[INVESCO AIM LOGO APPEARS HERE]
--Servicemark--
July 9, 2009
VIA EDGAR
Mr. James O'Connor
Division of Investment Management
U.S. Securities and Exchange Commission
100 F St., NE
Washington, DC 20549
Re: AIM Equity Funds (AEF)
Post-Effective Amendment No. 94 to
Form N-1A Registration Statement
File No. 002-25469; CIK No. 0000105377
Dear Mr. O'Connor:
This letter responds to the Staff's comments on the above-referenced
Registration Statement on Form N-1A filed by AIM Equity Funds (the "Registrant")
on April 30, 2009, which is scheduled to go effective July 14, 2009. The purpose
of the filing was to register AIM Disciplined Equity Fund (the "Fund") as a
series portfolio of the Registrant.
Staff's Comment:
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1. PERCENT LIMITATION LANGUAGE. Consider clarifying that notwithstanding the
disclosure indicating that "any percentage limitations with respect to assets of
the fund are applied at the time of purchase," the Fund would at all times
invest at least 80% of its assets in a diversified portfolio of common stocks of
publicly traded U.S. companies in compliance with Rule 35d-1 of the Investment
Company Act of 1940, as amended (the "1940 Act").
Response:
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The Registrant believes the Registrant's disclosure complies and is
consistent with Rule 35d-1 of the 1940 Act. Rule 35d-1(b) indicates that the
requirements of the rule apply at the time a fund invests its assets. The SEC
adopting release of the Investment Company Names Rule specifically states, in a
section entitled, "Temporary Departure from 80% Requirement" that "consistent
with current Division positions, the rule, as adopted, will require investment
companies to comply with the 80% investment requirement 'under normal
circumstances.'" The release goes on to state that this flexibility, "will
permit investment companies to take 'temporary defensive positions' to avoid
losses in response to adverse market, economic, political or other conditions.
In addition, it will permit investment companies to depart from the 80%
investment requirement in other limited, appropriate circumstances, particularly
in the case of unusually large cash inflows or redemptions." Accordingly, the
Registrant will not be incorporating further disclosure regarding compliance
with Rule 35d-1 in the registration statement.
James O'Connor
July 9, 2009
Page 2
Staff's Comment:
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2. RISK/RETURN SUMMARY. The Risk/Return Summary should elaborate on the risks
referenced within that section.
Response:
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The Registrant believes that the disclosure is adequate as the section
cross references the Investment Objective, Strategies and Risks for further
discussion of the risks listed. We will take the comment under advisement in
updating the registration statements of all AIM Funds to comply with the new
Summary Prospectus requirements as most of the 102 AIM Fund prospectuses contain
this disclosure convention.
Staff's Comment:
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3. MAXIMUM DEFERRED SALES CHARGE. Explain that the maximum deferred sales charge
language in the fee table will not apply to the Fund.
Response:
--------
As reflected in the fee table disclosed in the prospectus included in
the N-14 for the Registrant filed on June 26, 2009, the Fund will not impose any
sales charges.
Staff's Comment:
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4. FEE WAIVER LANGUAGE. Consider removing the following disclosure accompanying
the expense example that reads: "To the extent fees are waived and/or expenses
are reimbursed voluntarily, your expenses will be lower." Your concern was that
if there was no current intention to waive fees in the future, then the
disclosure served no purpose.
Response:
--------
We believe this disclosure serves the purpose of reminding shareholders
that the expense example is based on historical data and is not a commitment to
actual expenses at one and three years. We will nonetheless take this comment
under advisement with respect to all other AIM Funds, all of which contain this
disclosure.
Staff's Comment:
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5. INVESTMENT OBJECTIVES AND STRATEGIES: LOWER QUALITY DEBT SECURITIES. Please
report to what extent the Fund will invest in lower quality debt securities and
enhance disclosure if necessary.
Response:
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The Fund does not intend to make significant investments in lower
quality debt securities. The disclosure serves to make clear to investors that
the Fund has the flexibility to invest in lower quality debt securities.
James O'Connor
July 9, 2009
Page 3
Staff's Comment:
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6. INVESTMENT OBJECTIVES AND STRATEGIES: DURATION. If a principal investment
strategy of the Fund is duration, further describe this strategy.
Response:
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As this is a traditional equity income fund, we do not anticipate the
fund employing duration as a principal investment strategy. Because the Fund has
the flexibility to invest in debt securities, we have included disclosure
regarding duration as part of our Interest Rate Risk disclosure and believe this
disclosure is sufficient. It reads:
Interest Rate Risk--Interest rate risk refers to the risk that bond
prices generally fall as interest rates rise; conversely, bond
prices generally rise as interest rates fall. Specific bonds differ
in their sensitivity to changes in interest rates depending on
specific characteristics of each bond. A measure investors commonly
use to determine this sensitivity is called duration. The longer the
duration of a particular bond, the greater is its price sensitivity
to interest rate changes. Similarly, a longer duration portfolio of
securities has greater price sensitivity. Duration is determined by
a number of factors including coupon rate, whether the coupon is
fixed or floating, time to maturity, call or put features, and
various repayment features.
Staff's Comment:
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7. FUND MANAGEMENT: THE ADVISORS. Consider clarifying your disclosure regarding
your slate of sub-advisors. Specifically, consider stating that all listed
sub-advisors are under contract; however whether one of the sub-advisors manages
a particular Fund depends upon the investment objectives and strategies of that
Fund.
Response:
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We believe the disclosure covering the relationship between Invesco Aim
Advisors, Inc. (the "Advisor") and the affiliated sub-advisors listed in the
Fund's prospectus (the "Sub-Advisors"), which has been made in each registration
statement filed for every AIM Fund since the slate of sub-advisors was approved
by proxy, adequately reflects the relationship between the Advisor and the
Sub-Advisors.
It reads,
The following affiliates of the advisor (collectively, the
affiliated sub-advisors) serve as sub-advisors to the fund and may
be appointed by the advisor from time to time to provide
discretionary investment management services, investment advice,
and/or order execution services to the fund.....
James O'Connor
July 9, 2009
Page 4
Staff's Comment:
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8. FUND MANAGEMENT: THE ADVISORS. Include additional information in the
disclosure about the market timing and fair value pricing related litigation and
regulatory action, including an update on the current state of the litigation
and the settlement amount reached with the NYAG and the Commission. Consider too
removing the risk factor indicating that shareholders may react by redeeming
their investment in the fund.
Response:
--------
The Registrant believes that the disclosure is adequate; however, we
will take the comment under advisement in considering disclosure updates for the
prospectuses of all 102 AIM Funds in which this disclosure appears. All updated
information regarding the current status of the litigation and settlement
amounts are on page 73--74 of the Statement of Additional Information, which
contains disclosure about Pending Litigation and is cross referenced in the
section highlighted by the Staff. See too Schedule I-1 of the Statement of
Additional Information, which includes the list of all outstanding civil
litigation. We believe that the risk factor referenced in your comment remains
relevant due to the outstanding civil claims against the fund and various
affiliates and, for that reason, prefer to keep this risk disclosure in the
prospectus rather than move it to the SAI. Please note, this language has been
previously reviewed and approved by the Staff in 485(a) filings of this and the
other AIM Funds.
Staff's Comment:
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9. TIMING OF ORDERS. The disclosure regarding the timing of orders in the
Registrant's shareholder information section is confusing and problematic under
Rule 22c-1 of the 1940 Act.
Response:
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We believe the Registrant's disclosure regarding the timing of orders
is adequate and complies with Rule 22c-1 of the 1940 Act. Rule 22c-1 prohibits a
registered investment company from selling, redeeming or repurchasing its shares
except at a price based on the current net asset value of such shares which is
next computed after receipt of a tender of such security for redemption or of an
order to purchase or sell the share. Accordingly, the Registrant's timing of
orders disclosure reads:
The funds price purchase, exchange and redemption orders at the net
asset value calculated after the transfer agent receives an order in
good order.
Staff's Comment:
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10. TANDY REPRESENTATION. We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require. Since the
fund and its management are in possession of all facts relating to the fund's
disclosure, they are responsible for the accuracy and adequacy of the
disclosures they have made. In connection with responding to our comments,
please provide, in writing, a statement from the company acknowledging that: the
fund is responsible for the adequacy and accuracy of the disclosure in the
filings; Staff comments or changes to
James O'Connor
July 9, 2009
Page 5
disclosure in response to staff comments in the filings reviewed by the staff do
not foreclose the Commission from taking any action with respect to the filing;
and the fund may not assert this action as defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.
Response:
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In connection with the responses to the comments above, the Registrant
acknowledges the following:
- that the Registrant is responsible for the adequacy and accuracy
of the disclosure in their filings;
- that Staff comments or changes to disclosure in response to Staff
comments in the filings reviewed by the Staff do not foreclose
the Securities and Exchange Commission ("Commission") from taking
any action with respect to the filing; and
- that the Registrant may not assert Staff comments as a defense in
any proceeding initiated by the Commission or any person under
the federal securities laws of the United States.
Please do not hesitate to contact me at 713.214.5770 if you have any further
questions.
Very truly yours,
/s/ Melanie Ringold
Melanie Ringold