements and the New Sub-Advisory Agreements for
the Funds and recommended approval by the Shareholders.
TERMS OF THE NEW AGREEMENTS. If the New Agreements are approved by
Shareholders as described herein, upon the closing of the Purchase, AIM will
serve as the investment manager and administrator to the Funds. With the
exception of the replacement of Chancellor LGT by AIM as the investment manager
and administrator, the New Management Agreements are substantially the same as
the Current Management Contracts in all material respects, except: (1) the New
Agreements are governed by Delaware law, while the Current Management Contracts
are governed by California law; (2) the New Management Agreement includes a
license provision that governs the use of the "AIM" name; the Current Management
Contracts contain no such provision; (3) the provision in Current Management
Contracts addressing oversight of Fund pricing and computation of net asset
value has been deleted from the New Agreements, since AIM and Chancellor LGT
will perform these functions directly; (4) a provision has been added to the New
Agreements allowing their amendment without shareholder approval when permitted
by the 1940 Act; and (5) the date of effectiveness which, assuming Shareholder
approval, would be on or about the Closing Date.
AIM will be contractually obligated to provide the same services to each
Fund as are currently provided to each Fund by Chancellor LGT, in return for the
same advisory fees as are currently in place. AIM has further agreed that, for a
period of two years from the Closing Date, it will continue to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rates noted on Exhibit D. As a result, the maximum
expense ratios borne by each Fund will remain capped at current levels for two
years following the closing of the Purchase.
Pursuant to the New Sub-Advisory Agreements, Chancellor LGT will serve as
sub-adviser and sub-administrator to the Funds upon approval of the
Shareholders. Chancellor LGT would provide substantially all of the services for
the Funds that it currently provides. It would be paid sub-advisory fees by AIM,
not by the Fund.
Forms of the New Management Agreements and New Sub-Advisory Agreements are
attached hereto as Exhibits B and C. The descriptions of the New Agreements set
forth herein are qualified in their entirety by reference to Exhibits B and C.
Although the Current Management Contracts have not terminated and the New
Agreements have not become effective, the New Agreements are described below as
if they were both in effect.
Under the New Management Agreements, AIM will:
(a) subject to the supervision of each Company's Board, provide a continuous
investment program for each Fund, including investment research and
management with respect to all securities and investments and cash
equivalents of each Fund;
(b) determine from time to time what securities and other investments will be
purchased, retained or sold by each Fund, and the brokers and dealers
through whom trades will be executed;
(c) oversee the maintenance of all books and records with respect to the
securities transactions of the Funds, and furnish the Board with such
periodic and special reports as the Board reasonably may request; and
(d) provide administrative services for each Fund subject to the supervision of
the Board. In this regard, AIM will supervise all aspects of the operations
of each Fund, including the oversight of custodial and other services. At
AIM's expense, AIM will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination of each Fund's prospectus, statement of
additional information, proxy material, tax returns and required reports
with or to the Fund's shareholders, the Securities and Exchange Commission
("SEC") and other appropriate federal or state regulatory authorities. AIM
will provide the Companies and the Funds with, or obtain for them, adequate
office space and all
9
<PAGE>
necessary office equipment and services, including telephone service, heat,
utilities, stationery supplies and similar items.
In performing its obligations under the New Management Agreements, AIM is
required to comply with all applicable laws. AIM shall not be liable and each
Fund shall indemnify AIM and its directors, officers and employees, for any
costs or liabilities arising from any error of judgment or mistake of law or any
loss suffered by the Funds or the Companies in connection with the matters to
which the New Management Agreements relate except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of AIM in the performance
by AIM of its duties or from reckless disregard by AIM of its obligations and
duties under the New Management Agreements. Any person, even though also an
officer, director, employee or agent of AIM, who becomes an officer, Board
Member, employee or agent of a Company shall be deemed, when rendering services
to a Fund or a Company or acting with respect to any business of a Fund or a
Company, to be rendering such service to or acting solely for the Fund or the
Company and not as an officer, partner, employee, or agent or one under the
control or direction of AIM even though paid by it.
The New Management Agreements provide that all of the ordinary business
expenses not specifically assumed by AIM incurred in the operations of each of
the Funds and the offering of each of its shares shall be paid by each such
Fund. These expenses include but are not limited to brokerage commissions,
taxes, legal, accounting, auditing or governmental fees, custodian, transfer
agent and shareholder service agent costs. AIM will assume the cost of any
compensation, received by the officers of the Company and by the Board Members
of the Company who are not Independent Board Members, for services provided to
the Company.
The New Management Agreements for all Funds provide that, subject to the
approval of the Board of the applicable Company and the Shareholders of the
applicable Fund, AIM may delegate any and all of its duties to a sub-adviser or
sub-administrator, provided that AIM shall continue to supervise the performance
of any such sub-adviser or sub-administrator. In this regard, AIM will enter
into New Sub-Advisory Agreements with Chancellor LGT. Pursuant to the New
Sub-Advisory Agreements, AIM intends to delegate all of its duties under the New
Management Agreements to Chancellor LGT. The New Sub-Advisory Agreements are
substantially the same in all material respects to the New Management
Agreements, and the description above of the duties and services to be performed
by AIM will apply to Chancellor LGT as Sub-Adviser and Sub-Administrator to the
Funds.
Information with regard to the fees payable under each of the New Agreements
is set forth in Exhibit D.
With respect to any Fund, the New Management Agreement and the New
Sub-Advisory Agreement may be terminated at any time without penalty by vote of
the applicable Board or by a vote of a majority of the outstanding voting
securities of the applicable Fund, on 60 days' written notice to AIM or
Chancellor LGT, respectively, or by AIM or Chancellor LGT. Each of the New
Agreements will terminate automatically in the event of any assignment, as
defined by the 1940 Act. The New Agreements continue automatically for
successive periods not to exceed twelve months each, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of the Independent Board Members, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the applicable Fund.
ADDITIONAL SERVICES PROVIDED BY AIM AND ITS AFFILIATES. In addition to
AIM's investment management and administrative responsibilities under the New
Management Agreement, it is anticipated that a number of AIM affiliates will
provide services to the Funds if this Proposal 2 is approved by Shareholders.
It is currently anticipated that during September, 1998, A I M Fund
Services, Inc. ("AIM Services"), a wholly owned subsidiary of AIM, may commence
serving as transfer agent for the Funds. GT Global
10
<PAGE>
Investor Services, Inc. will continue to serve as transfer agent for the Funds
until such time as there is a successor transfer agent.
The agreements pursuant to which Chancellor LGT serves as accounting and
pricing agent for the Funds will also terminate as a result of the Purchase. It
is anticipated that the Boards will approve new fund accounting and pricing
agent agreements, through which AIM will serve as fund accounting and pricing
agent. AIM intends to delegate substantially all of its responsibilities as fund
accounting and pricing agent to Chancellor LGT. Under the 1940 Act, such
agreements do not require the approval of Shareholders before they become
effective. Such agreements will become effective on or about the Closing Date if
this Proposal 2 is approved by Shareholders.
INFORMATION CONCERNING AMVESCAP, AIM AND CHANCELLOR LGT. AMVESCAP, along
with its subsidiaries, is one of the largest independent investment management
organizations in the world. The AMVESCAP group of companies (through the AIM and
INVESCO brand names) offers a broad array of investment products and services to
institutions and individuals. As of December 31, 1997, AMVESCAP and its
subsidiaries had approximately $192 billion under management. AMVESCAP's
worldwide investment team consists of approximately 330 investment professionals
located in major financial centers, and includes larger investment teams in
Atlanta, Boston, Dallas, Denver, Hong Kong, Houston, London, Louisville, Miami,
Portland (Oregon), and Tokyo. The expertise, personnel, data and systems of
AMVESCAP's worldwide investment team, as well as the ongoing resources of
Chancellor LGT, will be available to AIM and Chancellor LGT in their management
and administration of the Funds. The corporate headquarters of AMVESCAP are
located at 11 Devonshire Square, London EC2M 4YR, England.
AIM was organized in 1976 and, together with its affiliates, currently
advises over 50 investment company portfolios (the "AIM Funds"). As of December
31, 1997, the total assets of the AIM Funds were approximately $83 billion. The
advisory fee schedule for the AIM Funds is set forth in Exhibit E. AIM is a
wholly owned subsidiary of A I M Management Group Inc. ("AIM Management").
Certain of the Directors and officers of AIM are also Trustees/Directors and
executive officers of the AIM Funds. The address of AIM, all of the Directors of
AIM, AIM Distributors, AIM Services, and AIM Management, is 11 Greenway Plaza,
Suite 100, Houston, TX 77046-1173.
Chancellor LGT currently provides investment management and/or
administration services to the Funds. Chancellor LGT and its worldwide asset
management affiliates have provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969. As of December 31, 1997, Chancellor LGT and its worldwide affiliates
managed approximately $54 billion in assets. In the United States, as of
December 31, 1997, Chancellor LGT managed or administered approximately $8
billion of assets of the Funds and several other registered investment
companies, including three closed-end funds, and sub-advised one other
registered investment company. In addition to the investment resources of its
San Francisco and New York offices, Chancellor LGT draws upon the expertise,
personnel, data and systems of other investment offices of LGT's Asset
Management Division in Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Funds, Chancellor LGT generally employs a team
approach, taking advantage of its investment resources around the world in
seeking each Fund's investment objective. The U.S. offices of Chancellor LGT are
located at 50 California Street, 27th Floor, San Francisco, CA 94111 and 1166
Avenue of the Americas, New York, NY 10036.
Chancellor LGT and its worldwide affiliates, including LGT Bank in
Liechtenstein, compose Liechtenstein Global Trust. Liechtenstein Global Trust is
a provider of global asset management and private banking products and services
to individual and institutional investors. Liechtenstein Global Trust is
controlled by the Prince of Liechtenstein Foundation, which serves as the parent
organization for the various business enterprises of the Princely Family of
Liechtenstein. The principal business address of the Prince of Liechtenstein
Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
11
<PAGE>
PROPOSAL 2(a) ASKS SHAREHOLDERS TO APPROVE THE NEW MANAGEMENT AGREEMENT, AND
PROPOSAL 2(b) ASKS SHAREHOLDERS TO APPROVE THE NEW SUB-ADVISORY AGREEMENT.
PROPOSALS 2(a) AND 2(b) ARE COMPLETELY INTERDEPENDENT, AND THE FAILURE TO
APPROVE EITHER PROPOSAL 2(a) OR 2(b) WILL MEAN THAT NEITHER PROPOSAL WILL BE
IMPLEMENTED.
EACH BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL 2(a) AND PROPOSAL 2(b).
PROPOSAL NO. 3: APPROVAL OF CHANGES TO CERTAIN FUNDAMENTAL
INVESTMENT RESTRICTIONS OF EACH FUND
RELEVANT FUNDS AND PROPOSAL. Changes are proposed to the fundamental
investment restrictions ("fundamental restrictions") of all Funds, but some of
the proposed changes apply only to certain Funds. See "Proposed Changes," below,
for listings of the Funds to which each specific change applies.
REASONS FOR THE PROPOSED CHANGES. Pursuant to the 1940 Act, each Fund has
adopted certain fundamental restrictions, which may be changed only with
shareholder approval. Restrictions and policies that a Fund has not specifically
designated as being fundamental are considered to be "non-fundamental" and may
be changed by the Boards without shareholder approval.
Several of the fundamental restrictions that the Funds have adopted reflect
regulatory, business or industry conditions, practices or requirements that are
no longer in effect. In addition, other fundamental restrictions reflect federal
regulatory requirements that remain in effect but are not required to be stated
as fundamental, or in some cases even as non-fundamental, restrictions. Also, as
new Funds have been created over a period of years, substantially similar
fundamental restrictions often have been phrased in slightly different ways,
sometimes resulting in minor but unintended differences in effect or potentially
giving rise to unintended differences in interpretation.
Accordingly, the Boards have approved revisions to the Funds' fundamental
restrictions in order to simplify, modernize and make more uniform those
restrictions that are required to be fundamental. In several instances, existing
fundamental restrictions that are eliminated because they are not required to be
fundamental would be re-classified as non-fundamental restrictions.
The Boards believe that eliminating the disparities among the Funds'
fundamental restrictions will enhance management's ability to manage efficiently
and effectively the Funds' assets in changing regulatory and investment
environments. In addition, by reducing to a minimum those restrictions that can
be changed only by shareholder vote, each Fund will be able to avoid the costs
and delays associated with a shareholder meeting if the Boards decide to make
future changes to its investment policies. Although the proposed changes in
fundamental restrictions will allow the Funds greater investment flexibility to
respond to future investment opportunities, the Boards do not anticipate that
the changes, individually or in the aggregate, will result at this time in a
material change in the level of investment risk associated with an investment in
any Fund.
PROPOSED CHANGES. The following is the text and a summary description of
the proposed changes to the Funds' fundamental restrictions, together with the
text of those non-fundamental restrictions that would be adopted in connection
with the elimination of certain of the Funds' current fundamental restrictions.
The text below also describes those fundamental restrictions that are being
eliminated for which no corresponding non-fundamental restrictions is being
proposed. Any non-fundamental restriction may be modified or eliminated by the
Boards at any future date without any further approval of shareholders.
Shareholders should note that for some Funds certain of the fundamental
restrictions that are treated separately below currently are combined within a
single existing fundamental restriction.
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With respect to each Fund and each proposed fundamental or non-fundamental
restriction, if a percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage resulting
from a change in the values of the Fund's portfolio securities or the amount of
its total assets will not be considered a violation of the restriction.
A. ADDITION OF FUNDAMENTAL RESTRICTION ON PORTFOLIO DIVERSIFICATION.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds other than Latin America
Fund, Growth & Income Fund, Strategic Income Fund, and Global Government Income
Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3A, a fundamental
restriction on portfolio diversification for each of the above-referenced Funds
would be added as follows:
"The Fund will not purchase securities of any one issuer if, as a
result, more than 5% of the Fund's total assets would be invested in
securities of that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
Fund's total assets may be invested without regard to this limitation, and
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities or to
securities issued by other investment companies."
DISCUSSION: Each of the above-referenced Funds are "diversified" funds
under the 1940 Act and, accordingly, must have a policy or fundamental
restriction establishing percentage limitations with respect to investments in
the securities of any one issuer. Each Fund has a policy that establishes such
percentage limitations. However, none of these Funds (other than Emerging
Markets Fund) has expressly stated its policy on portfolio diversification as a
fundamental policy. The proposed change would merely state, as a fundamental
restriction, the diversification standard each of the above-referenced Funds is
already subject to under the 1940 Act. The Emerging Markets Fund, which
currently states its diversification requirements as a fundamental policy, would
modify the language of its policy to conform to the language of the proposed
fundamental policy. As currently stated, the Emerging Market Fund's policy does
not reflect the statutory exception for investments in securities of government
agencies or of other investment companies.
B. MODIFICATION OF FUNDAMENTAL RESTRICTION ON CONCENTRATION.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds other than Infrastructure
Fund, Natural Resources Fund, and Telecommunications Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3B, the existing fundamental
restriction on concentration for each of the above-referenced Funds would be
modified as follows:
"The Fund will not purchase any security if, as a result of that
purchase, 25% or more of the Fund's total assets would be invested in
securities of issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities."
DISCUSSION: The proposed changes to the above-referenced Funds' fundamental
restriction on concentration would eliminate minor inconsistencies in the
wording of the Funds' current restrictions on concentration.
C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUING SENIOR SECURITIES AND
BORROWING MONEY.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3C, the existing fundamental
restriction on issuing senior securities and borrowing money for each Fund would
be modified as follows:
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"The Fund will not issue senior securities or borrow money, except as
permitted under the 1940 Act and then not in excess of 33 1/3% of the Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes."
DISCUSSION: The 1940 Act establishes limits on the ability of the Funds to
borrow money or issue "senior securities," a term that is defined, generally, to
refer to obligations that have a priority over an investment company's shares of
common stock or beneficial interest with respect to the distribution of its
assets or the payment of dividends. Currently, the fundamental restriction for
several of the Funds is more limiting than required by the 1940 Act. The current
fundamental restriction for the Growth & Income Fund, Latin America Fund and
Global Government Income Fund prohibits each of those Funds from borrowing
except for temporary or emergency purposes. The current fundamental restriction
for the Growth & Income Fund and Latin America Fund also prohibits those Funds
from purchasing any security while borrowings in excess of 5% of each Fund's
total assets are outstanding. In addition, the current fundamental restriction
for the Global Government Income Fund limits borrowing to 30% of the Fund's
total assets and prohibits the Fund from purchasing any security while any
borrowings are outstanding.
The proposed changes would make the Funds' restriction on borrowing money
and issuing senior securities no more limiting than required by the 1940 Act.
The Board believes that changing the Funds' fundamental restrictions in this
manner will provide flexibility for future contingencies. However, the Board
does not intend the change to affect the Funds' current operations. Accordingly,
the fundamental limitation of Global Government Income Fund, Latin America Fund
and Growth & Income Fund that prohibits those Funds from borrowing except for
temporary or emergency purposes will continue in effect as a non-fundamental
policy. Moreover, the fundamental limitation of Latin America Fund and Growth &
Income Fund that prohibits the Funds from purchasing portfolio securities when
borrowings exceed 5% of total assets will continue as a non-fundamental policy.
The current fundamental policy for the Global Government Income Fund that
prohibits the Fund from purchasing any security while any borrowings are
outstanding would be eliminated and in its place would be added a modified
non-fundamental policy that would permit the Fund to purchase securities while
borrowings of up to 5% of the Fund's total assets are outstanding. This change
would give the Global Government Income Fund more flexibility to borrow in order
to meet redemption requests.
Unlike the other Funds, Strategic Income Fund may borrow for investment
purposes. The proposed change to this Fund's fundamental restriction on
borrowing will not affect its ability to borrow for investment purposes but will
eliminate minor differences in the wording of this Fund's current restriction.
The fundamental restriction for Money Market Fund currently states that the Fund
"may not issue senior securities." Although this fundamental restriction will be
changed as described above, it is not currently contemplated that Money Market
Fund will borrow money.
Global Government Income Fund, Strategic Income Fund, U.S. Government Income
Fund, Growth & Income Fund, and Latin America Fund, as part of their fundamental
restriction on borrowing, include as part of their restriction an undertaking
that they will reduce their borrowings within three days if the asset coverage
for each Fund's borrowings falls below 300%. The proposed fundamental
restriction eliminates this undertaking. Nevertheless, the 1940 Act will
continue to impose this requirement on all of the Funds.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION ON MAKING LOANS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3D, the existing fundamental
restriction on making loans for each Fund would be modified as follows:
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"The Fund will not make loans, except through loans of portfolio
securities or through repurchase agreements, provided that for purposes of
this limitation, the acquisition of bonds, debentures, other debt securities
or instruments, or participations or other interests therein and investments
in government obligations, commercial paper, certificates of deposit,
bankers' acceptances or similar instruments will not be considered the
making of a loan."
DISCUSSION: The proposed changes to this fundamental restriction would
eliminate minor differences in the wording of the Funds' current restriction
making loans. In addition, the proposed restriction more completely describes
various types of debt instruments the Funds may purchase that do not constitute
the making of a loan.
In addition, Money Market Fund's current fundamental restriction on loans
contains an exception for loans "pursuant to contracts providing for the
compensation of service provided by compensated balances." This exception
applies to an arrangement whereby a fund reduces its custodian expenses through
its securities lending activities. In order to make the Funds' fundamental
restrictions more uniform, this language will be deleted. Deletion of this
language is not intended to affect the ability of Money Market Fund to engage in
the activity covered by the language. Similarly, this restriction is not
intended to affect the ability of any Fund to engage in this activity.
E. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING SECURITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3E, the existing fundamental
restriction on underwriting securities for each Fund would be modified as
follows:
"The Fund will not engage in the business of underwriting securities of
other issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities."
DISCUSSION: The proposed changes to this fundamental restriction would
eliminate minor differences in the wording of the Funds' current restriction on
underwriting securities.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENTS.
FUNDS TO WHICH THIS CHANGE APPLIES. All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3F, the existing fundamental
restriction on real estate investments for each Fund would be modified as
follows:
"The Fund will not purchase or sell real estate, except that investments
in securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation,
and except that the Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner."
DISCUSSION: The proposed changes to this fundamental restriction would
eliminate minor differences in the wording of the Funds' current restriction on
real estate investments and would clarify the types of real estate related
securities that are permissible investments for each Fund. In addition, the
proposed restriction includes an exception that permits each Fund to hold real
estate acquired as a result of ownership of securities or other interests.
All of the Funds other than New Pacific Fund, Europe Fund, America Fund,
International Fund, Emerging Markets Fund, and Money Market Fund currently state
that the Fund may not "purchase or sell real estate, including real estate
limited partnerships." The proposed restriction eliminates the reference to
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real estate limited partnerships. Thus, if the proposed change is approved, all
of the Funds would be able to invest in real estate limited partnerships.
However, for various tax reasons, the Funds do not intend to invest in real
estate limited partnerships. If such investments become available in the future,
they still would have to comply with a Fund's investment objective, policies and
limitations.
G. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3G, the existing fundamental
restriction on investing in commodities for each Fund would be modified as
follows:
"The Fund will not purchase or sell physical commodities, but the Fund
may purchase, sell or enter into financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments."
DISCUSSION: The proposed changes to this fundamental restriction are
intended to ensure that the Funds will have the maximum flexibility to enter
into hedging and other transactions utilizing financial contracts and derivative
products when doing so is permitted by the Funds' other investment policies. The
proposed restrictions would allow the Funds to respond to the rapid and
continuing development of derivative products. The proposed restriction broadens
the exception to the prohibition on buying and selling physical commodities to
cover all financial derivative instruments rather than only financial futures
and currency instruments.
The current fundamental restriction for Money Market Fund prohibits the Fund
from engaging in option transactions. If Proposal 3 is approved, this
restriction will be deleted and the Fund would have greater flexibility to
engage in option transactions. Money Market Fund, however, has no present
intention of engaging in option transactions. Moreover, Money Market Fund is
subject to regulation as a money market fund under Rule 2a-7 under the 1940 Act,
which imposes significant restrictions on the types of securities in which Money
Market Fund can invest.
H. ELIMINATION OF FUNDAMENTAL RESTRICTION ON MARGIN TRANSACTIONS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3H, the existing fundamental
restrictions on engaging in margin transactions for each Fund would be
eliminated and each Fund would become subject to the following non-fundamental
restriction:
"The Fund will not purchase securities on margin, provided that the Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities and further provided that the Fund may
make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments."
DISCUSSION: The Funds are not required to have a fundamental restriction on
margin transactions. Accordingly, it is proposed that the Funds' existing
fundamental restriction be replaced with a non-fundamental restriction. The
proposed non-fundamental restriction makes minor changes in wording from the
existing fundamental restriction and expands the list of margin transactions
excepted from the prohibition to include margin deposits in connection with
financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments.
As discussed in Item S below, the current fundamental restriction on margin
transactions for Money Market Fund, New Pacific Fund, Europe Fund, America Fund,
and International Fund is combined with a restriction on short sales that
prohibit the Funds from making short sales except in connection with their
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use of options, futures contracts, options thereon or forward currency
contracts. If Proposal 3 is approved, this restriction will be deleted and the
Funds would have greater flexibility to engage in short sales. These Funds,
however, have no present intention of engaging in short sales. The current
fundamental restriction on margin transactions for Money Market Fund prohibits
purchasing securities on margin. If Proposal 3 is approved, this restriction
will be deleted and the Fund would have greater flexibility to engage in margin
transactions. Money Market Fund, however, has no present intention of engaging
in margin transactions.
I. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN FUTURES CONTRACTS.
FUNDS TO WHICH THIS CHANGE APPLIES: Global Government Income Fund and
Strategic Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3I, the existing fundamental
restriction on engaging in futures contracts for Global Government Income Fund
and Strategic Income Fund would be eliminated and these Funds would become
subject to the following non-fundamental restriction:
"The Fund will not enter into a futures contract, if, as a result
thereof, more than 5% of the Fund's total assets (taken at market value at
the time of entering into the contract) would be committed to margin on such
futures contracts."
DISCUSSION: There is no legal requirement that Global Government Income
Fund or Strategic Income Fund have this fundamental restriction. Accordingly,
the Board believes that it should be made non-fundamental. The non-fundamental
restriction would be identical to the fundamental restriction proposed to be
eliminated and, thus, is not expected to have any impact on the operations of
the Funds. Establishing the restriction as non-fundamental, however, would
enable the Board to change this restriction in the future.
J. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN ILLIQUID SECURITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: Growth & Income Fund and Global
Government Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3J, the existing fundamental
restriction on investing in illiquid securities for the above-referenced Funds
would be eliminated and these Funds would become subject to the following
non-fundamental restriction:
"The Fund will not purchase securities for which there is no readily
available market, or enter into repurchase agreements or purchase time
deposits maturing in more than seven days, or purchase OTC options or hold
assets set aside to cover OTC options written by the Fund, if immediately
after and as a result, the value of such securities would exceed, in the
aggregate, 15% of the Fund's net assets."
DISCUSSION: There is no legal requirement that these Funds have a
fundamental restriction on this subject. Accordingly the Board believes that it
should be made non-fundamental. The non-fundamental restriction would be
identical to the fundamental restriction proposed to be eliminated. Establishing
the restriction as non-fundamental, however, would enable the Funds' Board to
change this policy in the future.
K. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PLEDGING ASSETS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3K, the existing fundamental
restriction on pledging assets for each Fund would be eliminated and the Funds
would become subject to the following non-fundamental restriction:
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"The Fund will not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral arrangements in
connection with permissible activities."
DISCUSSION: The Funds are not required to have a fundamental restriction
with respect to the pledging of assets. In order to maximize the Fund's
flexibility in this area, the Boards believe that the Funds' restriction on
pledging assets should be made non-fundamental. The non-fundamental restriction
would be similar to the fundamental restriction proposed to be eliminated. Money
Market Fund's non-fundamental restriction will no longer refer to an exception
for "borrowings as disclosed in the Fund's prospectus" since this exception
would be covered under the uniform non-fundamental restriction. The Boards do
not expect this change to have any impact on the Funds' operations.
L. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING SECURITIES ISSUED BY
OTHER INVESTMENT COMPANIES.
FUND TO WHICH THIS CHANGE APPLIES: Money Market Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3L, the existing fundamental
restriction on purchasing securities issued by other investment companies for
Money Market Fund would be eliminated.
DISCUSSION: There is no legal requirement that Money Market Fund have a
fundamental restriction on this subject. Eliminating this restriction would
provide the Fund with increased access to money market securities held by other
investment companies. In order to maximize the Fund's flexibility to invest in
other investment companies that invest in money market securities, the Board
believes this investment restriction should be eliminated.
M. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING COMMON STOCKS,
PREFERRED STOCKS, WARRANTS OR OTHER EQUITY SECURITIES.
FUND TO WHICH THIS CHANGE APPLIES: Money Market Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3M, the existing fundamental
restriction on purchasing common stocks, preferred stocks, warrants or other
equity securities for Money Market Fund would be eliminated.
DISCUSSION: There is no legal requirement that Money Market Fund have a
fundamental restriction on this subject. Moreover, Money Market Fund is
regulated as a money market fund under Rule 2a-7 under the 1940 Act. Rule 2a-7
imposes substantive restrictions on the types, quality, and maturities of the
securities in which Money Market Fund may invest. Accordingly, the Board
believes that this fundamental restriction is unnecessary and that it should be
deleted. This change is not expected to have any impact on the operations of the
Fund.
N. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTMENTS IN OIL, GAS AND
MINERAL LEASES AND PROGRAMS.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3N, the existing fundamental
restriction on investments in oil, gas or minerals for each Fund would be
eliminated.
DISCUSSION: The Funds are not required to have a fundamental restriction
with respect to oil, gas or mineral investments. In order to maximize each
Fund's flexibility in this area, the Board believes that each Fund's restriction
on oil, gas and mineral investments should be eliminated. Notwithstanding the
elimination of this fundamental restriction, no Fund expects to invest at this
time in oil, gas and mineral leases and programs.
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O. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING FOR THE PURPOSE OF
CONTROL.
FUNDS TO WHICH THIS CHANGE APPLIES: New Pacific Fund, Europe Fund, America
Fund, International Fund, Growth & Income Fund, Global Government Income Fund,
and Strategic Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3O, the existing fundamental
restriction on investing for the purpose of control for each of the
above-referenced Funds would be eliminated.
DISCUSSION: The Boards propose to eliminate this fundamental restriction,
which prohibits each of the above-referenced Funds from investing in companies
for the purpose of exercising control or management. Elimination of this
restriction would clarify each Fund's ability to exercise freely its rights as a
shareholder of the companies in which it invests. No Fund, however, currently
intends to become involved in directing or administering the day-to-day
operations of any company.
Chancellor LGT believes that it should be able to communicate freely each
Fund's views as a shareholder on important matters of policy to a company's
management, its board of directors and its shareholders, when Chancellor LGT or
the Board believes that such action or policy may affect significantly the value
of its investment. The activities that each Fund might engage in, either
individually or with others, include seeking changes in a company's direction,
seeking the sale of a company or a portion of its assets, or participating in a
takeover effort or in opposition to a takeover effort. Chancellor LGT believes
that each Fund currently may engage in such activities without necessarily
violating this fundamental restriction. Nevertheless, the existence of the
investment restriction might give rise to a claim that such activities did in
fact constitute investing for control or management.
P. ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING SECURITIES OF ISSUERS
IN WHICH OFFICERS AND TRUSTEES OF EACH COMPANY AND ITS AFFILIATES OWN
SECURITIES.
FUNDS TO WHICH THIS CHANGE APPLIES: New Pacific Fund, Europe Fund, America
Fund, International Fund, Growth & Income Fund, Global Government Income Fund,
and Strategic Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3P, the existing fundamental
restriction on purchasing securities of issuers in which affiliates of the
Companies own securities for each of the above-referenced Funds would be
eliminated.
DISCUSSION: There is no legal requirement that the Funds have this
fundamental restriction. Moreover, the Boards and Chancellor LGT do not believe
this restriction provides any safeguards against conflicts of interest that are
not covered under the Funds' Code of Ethics. Accordingly, the Boards believe
this restriction should be eliminated.
Q. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN SECURITIES OF
COMPANIES THAT HAVE BEEN IN OPERATION FOR LESS THAN THREE YEARS.
FUNDS TO WHICH THIS CHANGE APPLIES: Global Government Income Fund and
Strategic Income Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3Q, the existing fundamental
restriction on investing in securities of companies that have been in operation
for less than three years for each of the above-referenced Funds would be
eliminated.
DISCUSSION: No Fund is required to have a fundamental restriction with
respect to investing in securities of companies that have been in operation for
less than three years. In order to maximize each Fund's flexibility in this
area, the Boards believe that each Fund's restriction on investments in such
companies should be eliminated. Notwithstanding the elimination of this
fundamental restriction, each Fund expects to continue to invest less than 5% of
its assets in securities of companies that, together with their predecessors,
have been in operation for less than three years.
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R. ELIMINATION OF FUNDAMENTAL RESTRICTION ON SELLING SECURITIES SHORT.
FUNDS TO WHICH THIS CHANGE APPLIES: Global Government Income Fund,
Strategic Income Fund, U.S. Government Income Fund, Money Market Fund, New
Pacific Fund, International Fund, Europe Fund and America Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3R, the existing fundamental
restriction on selling securities short for the above-referenced Funds would be
eliminated.
DISCUSSION: No Fund is required to have a fundamental restriction with
respect to short sales of securities. In order to maximize each Fund's
flexibility in this area, the Boards believe that each Fund's restriction on
short sales of securities should be eliminated. Notwithstanding the elimination
of this fundamental restriction, each Fund does not expect to engage in short
sales of securities, except to the extent that the Fund contemporaneously owns
or has the right to acquire at no additional cost securities identical to, or
convertible into or exchange for, those sold short. Moreover, Money Market Fund,
as a money market fund, is subject to substantive regulation under Rule 2a-7
under the 1940 Act.
S. ELIMINATION OF FUNDAMENTAL RESTRICTION ON JOINT PARTICIPATION IN A
SECURITIES TRADING ACCOUNT.
FUNDS TO WHICH THIS CHANGE APPLIES: New Pacific Fund, Europe Fund, America
Fund, and International Fund.
PROPOSED CHANGE: Upon the approval of Proposal 3S, the existing fundamental
restriction on joint participation in a securities trading account would be
eliminated.
DISCUSSION: The above-referenced Funds currently have a fundamental
restriction against participation on a joint or joint and several basis in any
securities trading account. Joint activities by an investment company are
subject to regulation under the 1940 Act, and there is no legal requirement for
a Fund to have a fundamental restriction on this subject. In certain
circumstances, participation in joint trading accounts may be beneficial to the
Fund. In addition, it is contemplated that the Funds may participate in joint
trading accounts if shareholders approve the new management agreements described
in Proposal 2. Moreover, the Funds currently have, and may from time to time
seek to obtain, the benefit of exemptive relief from the SEC with respect to
certain joint activities. Accordingly, the Board wishes to ensure that the Funds
will not be more limited with respect to such transactions than is required by
law. Accordingly, the Boards have determined that this restriction should be
eliminated both as a fundamental and as a non-fundamental restriction.
T. APPROVAL OF NEW FUNDAMENTAL INVESTMENT POLICY REGARDING INVESTMENT OF ALL
OF EACH FUND'S ASSETS IN AN OPEN-END FUND.
FUNDS TO WHICH THIS CHANGE APPLIES: All Funds.
PROPOSED CHANGE: Upon the approval of Proposal 3T, the following
fundamental investment policy on investing in an open-end fund would be added
for each Fund:
"Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its investable assets (cash, securities and receivables
related to securities) in an open-end management investment company having
substantially the same investment objective, policies and limitations as the
Fund."
DISCUSSION: The Boards have approved, subject to shareholder approval, the
adoption of a new fundamental investment policy that would permit each Fund to
seek its investment objective by investing all of its investable assets in
another open-end fund. At present the Boards have not considered any specific
proposal to authorize a Fund to invest its assets in this fashion. The Board
will authorize investing
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a Fund's assets in another open-end fund only if the Boards first determine that
is in the best interests of such Fund and its shareholders.
The purpose of this proposal is to enhance the flexibility of each Fund and
permit it to take advantage of potential efficiencies in the future available
through investment in another open-end fund. This structure allows several funds
with different distribution pricing structures, but the same investment
objective, policies and restrictions, to combine their investments in a pooled
fund instead of managing them separately. This could lower the costs of
obtaining portfolio execution, custodial, investment advisory and other services
for the Fund and could assist in portfolio management to the extent the cash
flows of each investment vehicle offset each other or provide for less volatile
asset changes. Of course, such benefits may not occur. It is currently not
practical for any of these Funds to invest all of its investable assets in
another open-end management investment company.
To give specific authority to each Fund to enable it to invest all of its
assets in another registered investment company, the Boards recommend that
Shareholders vote to permit the assets of any Fund to be invested in an open-end
fund, without a further vote of Shareholders, but only if the Boards
subsequently determine that such action is in the best interests of the Fund and
its Shareholders.
Money Market Fund currently has a fundamental investment limitation that
prohibits Money Market Fund from purchasing the securities issued by other
investment companies, except as they may be acquired as part of a merger,
consolidation or aquisition. If this Proposal 3T is approved by Shareholders of
Money Market Fund, this fundamental limitation would be eliminated.
A Fund's methods of operation and shareholder services would not be
materially affected by its investment in an open-end fund, except that the
assets of the Fund might be managed as part of a larger pool. If a Fund invested
all of its assets in an open-end fund, it would hold only investment securities
issued by the open-end fund, and the open-end fund would invest directly in
individual securities of other issuers. The Fund otherwise would continue its
normal operations. The Board would retain the right to withdraw the Fund's
investments from the open-end fund and the Fund then would resume investing
directly in individual securities of other issuers as it does currently.
Chancellor LGT (and AIM, if Proposal 2 is approved) may benefit from the use
of this structure if, as a result, overall assets under management are increased
(since management fees are based on assets). Also, Chancellor LGT's expense of
providing investment and other services to the Funds may be reduced.
REQUIRED VOTE. Approval of each of the changes contemplated by Proposal 3
with respect to a Fund requires the affirmative vote of a "majority of the
outstanding voting securities" of that Fund, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or (2) 67% or more of the shares of the Fund present at the meeting if
more than 50% of the outstanding shares of the Fund are represented at the
meeting in person or by proxy. Each Shareholder may vote "for" or "against" all
items in Proposal 3 that apply to the Shareholder's Fund and, in addition,
Shareholders of any Fund also may vote against the changes proposed with respect
to specific fundamental restrictions applicable to their Fund in the manner
indicated on the proxy card. If the proposed changes are approved by
Shareholders of the respective Funds at the Special Meeting, those changes will
be effective upon appropriate disclosure being made in the Funds' prospectus and
statement of additional information.
IF ONE OR MORE OF THE CHANGES CONTEMPLATED BY PROPOSAL 3 ARE NOT APPROVED BY
SHAREHOLDERS OF A FUND, THE RELATED EXISTING FUNDAMENTAL RESTRICTION(S) OF THE
FUND WILL CONTINUE IN EFFECT FOR THAT FUND. DISAPPROVAL OF ALL OR PART OF
PROPOSAL 3 BY SHAREHOLDERS OF ONE FUND WILL NOT AFFECT ANY APPROVALS OF PROPOSAL
3 THAT ARE OBTAINED WITH RESPECT TO ANY OTHER FUND.
21
<PAGE>
EACH BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL 3.
PROPOSAL NO. 4: APPROVAL OF AN AGREEMENT AND PLAN OF
CONVERSION AND TERMINATION FOR EACH COMPANY
BACKGROUND. The Companies currently are organized as Massachusetts business
trusts. The Board of each Company has approved an Agreement and Plan of
Conversion and Termination ("Plan"), each of which provides for a series of
transactions (collectively, a "Reorganization") to convert each Fund of the
applicable Company to a series ("New Fund") of a newly created open-end
management investment company organized as a business trust ("New Trust") under
the Delaware Business Trust Act ("Delaware Act"). Under the Plans, each Fund
will transfer all its assets to a New Fund in exchange solely for voting shares
of beneficial interest in the New Fund and the New Fund's assumption of all the
Fund's liabilities. Attached to this Proxy Statement as Exhibit F is a form of
the Plan relating to the proposed Reorganizations involving the Funds of
Variable Investment Series; the form of the plan relating to the Reorganization
of Variable Investment Trust is identical in all material respects to Exhibit F
except for the names of the Company and its funds and of the New Trust and its
funds.
The Reorganizations are being proposed primarily to modernize the
organizational documents under which the Companies operate. As noted above,
Chancellor LGT, AIM, and the Boards believe that a number of benefits will be
available to the Funds and their shareholders once these documents conform to
those of the AIM Funds. The operations of each New Fund following the
Reorganization will be substantially identical to those of its predecessor Fund,
except that each New Fund's advisory arrangements will conform to the changes
proposed in Proposal 2, if Proposal 2 is approved, and the fundamental and
non-fundamental restrictions of each New Fund will conform to the changes
proposed in Proposal 3 to the extent that Proposal 3 is approved. Finally, as
described below, the Trust Instruments for the New Trusts will differ from the
Declarations of Trust of the Companies in certain respects that are expected to
improve the Companies' operations.
REASONS FOR THE PROPOSED REORGANIZATIONS. The Reorganizations are being
proposed because, as noted above, Chancellor LGT, AIM, and the Boards believe
that the Delaware business trust organizational form offers a number of
advantages over the Massachusetts business trust organizational form. As a
result of these advantages, the Delaware business trust organizational form has
been increasingly used by mutual funds, including several AIM Funds.
The Delaware business trust organizational form offers some advantages over
the Massachusetts business trust form. Each New Trust will be governed primarily
by the terms of an Agreement and Declaration of Trust, which is its governing
instrument ("Trust Instrument"), the form of which is attached to this Proxy
Statement as Exhibit G. In particular, with respect to both business trust law
and corporate law generally, Delaware offers greater specificity in its law and
greater certainty than does Massachusetts law. The Delaware Act also provides
that shareholders of a Delaware business trust will be entitled to the same
limitation of personal liability extended to stockholders of a Delaware
corporation, while Massachusetts business trust law does not limit the potential
liability of Massachusetts business trust shareholders. Delaware's limitation of
liability may not be absolute, as it is possible that a non-Delaware court would
not uphold this provision of the Delaware Act. However, the possibility of
liability, which is remote for Massachusetts business trust shareholders,
appears to be even more remote for Delaware business trust shareholders.
Finally, the Delaware business trust organizational form has an advantage over
the Massachusetts business trust form in that the Delaware Act limits
inter-series liability in a multi-series business trust, so that the assets of
one series of a New Trust (I.E., a New Fund) expressly will be protected against
claims by creditors and shareholders of another series of that New Trust. The
limit on such inter-series liability for the Companies, under Massachusetts law,
is not as clear.
22
<PAGE>
The Reorganizations will also have certain other effects on each Company,
its shareholders, and management, which are described below under "Certain
Comparative Information about the Companies and the New Trusts."
SUMMARY OF EACH PLAN. To accomplish the Reorganizations, each New Trust
will be formed as a Delaware business trust pursuant to a Trust Instrument, and
each New Fund will be established as a series of a New Trust. On the Closing
Date, each Fund will transfer all its assets to a corresponding New Fund in
exchange solely for a number of full and fractional shares of the New Fund equal
to the number of full and fractional shares of the Fund then outstanding and the
New Fund's assumption of the Fund's liabilities. Immediately thereafter, each
Fund will distribute those New Fund shares to its shareholders in complete
liquidation and will, as soon as practicable thereafter, be terminated. Upon
completion of the Reorganizations, each shareholder of each Fund will own full
and fractional shares of the corresponding New Fund equal in number and
aggregate net asset value to the shares he or she held in the Fund.
Each Plan authorizes the applicable Company to acquire one share of each New
Fund and, as the sole initial shareholder prior to the Reorganization
thereunder: (1) to elect the Company's Board Members as the trustees of the New
Trust to serve without limit in time, except as they may resign or be removed by
action of the New Trust's trustees or shareholders; (2) to approve an investment
management and administration agreement that will be substantially identical to
the New Management Agreement described in Proposal 2, provided that Proposal 2
is approved; (3) to approve a sub-advisory agreement that will be substantially
identical to the New Sub-Advisory Agreement described in Proposal 2, provided
that Proposal 2 is approved; and (4) to ratify the selection of Coopers &
Lybrand L.L.P., the Company's current accountants, as the New Trust's
independent public accountants.
Assuming approval of this Proposal by Shareholders, it is currently
contemplated that each Reorganization will occur on the Closing Date. However,
either Reorganization may close on another date if circumstances warrant.
The obligations of each Company and each New Trust under each Plan are
subject to various conditions stated therein. To provide against unforeseen
events, each Plan may be terminated or amended at any time prior to the closing
of the Reorganization thereunder by action of the Board of the applicable
Company, notwithstanding the approval of the Plan by the Shareholders of the
Company. However, no amendments may be made that would materially adversely
affect the interests of Shareholders of any Fund. Each Company and New Trust may
at any time waive compliance with any condition contained in the Plan, provided
that the waiver does not materially adversely affect the interests of the
Shareholders of any Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT. Each Plan authorizes
the applicable Company, as the sole shareholder of the New Trust prior to the
Reorganization thereunder, to approve with respect to each New Fund a New
Management Agreement that will be substantially identical to that described in
Proposal 2. Information on the New Management Agreements, including a
description of the differences between them and the Current Management
Contracts, is set forth under Proposal 2. The form of the New Management
Agreement is Exhibit B to this Proxy Statement.
SUB-ADVISORY AGREEMENT. Each Plan authorizes the applicable Company, as the
sole shareholder of the New Trust prior to the Reorganization thereunder, to
approve with respect to each New Fund a New Sub-Advisory Agreement that will be
substantially identical to that described in Proposal 2. Information on the New
Sub-Advisory Agreement is set forth under Proposal 2. The form of the New
Sub-Advisory Agreement is Exhibit C to this Proxy Statement.
CONTINUATION OF SHAREHOLDER ACCOUNTS. The New Trusts' transfer agent will
establish for each Shareholder an account containing the appropriate number of
Shares of each New Fund. Such accounts will be identical in all respects to the
accounts currently maintained by the Companies' transfer agent for each
Shareholder of the Funds. Shares held in the Fund accounts will automatically be
designated as Shares of the New Funds.
23
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES. Each Company and New Trust will receive an
opinion of Kirkpatrick & Lockhart LLP substantially to the effect that the
Reorganization in which it participates will constitute a tax-free
reorganization under section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended. Accordingly, the Funds, the New Funds, and the Shareholders of the
Funds will recognize no gain or loss for federal income tax purposes as a result
of the Reorganizations. Shareholders of the Funds should consult their tax
advisors regarding the effect, if any, of a Reorganization in light of their
individual circumstances and as to state and local consequences, if any, of a
Reorganization.
APPRAISAL RIGHTS. Appraisal rights are not available to Shareholders.
However, Shareholders retain the right to redeem their Shares of the Funds or
the New Funds, as the case may be, at any time before or after the
Reorganizations.
CERTAIN COMPARATIVE INFORMATION ABOUT THE COMPANIES AND THE NEW TRUSTS.
STRUCTURE OF THE NEW TRUSTS. Each New Trust will be established under the
laws of the State of Delaware by filing a certificate of trust in the office of
the Secretary of State of Delaware. Each New Trust will establish series
corresponding to and having identical designations as the series of its
predecessor Company, except to reflect the new proposed affiliations of the New
Funds with AIM and AMVESCAP. Each New Fund will have the same investment
objectives, policies, and restrictions as its predecessor Fund, except that each
of the New Fund's fundamental and nonfundamental restrictions will conform to
the changes proposed in Proposal 3 (assuming approval of that Proposal by the
shareholders). Each New Trust's fiscal year will be the same as that of its
predecessor Company. The New Trusts will not have any operations prior to the
Reorganizations. Initially, each Company will be the sole shareholder of its
corresponding New Trust.
As a Delaware business trust, each New Trust's operations will be governed
by its Trust Instrument and By-Laws, and applicable Delaware law rather than by
the Company's Declaration of Trust and By-Laws and applicable Massachusetts law.
Certain differences between the different domiciles and various forms of
organization are summarized below. The operations of each New Trust will
continue to be subject to the provisions of the 1940 Act and the rules and
regulations thereunder.
TRUSTEES AND OFFICERS OF THE NEW TRUSTS. Subject to the provisions of the
Trust Instrument, the business of each New Trust will be managed by its
trustees, who will serve indefinite terms and will have all powers necessary or
convenient to carry out their responsibilities. The responsibilities, powers,
and fiduciary duties of the trustees will be substantially the same as those of
the Board Members of each Company.
The trustees of each New Trust would be those persons elected at the Special
Meeting to serve as Board Members of its predecessor Company. Information
concerning the nominees for election as Board Members of each Company, all of
whom presently serve in such positions, is set forth under Proposal 1. It is
anticipated that the current officers of each Company, as well as certain AIM
personnel, will be elected to serve as officers of its successor New Trust and
the current officers of each Company will perform the same functions following
the Reorganizations that they now perform on behalf of the Companies.
SHARES OF THE NEW TRUSTS. The beneficial interests in the New Funds will be
represented by transferable shares, par value $0.01 per share. Share
certificates will not be issued unless requested in writing by a shareholder.
The trustees will have the power under the Trust Instrument to establish new
series and classes of shares; each Company's Board currently has a similar
right. Each Trust Instrument will permit the trustees to issue an unlimited
number of shares of each class and series. Each Company is substantially
identical to its successor New Trust with regard to the issuance of shares.
SHAREHOLDER MEETING REQUIREMENTS. Each Company's Declaration of Trust and
By-Laws provide that special meetings of Shareholders shall be called upon the
written request of holders of at least 10% of the Company's shares then
outstanding. Each New Trust's By-Laws will provide that a special meeting of
24
<PAGE>
shareholders for the purpose of voting on the removal of any trustee may be
called by the holders of 10% or more of the outstanding shares of the New Trust.
Each New Trust, like its predecessor Company, will operate as an open-end
management investment company registered with the SEC under the 1940 Act.
Shareholders of the New Funds will therefore have the power to vote at special
meetings with respect to, among other things, changes in fundamental investment
objectives and fundamental policies of the New Funds; approval of certain
changes to investment advisory contracts; and such additional matters relating
to the New Trusts as might be required by the 1940 Act. If, at any time, less
than a majority of the trustees holding office have been elected by the
shareholders, the trustees then in office will promptly call a meeting of
shareholders of the New Trust for the purpose of electing a trustee or trustees
in order to maintain a majority of trustees elected by shareholders.
REMOVAL OF TRUSTEES. Under each Company's Declaration of Trust, a trustee
may be removed by two-thirds of the trustees holding office prior to removal or
by holders of two-thirds of the outstanding Shares of the Company at a special
meeting called for that purpose. Each New Trust will be substantially identical
to the Companies with respect to the removal of trustees.
SHAREHOLDERS' RIGHTS OF INSPECTION. Under Massachusetts law, any
shareholder may inspect a Fund's records, accounts, and books for any legitimate
business purpose. Each Company's Declaration of Trust permits its trustees to
determine the extent to which, the times and places at which, and the conditions
under which a Shareholder may inspect any book or record. Under each New Trust's
Trust Instrument and By-Laws, New Fund shareholders who have held shares of
record for at least six months and who hold of record at least 5% of the
outstanding shares of any New Fund will be permitted, upon written request, to
inspect a list of the shareholders of that New Fund.
SHAREHOLDER LIABILITY. Under Massachusetts law, there is a remote
possibility, under certain circumstances, that a Company's Shareholders may be
held personally liable for the Company's obligations. Each Company's Declaration
of Trust, however, disclaims Shareholder liability for acts or obligations of
the Company and requires that every written agreement, obligation, or other
undertaking made or issued by the Company contain a provision to the effect that
the Company's Shareholders are not personally liable thereunder. In addition,
each Declaration of Trust also provides for indemnification out of Company
property for any Shareholder held personally liable solely by reason of his or
her being or having been a shareholder. Each Declaration of Trust also provides
that the Company shall, upon request, assume the defense of any claim made
against any Shareholder for any act or obligation of the Company and satisfy any
judgment thereon. Therefore, the risk of any Shareholder's incurring financial
loss beyond his or her investment due to Shareholder liability is limited to
circumstances in which a Company itself is unable to meet its obligations and
the express disclaimer of Shareholder liabilities is determined not to be
effective. Given the nature of each Company's assets and operations, the
possibility that a Company would be unable to meet its obligations is remote.
Under Delaware law, each New Trust's shareholders will not be personally
liable for the obligations of the New Trust. The Delaware Act provides that a
shareholder of a Delaware business trust is entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under Delaware law. The securities regulators of some states, however,
have indicated that they may decline to apply Delaware law on this point, and it
is conceivable that, notwithstanding current laws, courts in other states may
decline to apply Delaware law on this point. As a result, to the extent that
each New Trust or a shareholder will be subject to the jurisdiction of courts in
those states, there is a risk that those courts might not apply Delaware law and
could thereby subject New Trust shareholders to liability. The Boards and
management of the Companies believe this risk to be remote. To guard against
this risk, each Trust Instrument (i) will contain an express disclaimer of
shareholder liability for acts or obligations of the New Trust and (ii) will
provide for indemnification out of New Trust property of any shareholder held
personally liable for the obligations of the New Trust. Moreover, each Trust
Instrument will require
25
<PAGE>
that every written agreement, obligation, or other undertaking made or issued by
the New Trust contain a provision to the effect that New Fund shareholders are
not personally liable thereunder. Thus, the risk of a New Trust shareholder's
incurring financial loss beyond the shareholder's investment because of
shareholder liability would be limited to circumstances in which (a) a court
refused to apply Delaware law or otherwise failed to give full effect to a Trust
Instrument or contractual provisions limiting shareholder liability and (b) a
New Trust itself was unable to meet its obligations. In light of Delaware law,
the nature of each New Trust's business, and the nature of its assets, the
Boards believe that the risk of personal liability to a New Trust shareholder is
extremely remote.
LIABILITY OF TRUSTEES. Under each Company's Declaration of Trust, so long
as the trustees have acted under the belief that their actions are in the best
interests of the Company, they will be personally liable only for willful
misfeasance, bad faith, or gross negligence in the performance of their duties
or by reason of reckless disregard of their obligations and duties as trustees.
Under the Declaration of Trust, trustees, officers and employees will generally
be indemnified against liability and against the expenses of litigation incurred
by them unless their conduct is determined to constitute willful misfeasance,
bad faith, gross negligence, or reckless disregard of their duties or unless it
has been determined that they have not acted in good faith in the reasonable
belief that their actions were in the best interests of the Company. A Company
may also advance money for these expenses, provided that the trustee or officer
undertakes to repay the Company if his or her conduct is later determined to
preclude indemnification.
Each New Trust's Trust Instrument will provide indemnification for current
and former trustees and officers to the fullest extent permitted by Delaware law
and other applicable law. Trustees of a New Trust may be personally liable to
the Trust and its Shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties as Trustees.
AMENDMENT OF DECLARATIONS OF TRUST AND TRUST INSTRUMENTS. Each Company's
Declaration of Trust may be amended by a majority of the trustees so long as
such amendment does not adversely affect the rights of Shareholders. When such
amendment adversely affects the rights of Shareholders, such amendment may be
adopted by a majority of the trustees so long as the Company obtains the
approval of either (1) the holders of more than 50% of the Company's outstanding
Shares or (2) holders of more than 50% of the applicable series of the Company.
Each New Trust's Trust Instrument may be amended by the trustees without any
shareholder vote, except that the shareholders will have the right to vote on
any amendment that affects their voting rights, that alters the provisions
governing amendments to the Trust Instrument, that is required to have
shareholder approval by law or by the New Trust's registration statement, or
that is submitted to the shareholders by the trustees.
The foregoing is only a summary of certain differences between and among
each Company's Declaration of Trust and By-Laws and Massachusetts law and each
New Trust's Trust Instrument and By-Laws and Delaware law. It is not a complete
list of the differences. Shareholders should refer to the provisions of these
documents and state law directly for a more thorough comparison. Copies of the
Declarations of Trust and the By-Laws of the Companies, and of the New Trust's
Trust Instrument and By-Laws are, or will be, available to Shareholders without
charge upon written request to a Company or New Trust, when it comes into
existence.
REQUIRED VOTE. Each Company's Declaration of Trust requires for approval of
the Plan the affirmative vote of the holders of a majority of the outstanding
voting securities of the Company as defined in the 1940 Act. The 1940 Act
defines a "majority of the outstanding voting securities" as the lesser of (1)
67% of the interests present or represented at a meeting of shareholders if
holders of more than 50% of all interests are present or represented by proxy,
or (2) more than 50% of all interests. With respect to each Company, if the Plan
is not approved, the Company will continue to operate as a Massachusetts
business trust and the Funds will continue to operate as series of a
Massachusetts business trust.
26
<PAGE>
EACH BOARD RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4.
PROPOSAL NO. 5: RATIFICATION OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
At a meeting called for the purpose of such selection, the firm of Coopers &
Lybrand L.L.P. was selected by each Company's Board, including the independent
trustees, as the independent public accountants to audit the books and the
accounts of each Fund for the fiscal year ending December 31, 1998, and to
include its opinion in financial statements filed with the SEC. Each Board has
directed the submission of this selection to the Shareholders for ratification.
Coopers & Lybrand L.L.P. has advised the Boards that is has no financial
interest in either Company. For the fiscal year ended December 31, 1997, the
professional services rendered by Coopers & Lybrand L.L.P. included the issuance
of an opinion on the financial statements of each Fund and an opinion on other
reports of the Fund filed with the SEC. Representatives of Coopers & Lybrand
L.L.P. are not expected to be present at the Meeting, but have been given the
opportunity to make a statement if they so desire and will be available should
any matter arise requiring their presence.
REQUIRED VOTE. With respect to each Company, ratification of the selection
of Coopers & Lybrand L.L.P. requires the affirmative vote of a majority of the
votes cast thereon at the Meeting.
EACH BOARD RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 5.
27
<PAGE>
OTHER INFORMATION
EXECUTIVE OFFICERS AND DIRECTORS OF AIM
<TABLE>
<CAPTION>
NAME AND POSITION WITH AIM PRINCIPAL OCCUPATIONS
- ---------------------------------------- ------------------------------------------------------------------------
<S> <C>
John J. Arthur Director, Senior Vice President and Treasurer, AIM; and Vice President
Director and Treasurer, AIM Management, A I M Capital Management, Inc. ("AIM
Capital"), AIM Distributors, AIM Services and Fund Management Company.
Charles T. Bauer Chairman of the Board of Directors, AIM Management, AIM, AIM Capital,
Director AIM Distributors, AIM Services and Fund Management Company; and Director
and Executive Vice Chairman, AMVESCAP PLC.
Gary T. Crum Director and President, AIM Capital, Director and Senior Vice President,
Director AIM Management; and AIM; Director, AIM Distributors; and Director,
AMVESCAP PLC.
Robert H. Graham Director, President, and Chief Executive Officer, AIM Management;
Director and President Director and President, AIM; Director and Senior Vice President, AIM
Capital, AIM Distributors, AIM Services and Fund Management Company; and
Director and Chief Executive Officer, AMVESCAP PLC.
Dawn M. Hawley Director and Vice President, AIM; and Senior Vice President and Chief
Director Financial Officer, AIM Management.
Carol F. Relihan Director, Senior Vice President, Secretary and General Counsel, AIM;
Director Director, Vice President and General Counsel, Fund Management Company;
Vice President, Secretary and General Counsel, AIM Management; Vice
President and General Counsel, AIM Capital and AIM Distributors.
</TABLE>
EXECUTIVE OFFICERS AND DIRECTORS OF CHANCELLOR LGT
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH
CHANCELLOR LGT AND ADDRESS PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST FIVE YEARS(1)
- --------------------------------------- -------------------------------------------------------------------------
<S> <C>
Paul J. Loach, 46 Chairman of the Board of Directors of Chancellor LGT since August 1997;
Chairman of the Board of Directors Director and Managing Director of LGT Asset Management PLC (London) since
1166 Avenue of the Americas October 1994; Group Manager and Director of Framlington Group from May
New York, NY 10036 1988 to October 1994.
Prince Philipp von und zu Director of Chancellor LGT since November 1996; Vice Chairman of
Liechtenstein, 51 Supervisory Board of LGT Bank in Liechtenstein (Deutschland) GmbH
Director (Frankfurt) since 1992; Chairman of the Board of Directors and CEO of
Herrengasse 12, P.O. Box 85 Liechtenstein Global Trust (Vaduz) since 1990; Vice Chairman of the Board
FL-9490 Vaduz, Liechtenstein of Directors of LGT Bank in Liechtenstein since 1981.
John G. Greenwood, 51 Chief Economist and Director of Chancellor LGT since November 1997; Chief
Director Economist of Chancellor LGT from February 1994 to October 1996; Chief
50 California Street, 27th Floor Economist of LGT Asset Management, Limited (Hong Kong) from September
San Francisco, CA 94111 1974 to January 1994.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH
CHANCELLOR LGT AND ADDRESS PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST FIVE YEARS(1)
- --------------------------------------- -------------------------------------------------------------------------
<S> <C>
Nina Lesavoy, 40 Director of Chancellor LGT Senior Secured Management, Inc. since November
Director and Head of North American 1996; Director and Head of North American Institutional Distribution for
Institutional Distribution 1166 Avenue Chancellor LGT since November 1996; Director and Head of Client Service
of the Americas New York, NY 10036 and Sales for Chancellor LGT from March 1990 to October 1996.
Donald H. Young, 59 Director and Head of the Structured Products Group for Chancellor LGT
Director since November 1996; Director and Head of Global Asset Allocation for
1166 Avenue of the Americas Chancellor LGT from October 1988 to October 1996.
New York, NY 10036
Ken W. Chancey, 52 Senior Vice President--Mutual Fund Accounting, Chancellor LGT since 1997;
Senior Vice President Vice President--Mutual Fund Accounting, Chancellor LGT from 1992 to 1997;
Mutual Fund Accounting Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
50 California Street, 27th Floor
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer--North America for Chancellor LGT
Chief Legal and Compliance since October 1997; Executive Vice President of the Asset Management
Officer and Secretary Division of Liechtenstein Global Trust since October 1996; Senior Vice
50 California Street, 27th Floor President, General Counsel and Secretary of Chancellor LGT, GT Global,
San Francisco, CA 94111 Inc., GT Investor Services, Inc. and G.T. Insurance Agency from February
1996 to October 1996; Vice President, General Counsel and Secretary of
LGT Asset Management, Inc., Chancellor LGT, GT Global, Inc., GT Investor
Services, Inc. and G.T. Insurance Agency from May 1994 to February 1996;
Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
Margaret A. Riley, 34 Director of Chancellor LGT Senior Secured Management, Inc. since November
Chief Financial Officer 1996; Director of Chancellor LGT Venture Partners, Inc. since October
1166 Avenue of the Americas 1997; Managing Director and Chief Financial Officer of Chancellor LGT
New York, NY 10036 since October 1997; Managing Director and Controller of Chancellor LGT
from November 1996 to October 1997; Managing Director of Finance for
Chancellor LGT from March 1989 to October 1996.
</TABLE>
- ------------------------
(1) On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor
Capital") merged with LGT Asset Management, Inc. (San Francisco), and the
resulting entity was renamed Chancellor LGT Asset Management, Inc. Prior to
October 31, 1996, Ms. Lesavoy, Ms. Riley and Mr. Young held positions only
with Chancellor Capital.
EXECUTIVE OFFICERS OF THE COMPANIES
The executive officers of the Companies are listed below. The business
address of each officer is 50 California Street, 27th Floor, San Francisco,
California 94111.
William J. Guilfoyle, age 39, has been President of each Company since
February 1997. Mr. Guilfoyle is also President of GT Global, principal
distributor of the GT Global Mutual Funds. Additional information about Mr.
Guilfoyle is provided above.
Helge K. Lee, age 51, has been a Vice President and Secretary of the
Companies since May 1994. Additional information about Mr. Lee is provided
above.
29
<PAGE>
Kenneth R. Chancey, age 52, has been a Vice President and Chief Accounting
Officer of the Companies since 1993. Additional information about Mr. Chancey is
provided above.
AFFILIATED BROKERAGE COMMISSIONS
Three Funds paid commissions to affiliated brokers in their last fiscal
year. Growth & Income Fund, Europe Fund, and Telecommunications Fund paid $611,
$565, and $1,565, respectively, to affiliated brokers in the fiscal year ended
December 31, 1997; these commissions represent, respectively, 0.04%, 2.22%, and
1.00% of the total brokerage commissions paid by each of those Funds.
GENERAL INFORMATION
SOLICITATION OF PROXIES
Each Company will request broker/dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares
held of record by such persons. Each Company may reimburse such broker/dealer
firms, custodians, nominees and fiduciaries for their reasonable expenses
incurred in connection with such proxy solicitation. In addition to the
solicitation of Proxies by mail, officers of each Company and employees of
Chancellor LGT and its affiliates, without additional compensation, may solicit
Proxies in person or by telephone. The costs associated with such solicitation
and the Special Meeting will be borne by LGT and AMVESCAP.
OTHER MATTERS TO COME BEFORE THE MEETING
The Boards do not know of any matters to be presented at the Meeting other
than those described in this Proxy Statement, but should any other matter
requiring a vote of Shareholders arise, the Proxyholders will vote thereon
according to their best judgment in the interests of the Companies.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Companies, 50 California Street,
27th Floor, San Francisco, CA 94111, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion. Normally, there will be no annual meeting of
shareholders in any year, except as required under the 1940 Act.
REPORTS TO SHAREHOLDERS
EACH COMPANY WILL FURNISH TO SHAREHOLDERS AND TO CONTRACT OWNERS, WITHOUT
CHARGE AND UPON REQUEST, A COPY OF THE MOST RECENT ANNUAL REPORT AND A COPY OF
THE MOST RECENT SEMI-ANNUAL REPORT FOLLOWING SUCH ANNUAL REPORT OF ANY FUND.
REQUESTS FOR SUCH REPORTS MAY BE MADE BY WRITING TO THE COMPANY AT 50 CALIFORNIA
STREET, 27TH FLOOR, SAN FRANCISCO, CALIFORNIA 94111, OR BY CALLING (800)
824-1580.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
BY ORDER OF THE BOARDS,
/s/ HELGE KRIST LEE
HELGE KRIST LEE
SECRETARY
April 3, 1998
30
<PAGE>
[LOGO]
[INSURANCE COMPANY]
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1998
This proxy is being solicited on behalf of the Board of Trustees of the
Company indicated below and relates to the proposals with respect to the Company
and the portfolios of the Company ("Funds") indicated below. The undersigned
hereby appoints as proxies William J. Guilfoyle, Helge K. Lee and Michael A.
Silver and each of them (with power of substitution) to vote for the undersigned
all shares of the Fund with respect to which the undersigned is entitled to
direct the voting at the Special Meeting of Shareholders to be held at 1 p.m.,
Pacific time, on May 20, 1998, at the offices of the Company, 50 California
Street, 26th Floor, San Francisco, California 94111, and any adjournment thereof
("Meeting"), with all the power the undersigned would have if personally
present. Unless indicated to the contrary, this proxy shall be deemed to grant
authority to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and return it
promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
GTGVIS KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
G.T. GLOBAL VARIABLE INVESTMENT TRUST
The Board of Trustees recommends that you vote FOR each of the nominees and FOR
the following proposals:
<TABLE>
<CAPTION>
WITHHOLD FOR ALL
VOTE ON TRUSTEES FOR ALL ALL EXCEPT
<S> <C> <C> <C> <C>
1. Election of five members of the / / / / / / To withhold authority to vote
Company's Board of Trustees to serve for any individual nominee(s),
indefinite terms until their mark "For All Except" and
successors are duly elected and write the nominee's number
qualified: 1) William J. Guilfoyle; on the line below.
2) C. Derek Anderson; 3) Frank S. --------------------------
Bayley; 4) Arthur C. Patterson; 5)
Ruth H. Quigley
</TABLE>
<TABLE>
<CAPTION>
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
2. (a) Approval of a new investment management and administration / / / / / /
agreement;
(b) Approval of a sub-advisory and sub-administration / / / / / /
agreement;
3. Approval of changes to the fundamental investment restrictions; / / / / / /
/ / To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, but to approve
others, PLACE AN "X" IN THE BOX at left and indicate the
letter(s) (as set forth in the proxy statement) of the
investment restriction(s) you do not want to change on the line
below.
---------------------------------------------------------------
4. Approval of an agreement and plan of conversion and termination / / / / / /
with respect to the Company;
5. Ratification of the selection of Coopers & Lybrand L.L.P. as / / / / / /
the Company's Independent Public Accountants.
</TABLE>
If shares are held jointly, each shareholder named should sign. If only one
signs, his or her signature will be binding. If the shareholder is a
corporation, the President or a Vice President should sign in his or her own
name, indicating title. If the shareholder is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner".
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------- -----------------------------
Signature (PLEASE SIGN WITHIN BOX) Date
- ----------------------------------------------------------- -----------------------------
Signature (Joint Owners) Date
</TABLE>
<PAGE>
EXHIBIT A
NUMBER OF OUTSTANDING SHARES
The following table shows the number of shares outstanding of each Fund as
of March 17, 1998:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF COMPANY AND FUND OUTSTANDING
- ---------------------------------------------------------------------- ----------------
<S> <C>
G.T. GLOBAL VARIABLE INVESTMENT SERIES 30,782,466.610
New Pacific Fund 1,505,713.486
Europe Fund 1,458,299.498
America Fund 1,958,212.309
International Fund 552,988.077
Money Market Fund 25,307,253.240
</TABLE>
<TABLE>
<S> <C>
G.T. GLOBAL VARIABLE INVESTMENT TRUST 13,556,517.105
Latin America Fund 1,443,407.586
Infrastructure Fund 485,788.075
Natural Resources Fund 815,211.862
Telecommunications Fund 3,649,145.504
Growth & Income Fund 2,700,395.594
Strategic Income Fund 2,055,470.707
Emerging Markets Fund 1,186,184.370
Global Government Fund 706,849.243
U.S. Government Income Fund 514,064.164
</TABLE>
A-1
<PAGE>
OWNERSHIP OF OUTSTANDING SHARES
To the best of the Companies' knowledge, the following table sets forth the
names, addresses, and percentage ownership of the Funds of the Shareholders as
of the Record Date and the amount of outstanding Shares owned of record by such
owners.
<TABLE>
<CAPTION>
PERCENTAGE
OF
NAME OF COMPANY AND INSURANCE COMPANY NUMBER OF OUTSTANDING
FUND NAME AND ADDRESS SHARES SHARES
- --------------------------------------- ----------------------------------------- ---------------- ------------
<S> <C> <C> <C>
GT GLOBAL VARIABLE INVESTMENT SERIES
New Pacific Fund General American Life Insurance Company 1,422,419.708 94.47%
("General American Life") 700 Market
Street, St. Louis, MO 63103 and Security
Equity Life Insurance Company ("SELIC"),
84 Business Park Drive, Suite 303,
Armonk, NY 10504 (collectively, "General
American")*
American Enterprise Life Insurance 83,293.778 5.53%
Company ("AEL"), P.O. Box 634,
Minneapolis, MN 55440 and American
Centurion Life Assurance Company ("ACL"),
P.O. Box 6653, Albany, NY 12205
(collectively, "American Enterprise")**
Europe Fund General American 1,458,299.498 100.00%
America Fund General American 1,958,212.309 100.00%
International Fund General American 552,988.077 100.00%
Money Market Fund General American 25,307,253.240 100.00%
GT GLOBAL VARIABLE INVESTMENT TRUST
Latin America Fund General American 1,363,533.404 94.47%
American Enterprise 79,874.182 5.53%
Infrastructure Fund General American 485,788.075 100.00%
Natural Resources Fund General American 815,211.862 100.00%
Telecommunications Fund General American 3,649,145.504 100.00%
Growth & Income Fund General American 2,700,395.594 100.00%
Strategic Income Fund General American 2,055,470.707 100.00%
Emerging Markets Fund General American 1,186,184.370 100.00%
Global Government Income Fund General American 706,849.243 100.00%
U.S. Government Income Fund General American 514,064.164 100.00%
</TABLE>
- ------------------------
* For each Fund, SELIC, an affiliate of General American Life, owns less than
5% of the shares owned by General American.
** For New Pacific Fund and Latin America Fund, ACL, an affiliate of AEL, owns
less than 5% of the shares owned by American Enterprise.
A-2
<PAGE>
EXHIBIT B
[NAME OF COMPANY]
MASTER INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
COMPANY
AND
AIM ADVISORS, INC.
Contract made as of , 19 , between [Company], a Delaware
business trust ("Company"), and AIM Advisors, Inc. (the "Adviser"), a Delaware
corporation.
WHEREAS the Company is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and
intends to offer for public sale shares of [Funds], each being a series of the
Company's shares of beneficial interest: and
WHEREAS the Company hereafter may establish additional series of its shares
of beneficial interest (any such additional series, together with the series
named in the paragraph immediately preceding, are collectively referred to
herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS the Company desires to retain Adviser as investment manager and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Company and the Funds, and Adviser is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints Adviser as investment manager
and administrator of each Fund for the period and on the terms set forth in this
Contract. Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Company's Board of Trustees ("Board"),
Adviser will provide a continuous investment program for each Fund, including
investment research and management with respect to all securities and
investments and cash equivalents of the Fund. Adviser will determine from time
to time what securities and other investments will be purchased, retained or
sold by each Fund, and the brokers and dealers through whom trades will be
executed.
(b) Adviser agrees that in placing orders with brokers and dealers it will
attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of the
Funds or provide the Funds or Adviser's other clients with research, analysis,
advice and similar services. Adviser may pay to brokers and dealers, in return
for research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to Adviser's determining in good faith that
such commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of Adviser to the Funds and its
other clients and that the total commissions or spreads paid by each Fund will
be reasonable in relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to Adviser or any
affiliated person thereof except in accordance with the federal securities laws
and the rules and regulations thereunder and any exemptive orders currently in
effect. Whenever Adviser simultaneously places orders to purchase or sell the
same security on behalf of a Fund and one or more other accounts advised by
Adviser, such orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Company
recognizes that in some cases this procedure may adversely affect the results
obtained for each Fund.
B-1
<PAGE>
(c) Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Funds, and will furnish the Board
with such periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser
hereby agrees that all records which it maintains for the Company are the
property of the Company, agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any records which it maintains for the Company and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Company any records which it
maintains for the Company upon request by the Company.
3. DUTIES AS ADMINISTRATOR. Adviser will administer the affairs of each
Fund subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services, except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the Funds
with such corporate, administrative and clerical personnel (including officers
of the Company) and services as are reasonably deemed necessary or advisable by
the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain for them,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Adviser will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. DELEGATION OF ADVISER'S DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. With respect to one or more of the Funds, Adviser may enter into
one or more contracts ("Sub-Advisory or Sub-Administration Contract") with a
Sub-adviser or Sub-administrator in which Adviser delegates to such sub-adviser
or sub-administrator the performance of any or all of the services specified in
Paragraph 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which Adviser is subject with
respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each
Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940
Act and rules thereunder, and (iii) Adviser shall not enter into a Sub-Advisory
or Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. SERVICES NOT EXCLUSIVE. The services furnished by Adviser hereunder are
not to be deemed exclusive and Adviser shall be free to furnish similar services
to others so long as its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of any director,
officer or employee of Adviser, who may also be a Trustee, officer or employee
of the Company, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
B-2
<PAGE>
7. EXPENSES.
(a) During the term of this Contract, each Fund will bear all expenses, not
specifically assumed by Adviser, incurred in its operations and the offering of
its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Company and the Fund; (v) expenses of preparing
and filing reports and other documents with governmental and regulatory
agencies; (vi) filing fees and expenses relating to the registration and
qualification of the Fund's shares and the Company under federal and/or state
securities laws and maintaining such registrations and qualifications; (vii)
costs incurred in connection with the issuance, sale, or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii) costs
of preparing share certificates; (xviii) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company or the Fund; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the Company
to its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by
Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services provided
to the Company received by the officers of the Company and by the Trustees of
the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the Company or
any Fund that Adviser is not required by this Contract to pay or assume shall
not obligate Adviser to pay or assume the same or any similar expense of the
Company or any Fund on any subsequent occasion.
8. COMPENSATION.
(a) For the services provided to a Fund under this Contract, the Company
shall pay the Adviser an annual fee, payable monthly, based upon the average
daily net assets of such Fund as forth in Appendix A attached hereto. Such
compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as hereafter
may be established will pay to Adviser a fee in an amount to be agreed upon in a
written Appendix to this Contract executed by the Company on behalf of such Fund
and by Adviser.
B-3
<PAGE>
(c) The fee shall be computed daily and paid monthly to Adviser on or before
the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
9. LIMITATION OF LIABILITY OF ADVISER AND INDEMNIFICATION. Adviser shall
not be liable and each Fund shall indemnify Adviser and its directors, officers
and employees, for any costs or liabilities arising from any error of judgment
or mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Adviser in the
performance by Adviser of its duties or from reckless disregard by Adviser of
its obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Company shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company, to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Adviser even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect with respect to any Fund
unless it has first been approved (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund this Contract shall continue automatically
for successive periods not to exceed twelve months each, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of the
Fund on sixty days' written notice to Adviser or by Adviser at any time, without
the payment of any penalty, on sixty days' written notice to the Company.
Termination of this Contract with respect to one Fund shall not affect the
continued effectiveness of this Contract with respect to any other Fund. This
Contract will automatically terminate in the event of its assignment.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract shall be
effective until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
12. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. LICENSE AGREEMENT. The Company shall have the non-exclusive right to
use the name "AIM" to designate the Company or any current or future series of
shares only so long as AIM Advisors, Inc. serves as investment manager or
adviser to the Company with respect to such series of shares.
B-4
<PAGE>
14. LIMITATION OF SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has been executed and delivered
by an authorized officer of the Company acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
15. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
Attest: [COMPANY]
- -------------------------------------------- By: -----------------------------------------
Name:
Title:
Attest: AIM ADVISORS, INC.
- -------------------------------------------- By: -----------------------------------------
Name:
Title:
</TABLE>
B-5
<PAGE>
APPENDIX A
TO
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
COMPANY
The Company shall pay the Adviser, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fee shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ---------------
<S> <C>
First $ million.............................................................. %
Next $ million............................................................... %
Next $ million............................................................... %
Over $ million............................................................... %
</TABLE>
B-6
<PAGE>
EXHIBIT C
[NAME OF COMPANY]
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
AIM ADVISORS, INC.
AND
[CHANCELLOR LGT ASSET MANAGEMENT, INC.--NAME TO BE CHANGED]
Contract made as of , 1998, between AIM Advisors, Inc., a
Delaware corporation ("Adviser"), and [Chancellor LGT Asset Management,
Inc.--name to be changed], a California corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and Administration
Contract with [Company], an [open-end] management investment company registered
under the Investment Company Act of 1940, as amended ("1940 Act"), with respect
to [Funds], each Fund being a series of the Company's shares of beneficial
interest; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Funds, and Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of each Fund for the period and on the terms set forth in this
Contract. Sub-Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Company's Board of Trustees ("Board")
and Adviser, the Sub-Adviser will provide a continuous investment program for
each Fund, including investment research and management, with respect to all
securities and investments and cash equivalents of the Fund. The Sub-Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold with respect to each Fund., and the brokers and
dealers through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it will
attempt to obtain the best net result in terms of price and execution.
Consistent with this obligation, the Sub-Adviser may, in its discretion,
purchase and sell portfolio securities from and to brokers and dealers who sell
shares of the Funds or provide the Funds, Adviser's other clients, or
Sub-Adviser's other clients with research, analysis, advice and similar
services. The Sub-Adviser may pay to brokers and dealers, in return for such
research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to the Sub-Adviser's determining in good
faith that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of the Adviser and
Sub-Adviser to the Funds and their other clients and that the total commissions
or spreads paid by each Fund will be reasonable in relation to the benefits to
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder and any exemptive orders currently in effect. Whenever
the Sub-Adviser simultaneously places orders to purchase or sell the same
security on behalf of a Fund and one or more other accounts advised by the
Sub-Adviser, such orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Company
recognizes that in some cases this procedure may adversely affect the results
attained for each Fund.
C-1
<PAGE>
(c) The Sub-Adviser will maintain all books and records with respect to the
securities transactions of the Funds, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the
Company are the property of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Company and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Company any records which
it maintains for the Company upon request by the Company.
3. DUTIES AS SUB-ADMINISTRATOR. Sub-Adviser will administer the affairs of
each Fund subject to the supervision of the Company's Board of Trustees
("Board"), the Adviser, and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Funds.
(b) At Sub-Adviser's expense, Sub-Adviser will provide the Company and the
Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Sub-Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Sub-Adviser will provide the Company and the Funds with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Sub-Adviser will act in conformity with the Agreement and Declaration
of Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. SERVICES NOT EXCLUSIVE. The services furnished by Sub-Adviser hereunder
are not to be deemed exclusive and Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of Sub-Adviser, who may also be a Trustee, officer
or employee of the Company, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. EXPENSES.
(a) During the term of this Contract, each Fund will bear all expenses, not
specifically assumed by Sub-Adviser, incurred in its operations and the offering
of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Company and the Fund; (v) expenses of preparing
and filing reports and other documents with governmental and regulatory
agencies; (vi) filing fees and expenses relating to the registration and
qualification of the Fund's shares and the Company under federal and/or state
securities laws and maintaining such registrations and qualifications; (vii)
costs incurred in connection with the issuance, sale, or repurchase of the
Fund's shares of
C-2
<PAGE>
beneficial interest; (viii) fees and salaries payable to the Company's Trustees
who are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (ix) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (x) taxes (including
any income or franchise taxes) and governmental fees; (xi) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (xii) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Company or the Fund for
violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii) costs
of preparing share certificates; (xviii) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company or the Fund; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the Company
to its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by
Sub-Adviser, subject to Adviser's and the Board's supervision.
(d) Sub-Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Sub-Adviser of any expense of the Company
or any Fund that Sub-Adviser is not required by this Contract to pay or assume
shall not obligate Sub-Adviser to pay or assume the same or any similar expense
of the Company or any Fund on any subsequent occasion.
7. COMPENSATION.
(a) For the services provided to a Fund under this Contract, Adviser will
pay Sub-Adviser an annual fee, payable monthly, based upon the average daily net
assets of such Fund as set forth in Appendix A hereto.
(b) For the services provided under this Contract to each Fund as hereafter
may be established, Adviser will pay to Sub-Adviser a fee in an amount to be
agreed upon in a written Appendix to this Contract executed by Adviser and by
Sub-Adviser.
(c) The fee shall be computed daily and paid monthly to Sub-Adviser on or
before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF SUB-ADVISER AND INDEMNIFICATION. Sub-Adviser
shall not be liable for any costs or liabilities arising from any error of
judgment or mistake of law or any loss suffered by the Fund or the Company in
connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Sub-Adviser in the performance by Sub-Adviser of its duties or from reckless
disregard by Sub-Adviser of its obligations and duties under this
C-3
<PAGE>
Contract. Any person, even though also an officer, partner, employee, or agent
of Sub-Adviser, who may be or become a Trustee, officer, employee or agent of
the Company, shall be deemed, when rendering services to a Fund or the Company
or acting with respect to any business of a Fund or the Company to be rendering
such service to or acting solely for the Fund or the Company and not as an
officer, partner, employee, or agent or one under the control or direction of
Sub-Adviser even though paid by it.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect with respect to any Fund
unless it has first been approved (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of the
Fund on sixty days' written notice to Sub-Adviser or by Sub-Adviser at any time,
without the payment of any penalty, on sixty days' written notice to the
Company. Termination of this Contract with respect to one Fund shall not affect
the continued effectiveness of this Contract with respect to any other Fund.
This Contract will automatically terminate in the event of its assignment.
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
11. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
C-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
Attest: AIM ADVISORS, INC.
- -------------------------------------------- By: -----------------------------------------
Name:
Title:
Attest: CHANCELLOR LGT ASSET MANAGEMENT, INC. [Name
to be Changed]
- -------------------------------------------- By: -----------------------------------------
Name:
Title:
</TABLE>
C-5
<PAGE>
APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
The Adviser shall pay the Sub-Adviser, as full compensation for all services
rendered and all facilities furnished hereunder, a fee related to each Fund set
forth below. Such fee shall be calculated by applying the following annual rates
to the average daily net assets of such Fund for the calendar year computed in
the manner used for the determination of the net asset value of Shares of such
Fund.
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
[SERIES FUND]
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ------------
<S> <C>
First $ million............................................................... %
Next $ million................................................................ %
Next $ million................................................................ %
Over $ million................................................................ %
</TABLE>
C-6
<PAGE>
EXHIBIT D
ADVISORY AGREEMENT FEE SCHEDULE FOR GT GLOBAL VARIABLE FUNDS
AND OTHER GT GLOBAL FUNDS
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE (BASED ON AVERAGE COMPLETED
OF EXPENSE CAP DAILY NET ASSETS)(1) DAILY NET ASSETS)(1) FISCAL YEAR
- ----------------------------- -------------------------------------- -------------------------------------- ----------------
<S> <C> <C> <C>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
GT Global Variable America
Fund (B)..................... .75% .30% $ 43,976,824
GT Global Variable
New Pacific Fund (A)......... 1.00% .40% $ 16,490,084
GT Global Variable Europe
Fund (A)..................... 1.00% .40% $ 27,409,750
GT Global Variable
International Fund (A)....... 1.00% .40% $ 5,929,179
GT Global Money Market Fund
(C).......................... .50% .20% $ 26,964,207
G.T. GLOBAL VARIABLE INVESTMENT TRUST
GT Global Variable
Telecommunications Fund
(A).......................... 1.00% .40% $ 68,186,143
GT Global Variable Emerging
Markets Fund (A)............. 1.00% .40% $ 16,508,757
GT Global Variable
Infrastructure Fund (A)...... 1.00% .40% $ 8,745,185
GT Global Variable
Latin America Fund (A)....... 1.00% .40% $ 28,786,217
GT Global Variable Growth &
Income Fund (A).............. 1.00% .40% $ 50,356,264
GT Global Variable Strategic
Income Fund (B).............. .75% .30% $ 28,496,692
GT Global Variable Natural
Resources Fund (A)........... 1.00% .40% $ 16,709,007
GT Global Variable Global
Government Income Fund (B)... .75% .30% $ 8,251,027
GT Global Variable
U.S. Government Income Fund
(B).......................... .75% .30% $ 7,372,636
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE (BASED ON AVERAGE COMPLETED
OF EXPENSE CAP DAILY NET ASSETS)(1) DAILY NET ASSETS)(1) FISCAL YEAR
- ----------------------------- -------------------------------------- -------------------------------------- ----------------
<S> <C> <C> <C>
G.T. GLOBAL GROWTH SERIES
GT Global Europe Growth Fund
(D).......................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 491,253,811
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global International
Growth Fund (D).............. .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 204,450,024
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global Japan Growth Fund
(D).......................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 99,184,283
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global New Pacific Growth
Fund (D)..................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 193,115,287
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global Worldwide Growth
Fund (D)..................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 151,406,807
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global America Small Cap
Growth Fund (F).............. 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 33,710,743
Small Cap Growth Portfolio.)(1) of fees paid by the Small Cap Growth
Portfolio.)
GT Global America Mid Cap
Growth Fund (F).............. .725% on the first $500 million; .70% .29% on the first $500 million; .28% $ 512,282,162
on the next $500 million; .675% on the on the next $500 million; .27% on the
next $500 million; and .65% on amounts next $500 million; and .26% on amounts
thereafter thereafter
GT Global America Value Fund
(F).......................... 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 24,824,615
Value Portfolio.)(1) of fees paid by the Value Portfolio.)
GT Global Small Cap Growth
Portfolio.................... .475% on the first $500 million; .45% .29% on the first $500 million; .28% $ 33,710,743
on the next $500 million; .425% on the on the next $500 million; .27% on the
next $500 million; and .40% on amounts next $500 million; and .26% on amounts
thereafter thereafter
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE (BASED ON AVERAGE COMPLETED
OF EXPENSE CAP DAILY NET ASSETS)(1) DAILY NET ASSETS)(1) FISCAL YEAR
- ----------------------------- -------------------------------------- -------------------------------------- ----------------
<S> <C> <C> <C>
GT Global Value Portfolio.... .475% on the first $500 million; .45% .29% on the first $500 million; .28% $ 24,824,615
on the next $500 million; .425% on on the next $500 million; .27% on the
then next $500 million; and .40% on next $500 million; and .26% on amounts
amounts thereafter thereafter
G.T. INVESTMENT PORTFOLIOS, INC.
GT Global Dollar Fund (D).... .50% .20% $ 276,888,755
G.T. INVESTMENT FUNDS, INC.
GT Global Government Income
Fund (F)..................... .725% on the first $500 million; .70% .29% on the first $500 million; .28% $ 282,109,478
on the next $1 billion; .675% on the on the next $1 billion; .27% on the
next $1 billion; and .65% on amounts next $1 billion; and .26% on amounts
thereafter thereafter
GT Global High Income Fund
(F).......................... 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 365,792,411
Global High Income Portfolio.)(1) of fees paid by the Global High Income
Portfolio.)
GT Global Strategic Income
Fund (F)..................... .725% on the first $500 million; .70% .29% on the first $500 million; .28% $ 420,623,795
on the next $1 billion; .675% on the on the next $1 billion; .27% on the
next $1 billion; and .65% on amounts next $1 billion; and .26% on amounts
thereafter thereafter
GT Global Health Care Fund
(E).......................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 626,342,117
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global Infrastructure Fund
(E).......................... 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 98,019,059
Global Infrastructure Portfolio.)(1) of fees paid by the Global
Infrastructure Portfolio.)
GT Global Natural Resources
Fund (E)..................... 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 171,673,573
Global Natural Resources of fees paid by the Global Natural
Portfolio.)(1) Resources Portfolio.)
GT Global Telecommunications
Fund (E)..................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 1,721,119,059
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
</TABLE>
D-3
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE (BASED ON AVERAGE COMPLETED
OF EXPENSE CAP DAILY NET ASSETS)(1) DAILY NET ASSETS)(1) FISCAL YEAR
- ----------------------------- -------------------------------------- -------------------------------------- ----------------
<S> <C> <C> <C>
GT Global Financial Services
Fund (E)..................... 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 80,961,634
Global Financial Services of fees paid by the Global Financial
Portfolio.)(1) Services Portfolio.)
GT Global Consumer Products
and Services Fund (E)........ 0% (The advisory fee is imposed on the 0% (The sub-advisory fee is paid out $ 162,662,313
Global Consumer Products and Services of fees paid by the Global Consumer
Portfolio.)(1) Products and Services Portfolio.)
GT Global Emerging Markets
Fund (E)..................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 242,901,049
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global Latin America
Growth Fund (E).............. .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 293,580,062
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global Growth and Income
Fund (F)..................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 752,477,823
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GT Global Developing Markets
Fund (E)..................... .975% on the first $500 million; .95% .39% on the first $500 million; .38% $ 457,379,188
on the next $500 million; .925% on the on the next $500 million; .37% on the
next $500 million; and .90% on amounts next $500 million; and .36% on amounts
thereafter thereafter
GLOBAL INVESTMENT PORTFOLIO
Global Consumer Products and
Services Portfolio........... .725% on the first $500 million; .70% .39% on the first $500 million; .38% $ 162,616,034
on the next $500 million; .675% on the on the next $500 million; .37% on the
next $500 million; and .65% on amounts next $500 million; and .36% on amounts
thereafter thereafter
Global Financial Services
Portfolio.................... .725% on the first $500 million; .70% .39% on the first $500 million; .38% $ 80,246,799
on the next $500 million; .675% on the on the next $500 million; .37% on the
next $500 million; and .65% on amounts next $500 million; and .36% on amounts
thereafter thereafter
</TABLE>
D-4
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
FOR THE
NAME OF COMPANY ADVISORY FEE SUB-ADVISORY FEE MOST RECENTLY
AND FUND AND CATEGORY (BASED ON AVERAGE (BASED ON AVERAGE COMPLETED
OF EXPENSE CAP DAILY NET ASSETS)(1) DAILY NET ASSETS)(1) FISCAL YEAR
- ----------------------------- -------------------------------------- -------------------------------------- ----------------
<S> <C> <C> <C>
Global Infrastructure
Portfolio.................... .725% on the first $500 million; .70% .39% on the first $500 million; .38% $ 98,575,211
on the next $500 million; .675% on the on the next $500 million; .37% on the
next $500 million; and .65% on amounts next $500 million; and .36% on amounts
thereafter thereafter
Global Natural Resources
Portfolio.................... .725% on the first $500 million; .70% .39% on the first $500 million; .38% $ 171,031,199
on the next $500 million; .675% on the on the next $500 million; .37% on the
next $500 million; and .65% on amounts next $500 million; and .36% on amounts
thereafter thereafter
Global High Income
Portfolio.................... .475% on the first $500 million; .45% .29% on the first $500 million; .28% $ 368,639,850
on the next $1 billion; .425% on the on the next $1 billion; .27% on the
next $1 billion; and .40% on amounts next $1 billion; and .26% on amounts
thereafter, plus 2% of the Portfolio's thereafter, plus 0.8% of the
total investment income Portfolio's total investment income
GT GLOBAL SERIES TRUST
GT Global New Dimension
Fund......................... 0% (Advisory Fees are paid by the GT 0% (Sub-Advisory Fees are paid out of $ 35,569,014
Global Theme Funds.) fees paid by the GT Global Theme
Funds.)
</TABLE>
- ------------------------------
(1) The Fund is also subject to an administration fee of 0.25% of the Fund's
average daily net assets.
The expense caps correspond to the following percents of the Funds' average
daily net assets, exclusive of brokerage commissions, taxes, interest and
extraordinary expenses:
<TABLE>
<S> <C> <C>
Expense Cap A..................................... 1.25%
Expense Cap B..................................... 1.00%
Expense Cap C..................................... .75%
Expense Cap D.............. Class A 2.00%
Class B 2.65%
Advisor Class 1.65%
Expense Cap E.............. Class A 2.00%
Class B 2.50%
Advisor Class 1.50%
Expense Cap F.............. Class A 1.75%
Class B 2.40%
Advisor Class 1.40%
</TABLE>
D-5
<PAGE>
ADVISORY AGREEMENT AND OTHER FEES FOR GT GLOBAL VARIABLE FUNDS
FOR FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT PRICING AND UNDERWRITING
AND ADMINISTRATION ACCOUNTING COMMISSIONS RETAINED
NAME OF COMPANY AND FUND FEES SERVICES FEES BY GT GLOBAL
- ---------------------------------------------- ---------------------- ------------------ --------------------
<S> <C> <C> <C>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
America Fund.................................. $ 305,132 $ 10,211 $ 13,032
New Pacific Fund.............................. $ 276,947 $ 6,939 $ 16,290
Europe Fund................................... $ 279,058 $ 7,002 $ 14,224
International Fund............................ $ 56,606 $ 1,421 $ 4,428
Money Market Fund............................. $ 108,454 $ 5,575 $ 71,614
G.T. GLOBAL VARIABLE INVESTMENT TRUST
Telecommunications Fund....................... $ 691,109 $ 17,340 $ 28,956
Emerging Markets Fund......................... $ 207,464 $ 5,281 $ 14,926
Infrastructure Fund........................... $ 84,074 $ 2,161 $ 12,446
Latin America Fund............................ $ 298,692 $ 7,491 $ 11,573
Growth & Income Fund.......................... $ 421,575 $ 10,587 $ 21,810
Strategic Income Fund......................... $ 224,634 $ 7,516 $ 13,549
Natural Resources Fund........................ $ 182,720 $ 4,696 $ 21,834
Global Government Income Fund................. $ 70,010 $ 2,342 $ 3,882
U.S. Government Income Fund................... $ 42,280 $ 1,448 $ 4,354
</TABLE>
D-6
<PAGE>
EXHIBIT E
ADVISORY AGREEMENT FEE SCHEDULE FOR AIM FUNDS AS OF JANUARY 31, 1998
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
AIM ADVISOR FUNDS, INC.
AIM Advisor Flex Fund........................... .75%(1) $ 625,853,949
AIM Advisor Large Cap Value Fund................ .75%(1) $ 174,849,143
AIM Advisor International Value Fund............ 1.00%(2) $ 103,739,567
AIM Advisor MultiFlex Fund...................... 1.00%(3) $ 387,498,357
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund...................... .80% of the first $150 million and $ 3,493,585,350
.625% of amounts in excess of $150
million
AIM Blue Chip Fund.............................. .75% of the first $350 million and $ 979,685,761
.625% of amounts in excess of $350
million
AIM Capital Development Fund.................... .75% of the first $350 million and $ 1,010,135,296
.625% of amounts in excess of $350
million
AIM Charter Fund................................ 1.0% of the first $30 million; .75% of $ 4,752,019,015
the next $120 million; and .625% of
amounts in excess of $150 million(5)
AIM Constellation Fund.......................... 1.0% of the first $30 million; .75% of $ 13,912,446,119
the next $120 million; and .625% of
amounts in excess of $150 million(5)
AIM Weingarten Fund............................. 1.0% of the first $30 million; .75% of $ 6,483,927,020
the next $320 million; and .625% of
amounts in excess of $350 million(5)
AIM FUNDS GROUP
AIM Balanced Fund............................... .75% of the first $150 million and $ 1,277,805,629
.50% of amounts in excess of $150
million
AIM Global Utilities Fund....................... .60% of the first $200 million; .50% $ 277,498,403
of the next $300 million; .40% of the
next $500 million; and .30% in excess
of $1 billion
AIM Intermediate Government Securities Fund..... .50% of the first $200 million; .40% $ 265,925,326
of the next $300 million; .35% of the
next $500 million; and .30% in excess
of $1 billion
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
AIM Growth Fund................................. .80% of the first $150 million and $ 616,924,481
.625% of amounts in excess of $150
million
AIM High Yield Fund............................. .625% of the first $200 million; .55% $ 3,605,716,624
of the next $300 million; .50% of the
next $500 million; and .45% in excess
of $1 billion
AIM Income Fund................................. .50% of the first $200 million; .40% $ 489,526,640
of the next $300 million; .35% of the
next $500 million; and .30% in excess
of $1 billion
AIM Money Market Fund........................... .55% of the first $1 billion and .50% $ 750,048,007
in excess of $1 billion
AIM Municipal Bond Fund......................... .50% of the first $200 million; .40% $ 370,535,277
of the next $300 million; .35% of the
next $500 million; and .30% in excess
of $1 billion
AIM Value Fund.................................. .80% of the first $150 million and $ 13,824,307,149
.625% in excess of $150 million(6)
AIM INTERNATIONAL FUNDS, INC.
AIM Asian Growth Fund........................... .95% of the first $500 million and $ 2,743,531
.90% of amounts in excess of $500
million(7)
AIM European Development Fund................... .95% of the first $500 million and $ 4,315,458
.90% of amounts in excess of $500
million(7)
AIM International Equity Fund................... .95% of the first $1 billion and .90% $ 2,317,723,349
of amounts in excess of $1 billion(8)
AIM Global Income Fund.......................... .70% of the first $1 billion and .65% $ 63,888,544
of amounts in excess of $1 billion(9)
AIM Global Growth Fund.......................... .85% of the first $1 billion and .80% $ 421,251,030
of amounts in excess of $1 billion
AIM Global Aggressive Growth Fund............... .90% of the first $1 billion and .85% $ 2,260,087,933
of amounts in excess of $1 billion
AIM INVESTMENT SECURITIES FUNDS
AIM Limited Maturity Treasury Fund.............. .20% of the first $500 million and $ 440,551,972
.175% in excess of $500 million
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
TOTAL NET ASSETS
ADVISORY FEE (BASED ON AS OF JANUARY 31,
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) 1998
- ------------------------------------------------ -------------------------------------- --------------------
<S> <C> <C>
AIM SUMMIT FUND, INC............................ 1.00% of the first $10 million; .75% $ 1,645,427,899
of the next $140 million; and .625% of
amounts in excess of $150 million(10)
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund.............. .65% of the first $250 million and $ 518,951,143
.60% of amounts in excess of $250
million
AIM V.I. Diversified Income Fund................ .60% of the first $250 million and $ 92,801,459
.55% of amounts in excess of $250
million
AIM V.I. Government Securities Fund............. .50% of the first $250 million and $ 34,818,984
.45% of amounts in excess of $250
million
AIM V.I. Growth Fund............................ .65% of the first $250 million and $ 263,728,239
.60% of amounts in excess of $250
million
AIM V.I. Growth and Income Fund................. .65% of the first $250 million and $ 679,090,534
.60% of amounts in excess of $250
million
AIM V.I. International Equity Fund.............. .75% of the first $250 million and $ 209,002,303
.70% of amounts in excess of $250
million
AIM V.I. Money Market Fund...................... .40% of the first $250 million and $ 54,028,632
.35% of amounts in excess of $250
million
AIM V.I. Global Utilities Fund.................. .65% of the first $250 million and $ 22,915,161
.60% of amounts in excess of $250
million
AIM V.I. Value Fund............................. .65% of the first $250 million and $ 710,899,635
.60% of amounts in excess of $250
million
</TABLE>
- ------------------------
NOTES:
(1) AIM has agreed to pay INVESCO Capital Management, which serves as
sub-advisor, a fee equal to .20% of the average daily net asset value of
the Fund for each of the Large Cap Value Fund and Flex Fund.
The following is the expense limitation schedule for AIM Advisor Large Cap
Value Fund and Flex Fund: Total expenses are capped for the first $500
million at the annual rate of 1.45% for Class A and 2.20% for Class C; on
the next $500 million of net assets, expenses shall not exceed 1.40% for
Class A and 2.15% for Class C; on the net $1 billion of net assets, expenses
shall not exceed 1.35% for Class A and 2.10% for Class C; and on all assets
over $2 billion, expenses shall not exceed 1.30% for Class A and 2.05% for
Class C. A portion of the Flex Fund's administrative fees are currently
being waived due to the expense limitation.
E-3
<PAGE>
(2) AIM has agreed to pay INVESCO Global Asset Management Limited (IGAM), which
serves as sub-advisor, a fee equal to .35% of average net assets up to $50
million; .30% on average net assets over $50 million up to $100 million;
and .25% on average net assets in excess of $100 million of the
International Value Fund.
The following is the expense limitation schedule for AIM Advisor
International Value Fund: Total expenses are capped for the first $100
million at the annual rate of 1.70% for Class A and 2.45% for Class C; on
the next $400 million of net assets, expenses shall not exceed 1.65% for
Class A and 2.40% for Class C; on the next $500 million of net assets,
expenses shall not exceed 1.60% for Class A and 2.35% for Class C; on the
next $l billion of assets, expenses shall not exceed 1.55% for Class A and
2.30% for Class C; and on all assets over $2 billion, expenses shall not
exceed 1.50% for Class A and 2.25% for Class C. A portion of International
Value Fund's administrative fees are being waived due to the expense
limitation.
(3) AIM has agreed to pay INVESCO Management & Research, Inc., which serves as
a sub-advisor, a fee equal to .35% of average net assets on the first $500
million of assets and .25% of average net assets in excess of $500 million
of the MultiFlex Fund.
The following is the expense limitation schedule for AIM Advisor MultiFlex
Fund: Total expenses are capped for the first $100 million at the annual
rate of 1.70% for Class A and 2.45% for Class C; on the next $400 million of
net assets, expenses shall not exceed 1.65% for Class A and 2.40% for Class
C; on the next $500 million of net assets, expenses shall not exceed 1.60%
for Class A and 2.35% for Class C; on assets over $1 billion, expenses shall
not exceed 1.55% for Class A and 2.30% for Class C; and on all assets over
$2 billion, expenses shall not exceed 1.50% for Class A and 2.25% for Class
C.
(4) AIM pays 50% of the advisory fees it receives with respect to AIM Charter
Fund, AIM Constellation Fund and AIM Weingarten Fund to AIM Capital
Management, Inc. as Sub-Advisor for such funds. AIM and AIM Capital
Management, Inc. are voluntarily waiving fees for AIM Weingarten Fund for
net asset levels in excess of $2 billion. In lieu of the contractual
agreement, fees are being calculated at the annual rate of .60% of the
Fund's average daily net assets in excess of $2 billion to and including $3
billion, plus .575% of the Fund's average daily net assets in excess of $3
billion to and including $4 billion, plus .55% of the Fund's average daily
net assets in excess of $4 billion. AIM and AIM Capital Management, Inc.
are voluntarily waiving fees for AIM Constellation Fund and AIM Charter
Fund for net asset levels in excess of $2 billion. In lieu of the
contractual agreement, fees are being calculated at the annual rate of .60%
of the Fund's average daily net assets in excess of $2 billion.
(5) AIM is voluntarily waiving a portion of the fees for AIM Value Fund for net
asset levels in excess of $2 billion. In lieu of the contractual agreement,
fees are being calculated at the annual rate of .60% of the Fund's average
daily net assets in excess of $2 billion.
(6) AIM has agreed to pay INVESCO Global Asset Management Limited (IGAM) a fee
equal to .20% of the first $500 million of net assets and .175% of net
assets over $500 million for each of the AIM Asian Growth Fund and AIM
European Development Fund.
IGAM has sub-sub advisory agreements with INVESCO Asset Management Limited
(IAML) and INVESCO Asia Limited (IAL) for the European Development Fund and
Asian Growth Fund, respectively. IAL and IAML are entitled to an annual fee
equal to 100% of the fees received by IGAM with respect to the Funds.
(7) AIM has agreed to waive fees for AIM International Equity Fund. In lieu of
the contractual agreement, fees are being calculated at the annual rate of
.90% of the Fund's average daily net assets in excess of $500 million to
and including $1 billion, plus .85% of the Fund's average daily net assets
exceeding $1 billion.
E-4
<PAGE>
(8) AIM has agreed on a voluntary basis to waive fees and reimburse expenses to
the extent that the expense ratios do not exceed 1.25% and 1.75% for Class
A & B respectively.
(9) AIM bears a portion of the fee reduction obligation. The other portion is
borne by TradeStreet, which serves as sub-advisor to AIM Summit Fund, Inc.
AIM and TradeStreet reduce their fees in proportion to the fees being
received from AIM Summit Fund, Inc. TradeStreet has agreed to accept a fee
of .50% of the first $10 million of the Fund's average daily net assets,
.35% of the next $140 million of the Fund's average daily net assets, .225%
of the next $550 million of the Fund's average daily net assets and .15% of
the Fund's average daily net assets in excess of $700 million.
E-5
<PAGE>
EXHIBIT F
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of this day of , 1998, between G.T. Global Variable
Investment Series, a Massachusetts business trust ("Old Trust"), on behalf of
each segregated portfolio of assets ("series") of Old Trust listed in Schedule A
to this Agreement ("Schedule A") (each an "Old Fund"), and , a
Delaware business trust ("New Trust"), on behalf of each series of New Trust
listed in Schedule A (each a "New Fund")(3). (Each Old Fund and New Fund is
sometimes referred to herein individually as a "Fund" and collectively as the
"Funds"; Old Trust and New Trust are sometimes referred to herein individually
as a "Trust" and collectively as the "Trusts.") All agreements, representations,
actions, and obligations described herein made or to be taken or undertaken by a
Fund are made and shall be taken or undertaken by Old Trust on behalf of each
Old Fund and by New Trust on behalf of each New Fund.
Each Old Fund intends to change its identity and place of organization--by
converting from a series of a Massachusetts business trust to a series of a
Delaware business trust--through a reorganization within the meaning of section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended ("Code"). Each Old
Fund desires to accomplish such conversion by transferring all its assets to the
New Fund listed on Schedule A opposite its name (which is being established
solely for the purpose of acquiring such assets and continuing such Old Fund's
business) (each, a "corresponding New Fund") in exchange solely for voting
shares of beneficial interest in such New Fund ("New Fund Shares") and such New
Fund's assumption of such Old Fund's liabilities, followed by the constructive
distribution of the New Fund Shares pro rata to the holders of shares of
beneficial interest in such Old Fund ("Old Fund Shares") in exchange therefor,
all on the terms and conditions set forth in this Agreement (which is intended
to be, and is adopted as, a "plan of reorganization" for federal income tax
purposes). All such transactions involving each Old Fund and its corresponding
New Fund is referred to herein as a "Reorganization." For convenience, the
balance of this Agreement will refer only to a single Reorganization, one Old
Fund, and one New Fund, but the terms and conditions of this Agreement shall
apply separately to each Reorganization. The consummation of a Reorganization
shall not be contingent on consummation of any other Reorganization.
In consideration of the mutual promises herein contained, the parties agree
as follows:
1. Plan of Conversion and Termination.
1.1 Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to the corresponding New Fund.
New Fund agrees in exchange therefor (a) to issue and deliver to Old Fund the
number of full and fractional (rounded to the third decimal place) New Fund
Shares equal to the number of full and fractional Old Fund Shares then
outstanding and (b) to assume all of Old Fund's liabilities described in
paragraph 1.3 ("Liabilities"). Such transactions shall take place at the Closing
(as defined in paragraph 2.1).
1.2 The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at the
Effective Time (as defined in paragraph 2.1).
1.3 The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not determinable at the Effective Time, and
whether or not specifically referred to herein.
- ------------------------
(3) The Agreement involving G.T. Global Variable Investment Trust will be
identical to this Agreement except for the names of the trusts and their
respective series listed in schedule A.
F-1
<PAGE>
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall constructively distribute
the New Fund Shares received by it pursuant to paragraph 1.1 to Old Fund's
shareholders of record, determined as of the Effective Time (collectively,
"Shareholders" and each individually, a "Shareholder"), in exchange for their
Old Fund Shares. Such distribution shall be accomplished by New Trust's transfer
agent ("Transfer Agent") opening accounts on New Fund's share transfer books in
the Shareholders' names and transferring such New Fund Shares thereto. Each
Shareholder's account shall be credited with the respective pro rata number of
full and fractional (rounded to the third decimal place) New Fund Shares due
that Shareholder. All outstanding Old Fund Shares, including those represented
by certificates, shall simultaneously be canceled on Old Fund's share transfer
books. New Fund shall not issue certificates representing the New Fund Shares in
connection with the Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, Old Fund shall be terminated and any further
actions shall be taken in connection therewith as required by applicable law.
1.6 Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
1.7 Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
2. Closing.
2.1 The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Trusts' principal office on May 29,
1998, or on such other date and at such other place upon which the parties may
agree. All acts taking place at the Closing shall be deemed to take place
simultaneously as of the Trusts' close of business on the date thereof or at
such other time as the parties may agree ("Effective Time").
2.2 Old Trust shall deliver to New Trust at the Closing a schedule of the
Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by lot.
Old Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3 Old Trust shall deliver to New Trust at the Closing a list of the
Shareholders' names and addresses and the number of outstanding Old Fund Shares
owned by each Shareholder, all as of the Effective Time, certified by Old
Trust's Secretary or Assistant Secretary. The Transfer Agent shall deliver at
the Closing a certificate as to the opening on New Fund's share transfer books
of accounts in the Shareholders' names. New Trust shall issue and deliver a
confirmation to Old Trust evidencing the New Fund Shares to be credited to Old
Fund at the Effective Time or provide evidence satisfactory to Old Trust that
such shares have been credited to Old Fund's account on such books. At the
Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts, or other documents as the other party
or its counsel may reasonably request.
2.4 Each Trust shall deliver to the other at the Closing a certificate
executed in its name by its President or a Vice President in form and substance
satisfactory to the recipient and dated the Effective Time, to the effect that
the representations and warranties it made in this Agreement are true and
correct at the Effective Time except as they may be affected by the transactions
contemplated by this Agreement.
F-2
<PAGE>
3. Representations and Warranties.
3.1 Old Fund represents and warrants as follows:
3.1.1 Old Trust is a trust operating under a written instrument or
declaration of trust, the beneficial interest in which is divided into
transferable shares; it is duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts; and a copy of
its Declaration of Trust is on file with the Secretary of that Commonwealth;
3.1.2 Old Trust is duly registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"),
and such registration is in full force and effect;
3.1.3 Old Fund is a duly established and designated series of Old Trust;
3.1.4 At the Closing, Old Fund will have good and marketable title to the
Assets and full right, power, and authority to sell, assign, transfer, and
deliver the Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, New Fund will acquire good and
marketable title thereto;
3.1.5 New Fund Shares are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the terms hereof;
3.1.6 Old Fund is a "fund" as defined in section 851(g)(2) of the Code;
it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
commenced operations and will continue to meet all the requirements for such
qualification for its current taxable year (and the Assets will be invested
at all times through the Effective Time in a manner that ensures compliance
with the foregoing); it has no earnings and profits accumulated in any
taxable year in which the provisions of Subchapter M did not apply to it;
and it has made all distributions for each such past taxable year that are
necessary to avoid the imposition of federal excise tax or has paid or
provided for the payment of any excise tax imposed for any such year;
3.1.7 To the best of Old Trust's Management's knowledge, there is no plan
or intention of any Shareholders to redeem or otherwise dispose of any New
Fund Shares to be received by them in the Reorganization. That management
does not anticipate dispositions of those shares at the time of or soon
after the Reorganization to exceed the usual rate and frequency of
redemptions of shares of Old Fund as a series of an open-end investment
company. Consequently, that management expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result of or at
the time of the Reorganization will be DE MINIMIS;
3.1.8 The Liabilities were incurred by Old Fund in the ordinary course of
its business and are associated with the Assets;
3.1.9 Old Fund is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the meaning
of section 368(a)(3)(A) of the Code;
3.1.10 Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested in
the stock and securities of any one issuer, and not more than 50% of the
value of such assets is invested in the stock and securities of five or
fewer issuers;
3.1.11 As of the Effective Time, Old Fund will not have outstanding any
warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Old Fund Shares;
3.1.12 At the Effective Time, the performance of this Agreement shall have
been duly authorized by all necessary action by Old Fund's shareholders; and
F-3
<PAGE>
3.1.13 Old Fund will be terminated as soon as reasonably practicable after
the Reorganization, but in all events within twelve months after the
Effective Time.
3.2 New Fund represents and warrants as follows:
3.2.1 New Trust is a business trust duly organized, validly existing, and
in good standing under the laws of the State of Delaware, and its
Certificate of Trust has been duly filed in the office of the Secretary of
State thereof;
3.2.2 At the Effective Time New Trust will succeed to Old Trust's
registration statement filed under the 1940 Act with the Securities and
Exchange Commission ("SEC") and thus will become duly registered as an
open-end management investment company thereunder;
3.2.3 Before the Effective Time, New Fund will be a duly established and
designated series of New Trust;
3.2.4 New Fund has not commenced operations and will not commence
operations until after the Closing;
3.2.5 Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.6 No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization;
3.2.7 The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued and
outstanding shares of New Fund, fully paid and non-assessable;
3.2.8 New Fund will be a "fund" as defined in section 851(g)(2) of the
Code and will meet all the requirements to qualify for treatment as a RIC
for its taxable year in which the Reorganization occurs;
3.2.9 New Fund has no plan or intention to issue additional New Fund
Shares following the Reorganization except for shares issued in the ordinary
course of its business as a series of an open-end investment company; nor
does New Fund have any plan or intention to redeem or otherwise reacquire
any New Fund Shares issued pursuant to the Reorganization, other than in the
ordinary course of that business or to the extent necessary to comply with
its legal obligation under section 22(e) of the 1940 Act;
3.2.10 New Fund will actively continue Old Fund's business in
substantially the same manner that Old Fund conducted that business
immediately before the Reorganization; and New Fund has no plan or intention
to sell or otherwise dispose of any of the Assets, except for dispositions
made in the ordinary course of its business and dispositions necessary to
maintain its qualification as a RIC, although in the ordinary course of its
business New Fund will continuously review its investment portfolio (as Old
Fund did before the Reorganization) to determine whether to retain or
dispose of particular stocks or securities, including those included in the
Assets;
3.2.11 There is no plan or intention for New Fund to be dissolved or
merged into another corporation or business trust or "fund" thereof (within
the meaning of section 851(g)(2) of the Code) following the Reorganization;
and
3.1.12 Immediately after the Reorganization, (a) not more than 25% of the
value of New Fund's total assets (excluding cash, cash items, and U.S.
government securities) will be invested in the stock and securities of any
one issuer and (b) not more than 50% of the value of such assets will be
invested in the stock and securities of five or fewer issuers.
F-4
<PAGE>
3.3. Each Fund represents and warrants as follows:
3.3.1 The fair market value of the New Fund Shares received by each
Shareholder will be approximately equal to the fair market value of the Old
Fund Shares constructively surrendered in exchange therefor;
3.3.2 Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.3 The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
3.3.4 There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
3.3.5 Immediately following consummation of the Reorganization, New Fund
will hold the same assets--except for assets distributed to shareholders in
the course of its business as a RIC and assets used to pay expenses incurred
in connection with the Reorganization--and be subject to the same
liabilities that Old Fund held or was subject to immediately prior to the
Reorganization, plus any liabilities for expenses of the parties incurred in
connection with the Reorganization. Such excepted assets, together with the
amount of all redemptions and distributions (other than regular, normal
dividends) made by Old Fund immediately preceding the Reorganization, will,
in the aggregate, constitute less than 1% of its net assets.
4. Conditions Precedent.
Each Fund's obligations hereunder shall be subject to (a) performance by the
other party of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other party
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either Trust to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain same would not involve a risk of a
material adverse effect on the assets or properties of either Fund, provided
that either Trust may for itself waive any of such conditions;
4.2. Old Trust shall have called a meeting of Old Fund's shareholders
("Shareholders Meeting") to consider and act on this Agreement and the
Reorganization, and at such meeting those shareholders shall have approved
thereof in accordance with applicable law;
4.3. Each party shall have received an opinion from Kirkpatrick & Lockhart
LLP as to the federal income tax consequences mentioned below. In rendering such
opinion, such counsel may rely as to factual matters, exclusively and without
independent verification, on the representations made in this Agreement (or in
separate letters addressed to such counsel) and the certificates delivered
pursuant to paragraph 2.4. Such opinion shall be substantially to the effect
that, based on the facts and assumptions stated therein and
F-5
<PAGE>
conditioned on consummation of the Reorganization in accordance with this
Agreement, for federal income tax purposes:
4.3.1 The Reorganization will constitute a reorganization within the
meaning of section 368(a)(1)(F) of the Code, and each Fund will be "a party
to a reorganization" within the meaning of section 368(b) of the Code;
4.3.2 No gain or loss will be recognized to Old Fund on the transfer of
the Assets to New Fund in exchange solely for New Fund Shares and New Fund's
assumption of the Liabilities or on the subsequent distribution of those
shares to the Shareholders, in constructive exchange for their Old Fund
Shares, in liquidation of Old Fund;
4.3.4 No gain or loss will be recognized to New Fund on its receipt of
the Assets in exchange for New Fund Shares and its assumption of the
Liabilities;
4.3.4 New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the Reorganization, and New
Fund's holding period for the Assets will include Old Fund's holding period
therefor;
4.3.5 A Shareholder will recognize no gain or loss on the constructive
exchange of all its Old Fund Shares solely for New Fund Shares pursuant to
the Reorganization;
4.3.6 A Shareholder's basis for the New Fund Shares to be received by it
in the Reorganization will be the same as the basis for its Old Fund Shares
to be constructively surrendered in exchange for those New Fund Shares, and
its holding period for those New Fund Shares will include its holding period
for those Old Fund Shares, provided they are held as capital assets by the
Shareholder at the Effective Time; and
4.3.7 For purposes of section 381 of the Code, New Fund will be treated
as if there had been no Reorganization. Accordingly, the Reorganization will
not result in the termination of Old Fund's taxable year, Old Fund's tax
attributes enumerated in section 381(c) of the Code will be taken into
account by New Fund as if there had been no Reorganization, and the part of
Old Fund's taxable year before the Reorganization will be included in New
Fund's taxable year after the Reorganization;
4.4. Prior to the Closing, New Trust's trustees shall have authorized the
issuance of, and New Fund shall have issued, one New Fund Share to Old Trust in
consideration of the payment of $1.00 for the purpose of enabling Old Trust to
elect Old Trust's trustees as New Trust's trustees (to serve without limit in
time, except as they may resign or be removed by action of New Trust's trustees
or shareholders), to ratify the selection of New Trust's independent certified
public accountants, and to vote on the matters referred to in paragraph 4.5; and
4.5. New Trust (on behalf of and with respect to New Fund) shall have
entered into an investment management and administration agreement, a
sub-advisory agreement, and such other agreements as are necessary for New
Fund's operation as a series of an open-end investment company. Each such
agreement shall have been approved by New Trust's trustees and, to the extent
required by law, by such of those trustees who are not "interested persons"
thereof (as defined in the 1940 Act) and by Old Trust as the sole shareholder of
New Fund.
At any time prior to the Closing, any of the foregoing conditions (except
that set forth in paragraph 4.2) may be waived by the trustees of either Trust
if, in their judgment, such waiver will not have a material adverse effect on
the interests of Old Fund's shareholders.
5. Expenses.
Except as otherwise provided in subparagraph 3.3.3, all expenses incurred in
connection with the transactions contemplated by this Agreement (regardless of
whether they are consummated) will be borne by the parties as they mutually
agree.
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6. Entire Agreement; Survival.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the Closing.
7. Amendment.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
8. Termination.
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
8.1 By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be performed at or
prior to the Effective Time, (b) if a condition to its obligations has not been
met and it reasonably appears that such condition will not or cannot be met, or
(c) if the Closing has not occurred on or before September 30, 1998; or
8.2 By the parties' mutual agreement.
Except as otherwise provided in paragraph 5, in the event of termination
under paragraphs 8.1(c) or 8.2, there shall be no liability for damages on the
part of either Fund--or the trustees or officers of either Trust--to the other
Fund.
9. Miscellaneous.
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
9.3. The execution and delivery of this Agreement have been authorized by
each Trust's trustees, and this Agreement has been executed and delivered by
authorized officers of each Trust acting as such; neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by them individually or to impose any liability on any of them
or any shareholder of either Trust personally but shall bind only the assets and
property of the respective Funds, as provided in Old Trust's Declaration of
Trust and New Trust's Agreement and Declaration of Trust, respectively.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
<TABLE>
<CAPTION>
<S> <C>
Attest: G.T. GLOBAL VARIABLE INVESTMENT SERIES, on
behalf of each of its series listed in
Schedule A to this Agreement
- -------------------------------------------- By: -----------------------------------------
Title:
---------------------------------------
[ ],
Attest: on behalf of each of its series
listed in Schedule A to this
Agreement
- -------------------------------------------- By: -----------------------------------------
Title:
---------------------------------------
</TABLE>
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<PAGE>
SCHEDULE A
SERIES OF GT GLOBAL VARIABLE INVESTMENT SERIES
GT Global Variable America Fund
GT Global Variable Europe Fund
GT Global Variable International Fund
GT Global Variable New Pacific Fund
GT Global Money Market Fund
SERIES OF [ ]
[ ] Global Variable America Fund
[ ] Global Variable Europe Fund
[ ] Global Variable International Fund
[ ] Global Variable New Pacific Fund
[ ] Global Money Market Fund
F-9
<PAGE>
EXHIBIT G
AGREEMENT AND DECLARATION OF TRUST
OF
[ ]
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as
of , 1998, among , , ,
, and , as Trustees, and each person who becomes a
Shareholder (as hereinafter defined) in accordance with the terms hereinafter
set forth.
WHEREAS, the parties hereto desire to create a business trust pursuant to
the Delaware Act (as hereinafter defined) for the investment and reinvestment of
funds contributed thereto;
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with the Office of the Secretary of State of Delaware and do hereby
declare that all money and property contributed to the trust hereunder shall be
held and managed in trust under this Agreement for the benefit of the
Shareholders (as hereinafter defined) as herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST
Section 1.1. NAME. The name of the business trust created hereby is
" ," and the Trustees may transact the Trust's affairs in that
name. The Trust shall constitute a Delaware business trust in accordance with
the Delaware Act, as hereinafter defined.
Section 1.2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "Agreement" means this Agreement and Declaration of Trust, as it may be
amended from time to time;
(b) "Bylaws" means the Bylaws referred to in Article IV, Section 4.1(e)
hereof, as from time to time amended;
(c) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Article II, Section 2.3
hereof;
(d) "Commission" shall have the meaning given it in the 1940 Act. The terms
"Affiliated Person," "Company," "Person," and "Principal Underwriter"
shall have the meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretive releases of the Commission
thereunder;
(c) "Covered Person" means every person who is, or has been, a Trustee or an
officer or employee of the Trust;
(f) The "Delaware Act" refers to the Delaware Business Trust Act, 12 Del. C.
Section 3801 et seq., as such Act may be amended from time to time;
(g) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Trust, Portfolio, or Class, as applicable;
(h) The "1940 Act" refers to the Investment Company Act of 1940, as amended
from time to time;
(i) "Outstanding Shares" means Shares shown on the books of the Trust or its
transfer agent as then issued and outstanding, but does not include
Shares that have been repurchased or redeemed by the Trust;
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(j) "Portfolio" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.3 hereof;
(k) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(l) "Shares" means, as to a Portfolio or any Class thereof, the equal
proportionate transferable units of beneficial interest into which the
beneficial interest of such Portfolio of the Trust or such Class thereof
shall be divided and may include fractions of Shares as well as whole
Shares;
(m) The "Trust" means [ ], the Delaware business trust
established hereby, and reference to the Trust, when applicable to one or
more Portfolios of the Trust, or Classes thereof, shall refer to any such
Portfolio, or Class thereof, as the case may be;
(n) The "Trustees" means the Persons who have signed this Agreement and
Declaration of Trust as trustees so long as they shall continue to serve
as trustees of the Trust in accordance with the terms hereof, and all
other Persons who may from time to time be duly appointed as Trustee in
accordance with the provisions of Article III, Section 3.4 hereof or
elected as Trustee in accordance with the provisions of Article III,
Section 3.6 hereof, and reference herein to a Trustee or to the Trustees
shall refer to such Persons in their capacity as Trustees hereunder; and
(o) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the account of one or
more of the Trust, any Portfolio, any Class of a Portfolio, or the
Trustees on behalf of the Trust, a Portfolio, or a Class.
Section 1.3. PURPOSE. The purpose of the Trust is to conduct, operate and
carry on the business of a management investment company registered under the
1940 Act through one or more Portfolios investing primarily in securities and to
carry on such other business as the Trustees may from time to time determine
pursuant to their authority under this Agreement.
Section 1.4. CERTIFICATE OF TRUST. Immediately upon the execution of this
Agreement, the Trustees shall file a Certificate of Trust with respect to the
Trust in the Office of the Secretary of State of the State of Delaware pursuant
to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. SHARES OF BENEFICIAL INTEREST. The beneficial interest in the
Trust shall be divided into an unlimited number of Shares, with par value of
$0.01 per Share. The Trustees may, from time to time, authorize the division of
the Shares into one or more series, each of which constitutes a Portfolio, and
may further authorize the division of said Portfolios into one or more
additional, separate and distinct Classes in accordance with Article II, Section
2.3 of this Agreement. All Shares issued hereunder, including without
limitation, Shares issued in connection with a dividend or other distribution in
Shares or a split or reverse split of Shares, shall be fully paid and
nonassessable.
Section 2.2. ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
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Section 2.3. ESTABLISHMENT OF PORTFOLIOS AND CLASSES. The Trust shall
consist of one or more separate and distinct Portfolios, each with an unlimited
number of Shares unless otherwise specified. The Trustees hereby establish and
designate the Portfolios listed on Schedule A attached hereto and made a part
hereof ("Schedule A"). Each additional Portfolio shall be established by the
adoption of a resolution by the Trustees and shall be effective upon the date
stated therein (or, if no such date is stated, upon the date of such adoption).
The Shares of each Portfolio shall have the relative rights and preferences
provided for herein and such rights and preferences as may be designated by the
Trustees. The Trust shall maintain separate and distinct records for each
Portfolio and shall hold and account for the assets belonging thereto separately
from the other Trust Property and the assets belonging to any other Portfolio.
Each Share of a Portfolio shall represent an equal beneficial interest in the
net assets belonging to that Portfolio, except to the extent of expenses
separately allocated to Classes thereof as permitted herein. A Portfolio may
have exclusive voting rights with respect to matters affecting only that
Portfolio.
The Trustees may divide the Shares of any Portfolio into two or more
Classes, each with an unlimited number of Shares unless otherwise specified.
Each Class so established and designated shall represent interests in the net
assets belonging to that Portfolio and shall have identical voting, dividend,
liquidation, and other rights and be subject to the same terms and conditions,
except that expenses (or certain assets as determined by the Trustees) allocated
to a Class may be borne solely by (or credited solely to) that Class and except
that each Class may have separate rights to convert to another Class, exchange
rights, and similar rights, each as determined by the Trustees and a Class may
have exclusive voting rights with respect to matters affecting only that Class.
The Trustees hereby establish for each Portfolio listed on Schedule A the
Classes listed thereon. Each additional Class for any or all Portfolios shall be
established by the adoption of a resolution by the Trustees and shall be
effective upon the date stated therein (or, if no such date is stated, upon the
date of such adoption).
Section 2.3.1. Subject to Section 6.1 of this Agreement, the Trustees shall
have full power and authority, in their sole discretion without obtaining any
prior authorization or vote of the Shareholders of any Portfolio, or Class
thereof, to establish and designate and to change in any manner any Portfolio of
Shares, or any Class or Classes thereof; to fix such preferences, voting powers,
rights, and privileges of any Portfolio, or Classes thereof, as the Trustees may
from time to time determine (but the Trustees may not change the preferences,
voting powers, rights, and privileges of Outstanding Shares in a manner
materially adverse to the Shareholders of such Shares without the prior approval
of the affected Shareholders); to divide or combine the Shares or any Portfolio,
or Classes thereof, into a greater or lesser number; to classify or reclassify
any issued Shares or any Portfolio, or Classes thereof, into one or more
Portfolios or Classes of Shares of a Portfolio; and to take such other action
with respect to the Shares as the Trustees may deem desirable. A Portfolio and
any Class thereof may issue any number of Shares but need not issue any shares.
At any time that there are no Shares outstanding of any particular Portfolio or
Class previously established and designated, the Trustees may abolish that
Portfolio or Class and the establishment and designation thereof.
Section 2.3.2. Unless the establishing resolution or any other resolution
adopted pursuant to this Section 2.3 otherwise provides, Shares of each
Portfolio or Class thereof established hereunder shall have the following
relative rights and preferences:
(a) Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or the
Trustees, whether of the same or other Portfolio (or Class).
(b) All consideration received by the Trust for the issue or sale of Shares
of a particular Portfolio, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange, or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall be held and accounted for separately from the
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<PAGE>
other assets of the Trust and of every other Portfolio and may be
referred to herein as "assets belonging to" that Portfolio. The assets
belonging to a particular Portfolio shall belong to that Portfolio for
all purposes, and to no other Portfolio, subject only to the rights of
creditors of that Portfolio. In addition, any assets, income, earnings,
profits, or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Portfolio
shall be allocated by the Trustees between and among one or more of the
Portfolios for all purposes and such assets, income, earnings, profits,
or funds, or payments and proceeds with respect thereto, shall be assets
belonging to that Portfolio. The Trustees may, in their sole discretion,
allocate certain assets to a particular Class, and such assets may be
referred to herein as "assets belonging to" that Class.
(c) A particular Portfolio (or Class) shall be charged with the liabilities
of that Portfolio (or Class) and all expenses, costs, charges and
reserves attributable to any particular Portfolio (or Class) shall be
borne by such Portfolio (or Class). Any general liabilities, expenses,
costs, charges or reserves to the Trust which are not readily
identifiable as belonging to any particular Portfolio (or Class) shall
be allocated and charged by the Trustees between or among any one or
more of the Portfolios (or Classes) in such manner as the Trustees in
their sole discretion deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Portfolios
(or Classes) for all purposes. Without limitation of the foregoing
provisions of this Subsection 2.3.2, the debts, liabilities, obligations
and expenses incurred, contracted for or otherwise existing with respect
to a particular Portfolio (or Class) shall be enforceable against the
assets of such Portfolio (or Class) only, and not against the assets of
the Trust generally. Notice of this contractual limitation on
inter-Portfolio liabilities shall be set forth in the Certificate of
Trust described in Section 1.4 of this Agreement (whether originally or
by amendment), and upon the giving of such notice in the Certificate of
Trust, the statutory provisions of Section 3804 of the Delaware Act
relating to limitations on inter-Portfolio liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
Certificate of Trust) shall become applicable to the Trust and each
Portfolio and Class thereof.
All references to Shares in this Agreement shall be deemed to be shares
of any or all Portfolios, or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally
to each Portfolio of the Trust, and each Class thereof, except as the
context otherwise requires.
Section 2.4. INVESTMENT IN THE TRUST. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees from time to time may authorize. At the
Trustees' sole discretion, such investments, subject to applicable law, may be
in the form of cash or securities in which the affected Portfolio is authorized
to invest, valued as provided in applicable law. Each Investment shall be
credited to the individual shareholder's account in the form of full and
fractional Shares of the Trust, in such Portfolio (or Class) as the purchaser
shall select.
Section 2.5. PERSONAL LIABILITY OF SHAREHOLDERS. As provided by applicable
law, no Shareholder of the Trust shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or any Portfolio (or Class) thereof. Neither
the Trust nor the Trustees, nor any officer, employee, or agent of the Trust
shall have any power to bind personally any Shareholder or, except as provided
herein or by applicable law, to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. The Shareholders shall be entitled, to the fullest extent permitted
by applicable law, to the same limitation on personal liability as is extended
under the Delaware General Corporation Law to stockholders of private
corporations for profit. Every note, bond, contract, or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust or to any
Portfolio (or Class) thereof shall include a recitation limiting the obligation
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represented thereby to the Trust or to one or more Portfolios thereof or to one
or more Classes of a Portfolio and its or their assets (but the omission of such
a recitation shall not operate to bind any Shareholder or Trustee of the Trust).
Section 2.6. ASSENT TO AGREEMENT. Every Shareholder, by virtue of having
purchased a Share, shall be held to have expressly assented to, and agreed to be
bound by, the terms hereof. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to rights of said decedent
under this Trust.
ARTICLE III
THE TRUSTEES
Section 3.1. MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Agreement. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any and all foreign jurisdictions and to do
all such other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Agreement, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Agreement shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court or other authority.
Section 3.2. INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein.
Section 3.3. TERMS OF OFFICE OF TRUSTEES. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as herein provided;
except (a) that any Trustee may resign his trusteeship or may retire by written
instrument signed by him and delivered to the other Trustees, which shall take
effect upon such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument, signed by
least two-thirds of the number of Trustees prior to such removal, specifying the
date when such removal shall become effective; (c) that any Trustee who has
died, become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of the Shareholders owning at least
two-thirds of the Outstanding Shares.
Section 3.4. VACANCIES AND APPOINTMENT OF TRUSTEES. A vacancy shall occur
in case of the declination to serve, death, resignation, retirement or removal
of a Trustee, or a Trustee is otherwise unable to serve, or an increase in the
number of Trustees. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certification of the other Trustees of such vacancy shall be
conclusive. In the case of an existing vacancy, the remaining Trustees may fill
such vacancy by appointment such other person as they in their discretion shall
see fit, or may leave such vacancy unfilled or may reduce the number of Trustees
to not less than two (2) Trustees. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office or by
resolution of the Trustees, duly adopted, which shall be recorded in the minutes
of a meeting of the Trustees, whereupon the appointment shall take effect.
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An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation, or
removal of a Trustee or an increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at the time or
after the expected vacancy occurs. As soon as any Trustee appointed pursuant to
this Section 3.4 shall have accepted this appointment in writing and agreed in
writing to be bound by the terms of the Agreement, the Trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
Section 3.5. TEMPORARY ABSENCE OF TRUSTEE. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.6. NUMBER OF TRUSTEES. The number of Trustees shall initially be
five (5), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees; provided, however, that the number of
Trustees shall in no event be less than two (2) nor more than twelve (12). The
Shareholders shall elect the Trustees (other than the initial Trustees) on such
dates as the Trustees may fix from time to time.
Section 3.7. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Agreement.
Section 3.8. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust and
of each Portfolio thereof shall be held separate and apart from any assets now
or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustees. Legal title in all of the assets of the
Trust and the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held by, or in the name of the
Trust, or in the name of any Person as nominee. No Shareholder shall be deemed
to have a severable ownership in any individual asset of the Trust or of any
Portfolio, or Class thereof, or any right of partition or possession thereof,
but each Shareholder shall have, except as otherwise provided for herein, a
proportionate undivided beneficial interest in the Trust, Portfolio or Class
thereof. The Shares shall be personal property giving only the rights
specifically set forth in this Agreement or the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. Without
limiting the foregoing and subject to any applicable limitation in this
Agreement or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited
by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on, and lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment company,
and exercise all the powers necessary and appropriate to the conduct of
such operations;
(c) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging, or otherwise
subjecting as security the Trust Property; to
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endorse, guarantee, or undertake the performance of an obligation or
engagement of any other Person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either through
a principal underwriter in the manner hereafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution
of any kind;
(e) To adopt Bylaws not inconsistent with this Agreement providing for the
conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve such right to the shareholders; such
Bylaws shall be deemed incorporated and included in this Agreement;
(f) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange, or such other domestic or
foreign entities as custodians of any assets of the Trust subject to any
conditions set forth in this Agreement or in the Bylaws;
(h) To retain one or more transfer agents or Shareholder servicing agents,
or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any officers of
the Trust and to any investment adviser, manager, administrator,
custodian, underwriter, or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article VI, Section 6.1 hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies and powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustee shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any Trust,
whether in bearer, book entry, unregistered, or other negotiable form;
or either in the name of the Trust or of a Portfolio or Class thereof or
in the name of a custodian or a nominee or nominees, subject in either
case to proper safeguards according to the usual practice of Delaware
business trusts or investment companies;
(o) To establish separate and distinct Portfolios with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish
Classes of such Portfolios having relative rights, powers, and duties as
they may provide consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities, and expenses of the Trust to a particular
Portfolio or to apportion the same between or among two or more
Portfolios, provided that any liabilities or expenses incurred by a
particular Portfolio shall be payable solely out of the assets belonging
to that Portfolio as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contact, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust;
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(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income and of
capital gains and capital to Shareholders in the manner hereinafter
provided;
(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Portfolio or Class, and to require the
redemption of the Shares of any Shareholder whose investment is less
than such minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees, and to adopt a committee charter
providing for such responsibilities, membership (including Trustees,
officers, or other agents of the Trust therein) and any other
characteristics of said committees as the Trustees may deem proper.
Notwithstanding the provisions of this Article IV, and in addition to
such provisions or any other provision of this Agreement or of the
Bylaws, the Trustees may by resolution appoint a committee consisting of
less than the whole number of Trustees then in office, which committee
may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in
office, with respect to the institution, prosecution, dismissal,
settlement, review, or investigation of any action, suit, or proceeding
which shall be pending or threatened to be brought before any court,
administrative agency, or other adjudicatory body;
(v) To interpret the investment policies, practices or limitations of any
Portfolios;
(w) To establish a registered office and have a registered agent in the
State of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable, or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects, or powers.
The foregoing clauses shall be construed both as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Portfolio, and not an action in an
individual capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.2. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and VII, to apply to any such repurchase,
redemption, retirement, cancellation, or acquisition of Shares any funds or
property of the Trust, or the particular Portfolio or Class of the Trust, with
respect to which such Shares are issued.
Section 4.3. ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote of those present at a meeting duly called (including a meeting by
telephonic or other electronic means, unless the 1940 Act requires that a
particular action be taken only at a meeting of the Trustees in person) at which
a quorum is present or by unanimous written consent of the Trustees (or by
written consent of a majority of the Trustees if the President of the Trust
determines that such exceptional circumstances exist, and are of such urgency,
as to make unanimous written consent impossible or impractical, which
determination shall be
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conclusive and binding on all Trustees and not otherwise subject to challenge)
without a meeting. A majority of the Trustees shall constitute a quorum at any
meeting. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees. Notice of the time, date, and
place of all meetings of the Trustees shall be given to each Trustee by
telephone, facsimile, electronic-mail, or other electronic mechanism sent to his
or her home or business address at least twenty-four hours in advance of the
meeting or in person at another meeting of the Trustees or by written notice
mailed to his or her home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who attends the
meeting without objecting to the lack of notice or who signs a waiver of notice
either before or after the meeting. Subject to the requirements of the 1940 Act,
the Trustees by majority vote may delegate to any Trustee or Trustees authority
to approve particular matters or take particular actions on behalf of the Trust.
Any written consent or waiver may be provided and delivered to the Trust by any
means by which notice may be given to a Trustee.
Section 4.4. PRINCIPAL TRANSACTIONS. The Trustees may, on behalf of the
Trust, buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with any investment adviser, distributor, or transfer agent for the Trust or
with any affiliated person of such Person; and the Trust may employ any such
Person, or firm or Company in which such Person is an affiliated person, as
broker, legal counsel, registrar, investment adviser, distributor,
administrator, transfer agent, dividend disbursing agent, custodian, or in any
capacity upon customary terms, subject in all cases to applicable laws, rules,
and regulations and orders of regulatory authorities.
Section 4.5. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are authorized
to pay or cause to be paid out of the principal or income of the Trust or
Portfolio (or Class), or partly out of the principal and partly out of income,
and to charge or allocate the same to, between or among such one or more of the
Portfolios (or Classes) that may be established or designated pursuant to
Article II, Section 2.3, as they deem fair, all expenses, fees, charges, taxes,
and liabilities incurred or arising in connection with the Trust or Portfolio
(or Class), or in connection with the management thereof, including, but not
limited, to the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser and manager,
administrator, principal underwriter, auditors, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 4.6. TRUSTEE COMPENSATION. The Trustees as such shall be entitled
to reasonable compensation from the Trust. They may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, administrative, legal, accounting, investment
banking, underwriting, brokerage, or investment dealer or other services and the
payment for the same by the Trust.
ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Portfolio whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trustees
with such management, investment advisory, statistical, and research facilities
and services and such other facilities and services, if any, and all upon such
terms and conditions, as the Trustees may in their discretion determine.
The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
among the Trustees, the investment adviser, and the sub-adviser. Any
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references in this Agreement to the investment adviser shall be deemed to
include such sub-advisers, unless the context otherwise requires.
Section 5.2. OTHER SERVICE CONTRACTS. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator, custodian,
and similar servicers.
Section 5.3. PARTIES TO CONTRACT. Any contract of the character described
in Sections 5.1 and 5.2 of this Article V may be entered into with any
corporation, firm, partnership, trust, or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract.
Section 5.4. MISCELLANEOUS. The fact that (i) any of the Shareholders,
Trustees, or officers of the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter or distributor, or
agent of or for any Company or of or for any parent or affiliate of any Company,
with which an advisory or administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing, custodian, or other
agency contract may have been or may hereafter be made, or that any such
Company, or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that (ii) any Company with which an advisory or administration
contract or principal underwriter's or distributor's contract, or transfer,
shareholder servicing, or other agency contract may have been or may hereafter
be made also has an advisory or administration contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing,
custodial, or other agency contract with one or more other companies, or has
other business or interests shall not affect the validity of any such contract
or disqualify any Shareholder, Trustee, or officer of the Trust from voting upon
or executing the same or create any liability or accountability to the Trust or
its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
Section 6.1. VOTING POWERS. The Shareholders shall have power to vote only
with respect to (1) the election of Trustees as provided in Article III, Section
3.6, (2) the removal of a Trustee as provided in Article III, Section 3.3(d),
(3) any investment advisory contract to the extent required by the 1940 Act, (4)
termination of the Trust or a Portfolio or Class thereof as provided in Article
IX, Section 9.3, (5) amendment of this Agreement only as provided in Article IX,
Section 9.7, (6) the sale of all or substantially all the assets of the Trust or
of any Portfolio or Class, unless the primary purpose of such sale is to change
the Trust's domicile or form of organization or form of business trust; (7) the
merger or consolidation of the Trust or any Portfolio or Class with and into
another Company, unless (A) the primary purpose of such merger or consolidation
is to change the Trust's domicile or form of organization or form of business
trust, or (B) after giving effect to such merger or consolidation, based on the
number of Shares outstanding as of a date selected by the Trustees, the
Shareholders of the Trust or such Portfolio or Class will have a majority of the
outstanding shares of the surviving Company or Portfolio or Class, as the case
may be; and (8) such additional matters relating to the Trust as may be required
by law or as the Trustees may consider desirable.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may make any action required or permitted by law, this
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to vote of the Shareholders, all Shares shall be
voted together, except when required by applicable law or when the Trustees have
determined that the matter affects the interests of one or more Portfolios (or
Classes), then only the Shareholders of all such Portfolios (or Classes) shall
be entitled to vote thereon. Each whole Share shall be entitled to one vote as
to any matter on which it is entitled to vote, and each fractional Share shall
be entitled to a proportionate fractional vote. The vote necessary to approve
any such matter shall be set forth in this Agreement or in the Bylaws.
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ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1. DISTRIBUTIONS. The Trustees may from time to time declare and
pay dividends and make other distributions with respect to any Portfolio, or
Class thereof, which may be from income, capital gains, or capital. The amount
of such dividends or distributions and the payment of them and whether they are
in cash or any other Trust Property shall be wholly in the discretion of the
Trustees. Dividends and other distributions may be paid pursuant to a standing
resolution adopted once or more often as the Trustees determine. All dividends
and other distributions on Shares of a particular Portfolio or Class shall be
distributed pro rata to the Shareholders of that Portfolio or Class, as the case
may be, in proportion to the number of Shares of that Portfolio or Class they
held on the record date established for such payment, provided that such
dividends and other distributions on Shares of a Class shall appropriately
reflect expenses allocated to that Class. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash distribution payout plans,
or similar plans as the Trustees deem appropriate.
Section 7.2. REDEMPTIONS. Any holder of record of Shares of a particular
Portfolio, or Class thereof, shall have the right to require the Trust to redeem
his Shares, or any portion thereof, subject to such terms and conditions as are
set forth in the Bylaws or are prescribed by the Trustees.
Section 7.3. REDEMPTION OF SHARES BY TRUSTEES. Upon the terms and
conditions set forth in the Bylaws, the Trustees may call for the redemption of
the Shares of any Person or may refuse to transfer or issue Shares to any Person
to the extent that the same is necessary to comply with applicable law or
advisable to further the purposes of which the Trust is formed. To the extent
permitted by law, the Trustees may retain the proceeds of any redemption of
Shares required by them for payment of amounts due and owing by a Shareholder to
the Trust or any Portfolio or Class.
Section 7.4. REDEMPTION OF DE MINIMIS ACCOUNTS. If, at any time, when a
request for transfer or redemption of Shares of any Portfolio is received by the
Trust or its agent, the value of the Shares of such Portfolio in a Shareholder's
account is less than Five Hundred Dollars ($500.00), or such greater amount as
the Trustees, in their discretion, shall have determined in accordance with
Article IV, Section 4.1(t) hereof, after giving effect to such transfer or
redemption, the Trust may, at any time following such transfer or redemption and
upon giving thirty (30) days' notice to the Shareholder, cause the remaining
Shares of such Portfolio in such Shareholder's account to be redeemed at net
asset value and in accordance with such procedures as are set forth in the
Bylaws.
Section 7.5. SUSPENSION OF RIGHT OF REDEMPTION. Notwithstanding Section 2
of this Article, the Trustees may postpone payment of the redemption price and
suspend the Shareholders' right to require any Portfolio or Class to redeem
Shares during any period when and to the extent permissible under the 1940 Act.
Any such postponement and suspension shall take effect at the time the Trustees
shall specify, but not later than the close of business on the business day next
following the declaration thereof, and shall continue until the Trustees declare
the end thereof. If the right of redemption is suspended, a Shareholder may
either withdraw his or her request for redemption or receive payment based on
the net asset value per Share next determined after the suspension terminates.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1. LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person for any act, omission, or
obligation of the Trust or any Trustee; provided, however, that nothing
contained herein or in the Delaware Act shall protect any Trustee against any
liability to the Trust or to Shareholders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
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Section 8.2. INDEMNIFICATION OF COVERED PERSONS. Every Covered Person
shall be indemnified by the Trust to the fullest extent permitted by the
Delaware Act and other applicable law.
Section 8.3. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former shareholder of the Trust shall be held to be personally liable solely by
reason of his being or having been a Shareholder of the Trust or any Portfolio
or Class and not because of his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors, administrators, or
other legal representatives, or, in the case of a corporation or other entity,
its corporate or general successor) shall be entitled, out of the assets
belonging to the applicable Portfolio (or Class), to be held harmless from and
indemnified against all loss and expense arising from such liability in
accordance with the Bylaws and applicable law. The Trust, on behalf of the
affected Portfolio (or Class), shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder for any act or obligation
of that Portfolio (or Class).
ARTICLE IX
MISCELLANEOUS
Section 9.1. TRUST NOT A PARTNERSHIP; TAXATION. It is hereby expressly
declared that a trust and not a partnership is created hereby. No Trustee
hereunder shall have any power to bind personally either the Trust's officers or
any Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Portfolio or Class or, if the Trustees shall have yet to have
established any separate Portfolio or Class, of the Trust for payment under such
credit, contract, or claim; and neither the Shareholders nor the Trustee, nor
any of their agents, whether past, present, or future, shall be personally
liable therefor.
It is intended that the Trust, or each Portfolio if there is more than one
Portfolio, be classified for income tax purposes as an association taxable as a
corporation, and the Trustees shall do all things that they, in their sole
discretion, determine are necessary to achieve that objective, including (if
they so determine) electing such classification on Internal Revenue Form 8832.
Any Trustee is hereby authorized to sign such form on behalf of the Trust or any
Portfolio, and the Trustees may delegate such authority to any executive
officer(s) of any Portfolio's investment adviser. The Trustees, in their sole
discretion and without the vote or consent of the Shareholders, may amend this
Agreement to ensure that this objective is achieved.
Section 9.2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretion hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
VIII hereof and to Section 9.1 of this Article IX, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Agreement, and subject to the provisions of Article VIII hereof and Section
9.1 of this Article IX, shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
obtained.
Section 9.3. TERMINATION OF TRUST OR PORTFOLIO OR CLASS.
(a) The Trust or any Portfolio (or Class) may be terminated by (1) a
Majority Shareholder Vote of the Trust or the affected Portfolio (or
Class), respectively, or (2) if there are fewer than 100 Shareholders of
record of the Trust or of such terminating Portfolio (or Class), the
Trustees pursuant to written notice to the Shareholders of the Trust or
the affected Portfolio (or Class).
(b) On termination of the Trust or any Portfolio (or Class) pursuant to
paragraph (a),
(1) the Trust or that Portfolio (or Class) thereafter shall carry on no
business except for the purpose of winding up its affairs,
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(2) the Trustees shall proceed to wind up the affairs of the Trust or
that Portfolio (or Class), and all powers of the Trustees under this
Agreement with respect thereto shall continue until such affairs
have been wound up, including the powers to fulfill or discharge the
contracts of the Trust or that Portfolio (or Class), collect its
assets, sell, convey, assign, exchange, or otherwise dispose of all
or any part of its remaining assets to one or more persons at public
or private sale for consideration that may consist in whole or in
part of cash, securities, or other property of any kind, discharge
or pay its liabilities, and do all other acts appropriate to
liquidate its business, and
(3) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and
refunding agreements as they deem necessary for their protection,
the Trustees shall distribute the remaining assets ratably among the
Shareholders of the Trust or that Portfolio (or Class); however, the
payment to any particular Class of that Portfolio may be reduced by
any fees, expenses, or charges allocated to that Class.
(c) On completion of distribution of the remaining assets pursuant to
paragraph (b), the Trust or the affected Portfolio (or Class) shall
terminate and the Trustees and the Trust shall be discharged from all
further liabilities and duties hereunder with respect thereto and the
rights and interests of all parties therein shall be canceled and
discharged. On termination of the Trust, following completion of winding
up of its business, the Trustees shall cause a Certificate of
Cancellation of the Trust's Certificate of Trust to be filed in
accordance with the Delaware Act, which Certificate may be signed by any
one Trustee.
Section 9.4. SALE OF ASSETS; MERGER AND CONSOLIDATION. Subject to Section
6.1 of this Agreement, the Trustees may cause (i) the Trust or one or more of
its Portfolios (or Classes) to the extent consistent with applicable law to sell
all or substantially all of its assets, or be merged into or consolidated with
another Trust or Company, (ii) the Shares of the Trust or any Portfolio (or
Class) to be converted into beneficial interests in another business trust (or
series thereof) created pursuant to this Section 9.4 of Article IX, or (iii) the
Shares to be exchanged under or pursuant to any state or federal statute to the
extent permitted by law. In all respects not governed by statute or applicable
law, the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation including
the power to create one or more separate business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the trust or any
Portfolio (or Class) into beneficial interests in such separate business trust
or trusts (or series or class thereof).
Section 9.5. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Agreement supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. In this Agreement or in any
such amendment or supplemental Agreement, references to this Agreement, and all
expressions like "herein," "hereof," and "hereunder," shall be deemed to refer
to this Agreement as amended or affected by any such supplemental Agreement. All
expressions like "his," "he," and "him," shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Agreement, rather than the headings, shall control. This Agreement may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 9.6. GOVERNING LAW. The Trust and this Agreement, and the rights,
obligations and remedies of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
other laws of the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees, the Shareholders or this Agreement (a)
the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Act) pertaining to trusts which relate to or regulate (i) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and
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charges, (ii) affirmative requirements to post bonds for trustees, officers,
agents, or employees of a trust, (iii) the necessity for obtaining court or
other governmental approval concerning the acquisition, holding, or disposition
of real or personal property, (iv) fees or other sums payable to trustees,
officers, agents, or employees of a trust, (v) the allocation of receipts and
expenditures to income or principal, (vi) restrictions or limitations on the
permissible nature, amount, or concentration of trust investments or
requirements relating to the titling, storage, or other manner of holding of
trust assets, or (vii) the establishment of fiduciary or other standards or
responsibilities or limitations on the indemnification, acts or powers of
trustees or other Persons, which are inconsistent with the limitations of
liabilities or authorities and powers of the Trustees or officers of the Trust
set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business trust," and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions, provided, however, that the exercise of any
such power, privilege, or action shall not otherwise violate applicable law.
Section 9.7. AMENDMENTS. Except as specifically provided herein, the
Trustees may, without any Shareholder vote, amend this Agreement by making an
amendment, a Agreement supplemental hereto, or an amended and restated trust
instrument. Any amendment submitted to Shareholders that the Trustees determine
would affect the Shareholders of only one or more Portfolios (or Classes
thereof) shall be authorized by vote of only the Shareholders of that Portfolio
(or Class), and no vote shall be required of Shareholders of any Portfolio (or
Class) that is not affected. Notwithstanding anything else herein to the
contrary, any amendment to Article IX that would have the effect of reducing the
indemnification provided thereby to Covered Persons or to Shareholders or former
Shareholders, and any repeal or amendment of this sentence shall each require
the affirmative vote of Shareholders owning at least two-thirds of the
Outstanding Shares entitled to vote thereon. A certification signed by a
majority of the Trustees setting forth an amendment to this Agreement and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid, or a copy of this Agreement, as amended, executed by a majority of
the Trustees, shall be conclusive evidence of such amendment when lodged among
the records of the Trust.
Section 9.8. PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Agreement are severable, and the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with applicable law the
conflicting provision shall be deemed never to have constituted a part of this
Agreement; provided, however, that such determination shall not affect any of
the remaining provisions of this Agreement or render invalid or improper any
action taken or omitted prior to such determination. If any provision of this
Agreement shall be held invalid or enforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
Section 9.9. SHAREHOLDERS' RIGHT TO INSPECT SHAREHOLDER LIST. One or more
Persons who together and for at least six months have been Shareholders of at
least five percent (5%) of the outstanding shares of any Class may present to
any officer or resident agent of the Trust a written request for a list of its
Shareholders. Within twenty (20) days after such request is made, the Trust
shall prepare and have available on file at its principal office a list verified
under oath by one of its officers or its transfer agent or registrar which sets
forth the name and address of each Shareholder and the number of Shares of each
Class which the Shareholder holds. The rights provided for herein shall not
extend to any Person who is a beneficial owner but not also a record owner of
Shares of the Trust.
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IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument this [ ] day of [ ],
1998.
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