SCHEDULE 14A INFORMATION
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EXCHANGE ACT OF 1934
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AIM STOCK FUNDS
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AIM STOCK FUNDS
AIM DYNAMICS FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
December [__], 2007
Dear Shareholder:
AIM Stock Funds (the "Trust") will hold a Special Meeting of Shareholders
on February 29, 2008 in Houston, Texas. The purpose of the Meeting is to vote on
important proposals affecting the Trust's portfolio, AIM Dynamics Fund (the
"Fund"). This package contains important information about the proposals, a
proxy statement, simple instructions on how to vote by phone or via the
Internet, and a business reply envelope for you to vote by mail.
The Board of Trustees (the "Board") for the Fund has carefully considered
the proposals below, believes that they are in the best interests of the Fund
and its shareholders, and unanimously recommends that you vote FOR each of the
proposals. The enclosed proxy statement provides you with detailed information
on each proposal including how it will benefit shareholders.
The Board is requesting that you:
1. Elect 13 trustees to the Board, each of whom will serve until his or her
successor is elected and qualified.
2. Approve a new sub-advisory agreement for the Fund between A I M
Advisors, Inc. and various affiliated sub-advisers.
3. Approve changing certain fundamental investment restrictions of the Fund
to provide the Fund with more investment flexibility.
4. Approve making the investment objective of the Fund non-fundamental.
5. Approve an amendment to the Trust's Agreement and Declaration of Trust
that would permit the Board to terminate the Trust, the Fund or a share class
without a shareholder vote.
6. Approve an Agreement and Plan of Reorganization that provides for the
restructuring of the Fund as a new series portfolio of AIM Investment Securities
Funds, an existing open-end management investment company organized as a
Delaware statutory trust, the transfer of all of the Fund's assets and
liabilities to the new series portfolio and the termination of the Fund as a
designated series of AIM Stock Funds.
7. Transact any other business, not currently contemplated, that may
properly come before the Special Meeting, in the discretion of the proxies or
their substitutes.
Your vote is important. Please take a moment after reviewing the enclosed
materials to sign and return your proxy card in the enclosed postage paid return
envelope. If you attend the meeting, you may vote your shares in person. If you
expect to attend the meeting in person, or have questions, please notify us by
calling (800) 952-3502. You may also vote by telephone or through a website
established for that purpose by following the instructions that appear on the
enclosed proxy card. If we do not hear from you after a reasonable amount of
time, you may receive a telephone call from our proxy solicitor, Computershare
Fund Services, reminding you to vote your shares.
Sincerely,
/s/ Philip A. Taylor
- -------------------------------------
President and Principal Executive
Officer
AIM STOCK FUNDS
AIM DYNAMICS FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 29, 2008
To the Shareholders of AIM Dynamics Fund (the "Fund"):
The Board of Trustees (the "Board") of AIM Stock Funds (the "Trust") has
carefully considered the proposals below, believes that they are in the best
interests of the Fund and its shareholders, and unanimously recommends that you
vote FOR each of the proposals. The enclosed proxy statement provides you with
detailed information on each proposal including how it will benefit
shareholders.
We cordially invite you to attend our Special Meeting of Shareholders to:
1. Elect 13 trustees to the Board, each of whom will serve until his or her
successor is elected and qualified.
2. Approve a new sub-advisory agreement for the Fund between A I M
Advisors, Inc. and each of AIM Funds Management Inc.; INVESCO Asset Management
Deutschland, GmbH; INVESCO Asset Management Ltd.; INVESCO Asset Management
(Japan) Limited; INVESCO Australia Limited; INVESCO Global Asset Management
(N.A.), Inc.; INVESCO Hong Kong Limited; INVESCO Institutional (N.A.), Inc.; and
INVESCO Senior Secured Management, Inc.
3. Approve changing certain fundamental investment restrictions of the
Fund.
4. Approve making the investment objective of the Fund non-fundamental.
5. Approve an amendment to the Trust's Agreement and Declaration of Trust
that would permit the Board to terminate the Trust, the Fund or a share class
without a shareholder vote.
6. Approve an Agreement and Plan of Reorganization that provides for the
restructuring of the Fund as a new series portfolio of AIM Investment Securities
Funds, an existing open-end management investment company organized as a
Delaware statutory trust, the transfer of all of the Fund's assets and
liabilities to the new series portfolio and the termination of the Fund as a
designated series of AIM Stock Funds.
7. Transact any other business, not currently contemplated, that may
properly come before the Special Meeting, in the discretion of the proxies or
their substitutes.
1
We are holding the Special Meeting at 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 on February 29, 2008, at 3:00 p.m., Central Time.
Shareholders of record of the Fund as of the close of business on November
30, 2007 are entitled to notice of, and to vote at, the Special Meeting or any
adjournment or postponement of the Special Meeting.
WE REQUEST THAT YOU EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
THE ACCOMPANYING PROXY CARD. THE BOARD IS SOLICITING YOUR VOTE ON THE PROPOSALS
SET FORTH ABOVE. YOU MAY ALSO VOTE BY TELEPHONE OR THROUGH A WEBSITE ESTABLISHED
FOR THAT PURPOSE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY MATERIAL.
YOUR VOTE IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM AT THE SPECIAL
MEETING. YOU MAY REVOKE YOUR PROXY CARD AT ANY TIME BEFORE IT IS EXERCISED BY
EXECUTING AND SUBMITTING A REVISED PROXY CARD, BY GIVING WRITTEN NOTICE OF
REVOCATION TO THE TRUST'S SECRETARY OR BY VOTING IN PERSON AT THE SPECIAL
MEETING.
/s/ John M. Zerr
- -------------------------------------
Secretary
December ____, 2007
2
AIM STOCK FUNDS
AIM DYNAMICS FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 29, 2008
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
WHY DID WE SEND YOU THIS PROXY STATEMENT?
We are sending you this Proxy Statement and the enclosed proxy card on
behalf of the Fund because the Board of Trustees (the "Board") of the AIM Stock
Funds (the "Trust") is soliciting your proxy to vote at the Special Meeting of
Shareholders and at any adjournments or postponements of the Special Meeting
(collectively, the "Special Meeting"). This Proxy Statement provides you
information about the business to be conducted at the Special Meeting. You do
not need to attend the Special Meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy card or vote by telephone or
through a website established for that purpose.
The Trust intends to mail this Proxy Statement, the enclosed Notice of
Special Meeting of Shareholders and the enclosed proxy card on or about December
__, 2007 to all shareholders entitled to vote. Shareholders of record of any
class of the Fund as of the close of business on November 30, 2007 (the "Record
Date") are entitled to vote their respective shares at the Special Meeting. The
number of shares outstanding of each class of the Fund on the Record Date can be
found in Exhibit A. Each share of the Fund that you own entitles you to one vote
on each proposal set forth in the table below (a fractional share has a
fractional vote).
We have previously sent to shareholders the most recent annual report for
the Fund, including financial statements, and the most recent semiannual report
for the period after the annual report, if any. If you have not received such
report(s) or would like to receive an additional copy, please contact AIM
Investment Services, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046,
or call (800) 959-4246. We will furnish such report(s) free of charge.
WHEN AND WHERE WILL THE SPECIAL MEETING BE HELD?
We are holding the Special Meeting at 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 on February 29, 2008, at 3:00 p.m., Central Time.
WHAT ARE THE PROPOSALS TO BE VOTED ON AT THE SPECIAL MEETING?
Each of the proposals described in this proxy statement is designed to
benefit the Fund and its shareholders. In general, the proposals seek to
optimize the efficiency, flexibility and transparency of the operations of the
Fund and the delivery of investment management services to the Fund, and to
streamline the portfolio management operations of AIM and its affiliates.
1
The following table summarizes each proposal to be presented at the Special
Meeting and the page number on which the discussion of each proposal begins:
PROPOSAL PAGE NUMBER
- -------- -----------
1. To elect trustees.............................................. [___]
2. To approve a new sub-advisory agreement between A I M
Advisors, Inc. and various affiliated sub-advisers............. [___]
3. To approve changing the fundamental investment restrictions.... [___]
4. To approve making the investment objective non-fundamental..... [___]
5. To approve an amendment to the Trust's Agreement and
Declaration of Trust........................................... [___]
6. To approve an Agreement and Plan of Reorganization to
restructure the Fund as a new series portfolio of an existing
Delaware statutory trust....................................... [___]
7. To consider other matters...................................... [___]
HOW DO I VOTE IN PERSON?
If you do attend the Special Meeting, were the record owner of your shares
on the Record Date, and wish to vote in person, we will provide you with a
ballot prior to the vote. However, if your shares were held in the name of your
broker, bank or other nominee, you are required to bring a letter from the
nominee indicating that you are the beneficial owner of the shares on the Record
Date and authorizing you to vote. The letter must also state whether before the
Special Meeting you authorized a proxy to vote for you and if so, how you
instructed such proxy to vote. Please call the Trust at (800) 952-3502 if you
plan to attend the Special Meeting.
HOW DO I VOTE BY PROXY?
Whether you plan to attend the Special Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Special Meeting or to vote at the Special Meeting if you choose to do so.
If you properly complete and sign your proxy card and send it to us in time
to vote at the Special Meeting, your "proxy" (the individual(s) named on your
proxy card) will vote your shares as you have directed. If you sign your proxy
card but do not make specific choices, your proxy will vote your shares as
recommended by the Board as follows and in accordance with management's
recommendation on other matters:
- FOR the election of all 13 nominees for trustee of the Trust.
2
- FOR the approval of a new sub-advisory agreement for the Fund between
A I M Advisors, Inc. and various affiliated sub-advisers.
- FOR changing certain fundamental investment restrictions of the Fund.
- FOR making the investment objective of the Fund non-fundamental.
- FOR the approval of an amendment to the Trust's Agreement and
Declaration of Trust.
- FOR the proposal to approve an Agreement and Plan of Reorganization
(the "Plan") to restructure the Fund as a new series portfolio of an
existing Delaware statutory trust.
Your proxy will have the authority to vote and act on your behalf at any
adjournment or postponement of the Special Meeting.
Shareholders may also transact any other business not currently
contemplated that may properly come before the Special Meeting in the discretion
of the proxies or their substitutes.
HOW DO I VOTE BY TELEPHONE OR THE INTERNET?
You may vote your shares by telephone or through a website established for
that purpose by following the instructions that appear on the proxy card
accompanying this Proxy Statement.
MAY I REVOKE MY VOTE?
If you authorize a proxy to vote for you, you may revoke the authorization
at any time before it is exercised. You can do this in one of four ways:
- You may send in another proxy card at a later date, prior to the
Shareholder Meeting.
- If you submitted a proxy by telephone, via the Internet or via an
alternative method of voting permitted by your broker, you may submit
another proxy by telephone, via the Internet, or via such alternative
method of voting, or send in another proxy with a later date.
- You may notify the Trust's Secretary in writing before the Special
Meeting that you have revoked your proxy.
- You may vote in person at the Special Meeting, as set forth above
under the heading, "How Do I Vote in Person?".
WHAT IS THE QUORUM REQUIREMENT?
A quorum of shareholders is necessary to hold a valid meeting. A quorum
will exist for Proposals 1 and 5 for the Trust if shareholders entitled to vote
one-third of the issued and
3
outstanding shares of the Trust on the Record Date are present at the Special
Meeting in person or by proxy. A quorum will exist for Proposals 2, 3, 4 and 6
for the Fund if shareholders entitled to vote one-third of the issued and
outstanding shares of the Fund on the Record Date are present at the Special
Meeting in person or by proxy.
Under rules applicable to broker-dealers, if your broker holds your shares
in its name, we expect that the broker will be entitled to vote your shares on
Proposal 1 even if it has not received instructions from you. However, your
broker will not be entitled to vote on Proposals 2, 3, 4, 5 and 6 unless it has
received instructions from you. A "broker non-vote" occurs when a broker has not
received voting instructions from a shareholder and is barred from voting the
shares without shareholder instructions because the proposal is considered to be
non-routine. Because Proposals 2, 3, 4, 5 and 6 are considered non-routine, your
broker will not be permitted to vote your shares if it has not received
instructions from you, and the shares will be considered "broker non-votes." As
a result, we urge you to complete and send in your proxy or voting instructions
so your vote can be counted.
Abstentions and broker non-votes will count as shares present at the
Special Meeting for purposes of establishing a quorum.
COULD THERE BE AN ADJOURNMENT OF THE SPECIAL MEETING?
If a quorum is not present at the Special Meeting or a quorum is present
but sufficient votes to approve the proposal are not received, the persons named
as proxies may propose one or more adjournments of the Special Meeting to allow
for further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Special
Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote "FOR" the proposal in favor of such an
adjournment and will vote those proxies required to be voted "AGAINST" the
proposal against such an adjournment. If a quorum is present but sufficient
votes to approve a proposal are not received, a shareholder vote may be taken on
other proposals described in this Proxy Statement prior to any adjournment if
sufficient votes have been received for such other proposals.
WHAT IS THE VOTE NECESSARY TO APPROVE EACH PROPOSAL?
PROPOSAL 1. The affirmative vote of a plurality of votes cast by the
shareholders of the Trust is necessary to elect trustees of the Trust at the
Special Meeting, meaning that the trustee nominee with the most affirmative
votes for a particular slot is elected for that slot. In an uncontested election
for trustees, the plurality requirement is not a factor. Abstentions will not
count as votes cast and will have no effect on the outcome of this proposal. We
expect that brokers will be entitled to vote on this proposal, but any broker
non-vote will have no effect on the outcome of this proposal.
PROPOSALS 2, 3 AND 4. Approval of Proposals 2, 3 and 4 requires the lesser
of (a) the affirmative vote of 67% or more of the voting securities of the Fund
present or represented by proxy at the Special Meeting, if the holders of more
than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (b) the affirmative vote of more than 50% of the
outstanding voting securities of the Fund. Abstentions and broker non-votes are
4
counted as present but are not considered votes cast at the Special Meeting. As
a result, they have the same effect as a vote against Proposals 2, 3 and 4
because approval of Proposals 2, 3 and 4 requires the affirmative vote of a
percentage of the voting securities present or represented by proxy or a
percentage of the outstanding voting securities.
PROPOSAL 5. Approval of Proposal 5 requires the affirmative vote of a
majority of the votes cast by shareholders of the Trust at the Special Meeting.
Abstentions and broker non-votes will not count as votes cast and will have no
effect on the outcome of this proposal.
PROPOSAL 6. Approval of Proposal 6 requires the affirmative vote of a
majority of the votes cast by shareholders of the Fund at the Special Meeting.
Abstentions and broker non-votes will not count as votes cast and will have no
effect on the outcome of this proposal.
HOW WILL PROXIES BE SOLICITED AND WHO WILL PAY?
The Trust has engaged the services of Computershare Fund Services
("Solicitor") to assist in the solicitation of proxies for the Special Meeting.
Solicitor's costs are estimated to be in the aggregate approximately $________.
The Trust expects to solicit proxies principally by mail, but the Trust or
Solicitor may also solicit proxies by telephone, facsimile or personal
interview. The Trust's officers will not receive any additional or special
compensation for any such solicitation. [EACH FUND/AIM] will pay [TO BE
DETERMINED] the cost of soliciting proxies, the printing and mailing of this
Proxy Statement, the attached Notice of Special Meeting of Shareholders, the
enclosed proxy card, and any further solicitation.
WILL ANY OTHER MATTERS BE VOTED ON AT THE SPECIAL MEETING?
Management is not aware of any matters to be presented at the Special
Meeting other than those discussed in this Proxy Statement. If any other matters
properly come before the Special Meeting, the shares represented by proxies will
be voted on those matters in accordance with management's recommendation.
HOW MAY A SHAREHOLDER PROPOSAL BE SUBMITTED?
As a general matter, the Fund does not hold regular meetings of
shareholders. Shareholder proposals for consideration at a meeting of
shareholders of the Fund should be submitted to the Trust at the address set
forth on the first page of this Proxy Statement. To be considered for
presentation at a meeting of shareholders, the Trust must receive proposals
within a reasonable time, as determined by the Trust's management, before proxy
materials are prepared for the meeting. Such proposals also must comply with
applicable law.
For a discussion of procedures that must be followed for a shareholder to
nominate an individual as a trustee, please refer to the section of this Proxy
Statement entitled "Proposal 1 - What Are the Committees of the Board? -
Governance Committee."
5
PROPOSAL 1
ELECTION OF TRUSTEES
WHAT IS THE STRUCTURE OF THE BOARD OF TRUSTEES?
The Board currently consists of 14 persons. Twelve of the current trustees
are "independent," meaning they are not "interested persons" of the Trust within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
Two of the current trustees are "interested persons" because of their business
and financial relationships with the Trust and A I M Advisors, Inc. ("AIM"), the
Fund's investment adviser, and/or AIM's indirect parent, Invesco Ltd.
("INVESCO").
You are being asked to vote on the election of trustees to the Board of the
Trust so that, in the event that Proposal 6 is not approved by shareholders, the
Trust will have newly elected trustees.
WHO ARE THE NOMINEES FOR TRUSTEES?
The Trust's Governance Committee (which consists solely of independent
trustees) has approved the nomination of the 11 current independent trustees, as
set forth below, to serve as trustee until his or her successor is elected and
qualified. The Trust's full Board has approved the nomination of the two current
interested trustees, as set forth below. Ruth H. Quigley, a current trustee, is
retiring effective as of December 31, 2007.
Each nominee who is a current trustee serves as a trustee of the 16
registered investment companies comprising the mutual funds advised by AIM (the
"AIM Funds"). Each nominee who is a current trustee oversees 104 portfolios that
comprise the AIM Funds. The business address of each nominee who is a current
trustee is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
If elected, each nominee would continue to oversee a total of 16 registered
investment companies currently comprising 104 portfolios.
Each of the nominees is willing to serve as a trustee. However, if a
nominee becomes unavailable for election, proxies will vote for another nominee
proposed by the Board or, as an alternative, the Board may keep the position
vacant or reduce the number of trustees.
6
NOMINEES WHO CURRENTLY ARE INDEPENDENT TRUSTEES
OTHER
NAME AND YEAR TRUSTEE PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
OF BIRTH SINCE NAME OF TRUST DURING PAST 5 YEARS HELD
- --------------------- ------- --------------- -------------------------------- -------------------
Bob R. Baker 1983 AIM Stock Funds Retired None
(1936)
Frank S. Bayley 2003 AIM Stock Funds Retired Badgley Funds, Inc.
(1939) Formerly: Partner, law firm of (registered
Baker & McKenzie investment company)
(2 portfolios)
James T. Bunch 2000 AIM Stock Funds Founder, Green, Manning & Bunch None
(1942) Ltd. (investment banking firm);
and Director, Policy Studies,
Inc. and Van Gilder Insurance
Corporation
Bruce L. Crockett 2003 AIM Stock Funds Chairman, Crockett Technology ACE Limited
(1944) Associates (technology (insurance
consulting company) company); Captaris,
Inc. (unified
messaging provider)
Albert R. Dowden 2003 AIM Stock Funds Director of a number of public None
(1941) and private business
corporations, including the Boss
Group, Ltd. (private investment
and management), Reich & Tang
Funds (Chairman) (registered
investment company) (7
portfolios), Daily Income Fund
(4 portfolios), California Daily
Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free
Income Fund, Inc. and New Jersey
Daily Municipal Income Fund,
Inc., Annuity and Life Re
(Holdings), Ltd. (insurance
company), and Homeowners of
America Holding Corporation
(property casualty company)
7
OTHER
NAME AND YEAR TRUSTEE PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
OF BIRTH SINCE NAME OF TRUST DURING PAST 5 YEARS HELD
- --------------------- ------- --------------- -------------------------------- -------------------
Formerly: Director, CompuDyne
Corporation (provider of
products and services to the
public security market);
Director, President and Chief
Executive Officer, Volvo Group
North America, Inc.; Senior Vice
President, AB Volvo; Director of
various affiliated Volvo
companies; and Director,
Magellan Insurance Company
Jack M. Fields 2003 AIM Stock Funds Chief Executive Officer, Twenty Administaff
(1952) First Century Group, Inc.
(government affairs company);
Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P.
(cattle, hunting, corporate
entertainment); and Discovery
Global Education Fund
(non-profit)
Formerly: Chief Executive
Officer, Texana Timber LP
(sustainable forestry company)
Carl Frischling 2003 AIM Stock Funds Partner, law firm of Kramer Director, Reich &
(1937) Levin Naftalis and Frankel LLP Tang Funds (7
portfolios)
Prema Mathai-Davis 2003 AIM Stock Funds Formerly: Chief Executive None
(1950) Officer, YWCA of the USA
Lewis F. Pennock 2003 AIM Stock Funds Partner, law firm of Pennock & None
(1942) Cooper
Larry Soll, Ph.D. 1997 AIM Stock Funds Retired None
(1942)
Raymond Stickel, Jr. 2005 AIM Stock Funds Retired None
(1944)
Formerly: Partner, Deloitte &
Touche and Director, Mainstay VP
Series Funds, Inc. (25
portfolios)
8
NOMINEES WHO CURRENTLY ARE INTERESTED PERSONS
NAME, YEAR OF
BIRTH AND OTHER
POSITION(S) HELD TRUSTEE PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
WITH THE TRUST SINCE NAME OF TRUST DURING PAST 5 YEARS HELD
- --------------------- ------- --------------- -------------------------------- -------------------
Martin L. Flanagan(1) 2007 AIM Stock Funds Director, Chief Executive None
(1960) Officer and President, Invesco
Ltd. (ultimate parent of AIM
and a global investment
management firm); Director,
Chief Executive Officer and
President, INVESCO PLC (parent
of AIM and a global investment
management firm); Chairman, A
I M Advisors, Inc. (registered
investment adviser); and
Director, Chairman, Chief
Executive Officer and
President, IVZ Inc. (holding
company) and INVESCO North
American Holdings, Inc.
(holding company); Chairman
and President, INVESCO Group
Services, Inc. (service
provider); Trustee, The AIM
Family of Funds(R); Vice
Chairman, Investment Company
Institute; and Member of
Executive Board, SMU Cox
School of Business
Formerly: President, Co-Chief
Executive Officer, Co-President,
Chief Operating Officer and
Chief Financial Officer,
Franklin Resources, Inc. (global
investment management
organization) and Chairman,
Investment Company Institute
- ----------
(1) Mr. Flanagan was appointed as Trustee of the Trust on February 24, 2007.
Mr. Flanagan is considered an interested person of the Fund because he is
an officer of the adviser to the Fund, and an officer and a director of
INVESCO, parent of the adviser to the Fund.
9
NAME, YEAR OF
BIRTH AND OTHER
POSITION(S) HELD TRUSTEE PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
WITH THE TRUST SINCE NAME OF TRUST DURING PAST 5 YEARS HELD
- --------------------- ------- --------------- -------------------------------- -------------------
Philip A. Taylor(2) 2006 AIM Stock Funds Director, Chief Executive None
(1954) Officer and President, AIM
Mutual Fund Dealer Inc.
(registered broker dealer), A I
M Advisors, Inc., AIM Funds
Management Inc. d/b/a INVESCO
Enterprise Services (registered
investment adviser and
registered transfer agent) and
1371 Preferred Inc. (holding
company); Director, Chairman,
Chief Executive Officer and
President, A I M Management
Group Inc. and A I M Capital
Management, Inc. (registered
investment adviser); Director
and President, INVESCO Funds
Group, Inc. (registered
investment adviser and
registered transfer agent) and
AIM GP Canada Inc. (general
partner for limited
partnership); Director, A I M
Distributors, Inc. (registered
broker dealer); Director and
Chairman, AIM Investment
Services, Inc. (registered
transfer agent) and INVESCO
Distributors, Inc. (registered
broker dealer); Director,
President and Chairman, IVZ
Callco Inc. (holding company),
INVESCO Inc. (holding company)
and AIM Canada Holdings Inc.
(holding company); Director and
Chief Executive Officer, AIM
Trimark Corporate Class Inc.
(formerly AIM Trimark Global
Fund Inc.) (corporate mutual
fund company) and AIM Trimark
Canada Fund Inc. (corporate
mutual fund company); Trustee,
President
- ----------
(2) Mr. Taylor is considered an interested person of the Fund because he is an
officer and a director of the adviser to, and a director of the principal
underwriter of, the Fund.
10
NAME, YEAR OF
BIRTH AND OTHER
POSITION(S) HELD TRUSTEE PRINCIPAL OCCUPATION(S) TRUSTEESHIP(S)
WITH THE TRUST SINCE NAME OF TRUST DURING PAST 5 YEARS HELD
- --------------------- ------- --------------- -------------------------------- -------------------
and Principal Executive Officer,
The AIM Family of Funds(R)
(other than AIM Treasurer's
Series Trust, Short-Term
Investments Trust and Tax-Free
Investments Trust); Trustee and
Executive Vice President, The
AIM Family of Funds(R) (AIM
Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust only)
; and Manager, PowerShares
Capital Management LLC
Formerly: Director and Chairman,
Fund Management Company;
President and Principal
Executive Officer, The AIM
Family of Funds(R) (AIM
Treasurer's Series Trust,
Short-Term Investments Trust and
Tax-Free Investments Trust
only); Chairman, AIM Canada
Holdings, Inc.; President, AIM
Trimark Global Fund Inc. and AIM
Trimark Canada Fund Inc.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 1?
The Board, including the independent trustees of the Board, unanimously
recommends that you vote "FOR" the 13 nominees listed above.
WHAT ARE THE COMMITTEES OF THE BOARD?
The Board currently has six standing committees: an Audit Committee, a
Compliance Committee, a Governance Committee, an Investments Committee, a
Special Market Timing Litigation Committee and a Valuation Committee. Effective
January 1, 2008, the Board's Valuation Committee will be reconstituted as a
Valuation, Distribution and Proxy Oversight Committee.
11
AUDIT COMMITTEE
The Audit Committee is separately designated and established in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Further, the Audit Committee is comprised entirely of trustees
who are not "interested persons" of the Fund as defined in Section 2(a)(19) of
the 1940 Act. The current members of the Audit Committee are James T. Bunch,
Bruce L. Crockett, Lewis F. Pennock, Dr. Larry Soll, Raymond Stickel, Jr.
(Chair), and Ruth H. Quigley (Vice Chair). Effective January 1, 2008, Mr. Bunch
will replace Miss Quigley as the Vice Chair of each Audit Committee.
The Audit Committee's primary purposes are to: (i) oversee qualifications,
independence and performance of the independent registered public accountants
(the "independent auditors") for the Fund; (ii) appoint independent auditors for
the Fund; (iii) pre-approve all permissible non-audit services that are provided
to the Fund by their independent auditors to the extent required by Section
10A(h) and (i) of the Exchange Act; (iv) pre-approve, in accordance with Rule
2-01(c)(7)(ii) of Regulation S-X, certain non-audit services provided by the
Fund's independent auditors to the Fund's investment adviser and certain other
affiliated entities; (v) review the audit and tax plans prepared by the
independent auditors; (vi) review the Fund's audited financial statements; (vii)
review the process that management uses to evaluate and certify disclosure
controls and procedures in Form N-CSR; (viii) review the process for preparation
and review of the Fund's shareholder reports; (ix) review certain tax procedures
maintained by the Fund; (x) review modified or omitted officer certifications
and disclosures; (xi) review any internal audits; (xii) establish procedures
regarding questionable accounting or auditing matters and other alleged
violations; (xiii) set hiring policies for employees and proposed employees of
the Fund who are employees or former employees of the independent auditors; and
(xiv) remain informed (a) of the Fund's accounting systems and controls, (b)
regulatory changes and new accounting pronouncements that affect the Fund's net
asset value calculations and financial statement reporting requirements, and (c)
communications with regulators regarding accounting and financial reporting
matters that pertain to the Fund.
COMPLIANCE COMMITTEE
The current members of the Compliance Committee are Frank S. Bayley, Mr.
Crockett (Chair), Albert R. Dowden (Vice Chair) and Mr. Stickel.
The Compliance Committee is responsible for: (i) recommending to the Board
and the independent trustees the appointment, compensation and removal of the
AIM Fund's Chief Compliance Officer; (ii) recommending to the independent
trustees the appointment, compensation and removal of the AIM Fund's Senior
Officer appointed pursuant to the terms of the Assurances of Discontinuance
entered into by the New York Attorney General, AIM and INVESCO Funds Group, Inc.
("IFG"); (iii) recommending to the independent trustees the appointment and
removal of AIM's independent Compliance Consultant (the "Compliance Consultant")
and reviewing the report prepared by the Compliance Consultant upon its
compliance review of AIM (the "Report") and any objections made by AIM with
respect to the Report; (iv) reviewing any report prepared by a third party who
is not an interested person of AIM, upon the conclusion by such third party of a
compliance review of AIM; (v) reviewing all reports on compliance matters from
the AIM Fund's Chief Compliance Officer, (vi) reviewing
12
all recommendations made by the Senior Officer regarding AIM's compliance
procedures, (vii) reviewing all reports from the Senior Officer of any
violations of state and federal securities laws, the Colorado Consumer
Protection Act, or breaches of AIM's fiduciary duties to Fund shareholders and
of AIM's Code of Ethics; (viii) overseeing all of the compliance policies and
procedures of the AIM Funds and their service providers adopted pursuant to Rule
38a-1 of the 1940 Act; (ix) from time to time, reviewing certain matters related
to redemption fee waivers and recommending to the Board whether or not to
approve such matters; (x) receiving and reviewing quarterly reports on the
activities of AIM's Internal Compliance Controls Committee; (xi) reviewing all
reports made by AIM's Chief Compliance Officer; (xii) reviewing and recommending
to the independent trustees whether to approve procedures to investigate matters
brought to the attention of AIM's ombudsman; (xiii) risk management oversight
with respect to the AIM Funds and, in connection therewith, receiving and
overseeing risk management reports from INVESCO that are applicable to the AIM
Funds or their service providers; and (xiv) overseeing potential conflicts of
interest that are reported to the Compliance Committee by AIM, the Chief
Compliance Officer, the Senior Officer and/or the Compliance Consultant.
GOVERNANCE COMMITTEE
The Governance Committee is comprised entirely of trustees who are not
"interested persons" of the Fund as defined in Section 2(a)(19) of the 1940 Act.
The current members of the Governance Committee are Messrs. Bob R. Baker,
Bayley, Dowden (Chair), Jack M. Fields (Vice Chair), Carl Frischling and Dr.
Prema Mathai-Davis.
The Governance Committee is responsible for: (i) nominating persons who
will qualify as independent trustees for (a) election as trustees in connection
with meetings of shareholders of the AIM Funds that are called to vote on the
election of trustees, (b) appointment by the Board to fill vacancies that arise
between meetings of shareholders; (ii) reviewing the size of the Board, and
recommending to the Board whether the size of the Board shall be increased or
decreased; (iii) nominating the Chair of the Board; (iv) monitoring the
composition of the Board and each committee of the Board, and monitoring the
qualifications of all trustees; (v) recommending persons to serve as members of
each committee of the Board (other than the Compliance Committee), as well as
persons who shall serve as the chair and vice chair of each such committee; (vi)
reviewing and recommending the amount of compensation payable to the independent
trustees; (vii) overseeing the selection of independent legal counsel to the
independent trustees; (viii) reviewing and approving the compensation paid to
independent legal counsel to the independent trustees; (ix) reviewing and
approving the compensation paid to counsel and other advisers, if any, to the
Committees of the Board; and (x) reviewing as they deem appropriate
administrative and/or logistical matters pertaining to the operations of the
Board.
The Governance Committee will consider nominees recommended by a
shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Governance Committee or the Board, as applicable, shall make the
final determination of persons to be nominated. The Governance Committee will
evaluate nominees recommended by a shareholder to serve as trustees in the same
manner as they evaluate nominees identified by the Governance Committee.
13
In seeking out potential nominees and in nominating persons to serve as
independent trustees of the AIM Funds, the Governance Committee will not
discriminate against any person based on his or her race, religion, national
origin, gender, physical disability and other factors not relevant to the
person's ability to serve as an independent trustee. Evaluation by the
Governance Committee of a person as a potential nominee to serve as an
independent trustee, including a person nominated by a shareholder, should
result in the following findings by the Governance Committee: (i) that, if such
nominee is elected or appointed, at least 75% of the trustees will be
independent trustees; (ii) that the person is otherwise qualified under
applicable laws and regulations to serve as a trustee of the AIM Funds; (iii)
that the person is willing to serve, and willing and able to commit the time
necessary for the performance of the duties of a trustee; (iv) with respect to
potential nominees who will serve as members of the Audit Committee of the Fund,
that the person meets the requirements set forth in the AIM Fund's Audit
Committee charter for service on such Committee; (v) that the person can make a
positive contribution to the Board and the Fund, with consideration being given
to the person's business experience, education and such other factors as the
Governance Committee may consider relevant; (vi) that the person is of good
character and high integrity; and (vii) that the person has desirable
personality traits including independence, leadership and the ability to work
with the other members of the Board.
Consistent with the 1940 Act, the Governance Committee can consider
recommendations from management in its evaluation process.
Notice procedures set forth in the Trust's bylaws require that any
shareholder of the Fund desiring to nominate a trustee for election at a
shareholder meeting must submit to the Trust's Secretary the nomination in
writing not later than the close of business on the later of the 90th day prior
to such shareholder meeting or the tenth day following the day on which public
announcement is made of the shareholder meeting and not earlier than the close
of business on the 120th day prior to the shareholder meeting. The notice must
set forth: (i) as to each person whom the shareholder proposes to nominate for
election or reelection as a trustee all information relating to such person that
is required to be disclosed in solicitations of proxies for election of trustees
in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A of the Securities Exchange Act of 1934 (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a trustee if elected); and (ii) as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination is made:
(a) the name and address of such shareholder, as they appear on the Trust's
books, and of such beneficial owner; and (b) the number of shares of each series
portfolio of the Trust which are owned of record or beneficially by such
shareholder and such beneficial owner.
A current copy of the Governance Committee's Charter is available at
http://www.aiminvestments.com. Go to this site, access the About Us tab, and
click on Governance Committees' Charter.
INVESTMENTS COMMITTEE
The current members of the Investments Committee are Messrs. Baker (Vice
Chair), Bayley (Chair), Bunch, Crockett, Dowden, Fields, Martin L. Flanagan,
Frischling, Pennock, Stickel, Philip A. Taylor, Drs. Mathai-Davis (Vice Chair)
and Soll, and Miss Quigley (Vice
14
Chair). Effective January 1, 2008, Dr. Soll will replace Miss Quigley as a Vice
Chair of each Investments Committee.
The Investments Committee's primary purpose is to: (i) assist the Board in
its oversight of the investment management services provided by AIM as well as
any sub-advisers; and (ii) review all proposed and existing advisory and
sub-advisory arrangements for the AIM Funds, and to recommend what action the
full Board and the independent trustees take regarding the approval of all such
proposed arrangements and the continuance of all such existing arrangements.
The Investments Committee has established three Sub-Committees. Each
Sub-Committee is responsible for: (i) reviewing the performance, fees and
expenses of the AIM Funds that have been assigned to a particular Sub-Committee
(for each Sub-Committee, the "Designated Funds"), unless the Investments
Committee takes such action directly; (ii) reviewing with the applicable
portfolio managers from time to time the investment objective(s), policies,
strategies and limitations of the Designated Funds; (iii) evaluating the
investment advisory and sub-advisory arrangements in effect or proposed for the
Designated Funds, unless the Investments Committee takes such action directly;
(iv) being familiar with the registration statements and periodic shareholder
reports applicable to their Designated Funds; and (v) such other
investment-related matters as the Investments Committee may delegate to the
Sub-Committee from time to time.
SPECIAL MARKET TIMING LITIGATION COMMITTEE
The current members of the Special Market Timing Litigation Committee are
Messrs. Bayley, Bunch (Chair), Crockett and Dowden (Vice Chair).
The Special Market Timing Litigation Committee is responsible: (i) for
receiving reports from time to time from management, counsel for management,
counsel for the AIM Funds and special counsel for the independent trustees, as
applicable, related to (a) the civil lawsuits, including purported class action
and shareholder derivative suits, that have been filed against the AIM Funds
concerning alleged excessive short term trading in shares of the AIM Funds
("market timing") and (b) the civil enforcement actions and investigations
related to market timing activity in the AIM Funds that were settled with
certain regulators, including without limitation the SEC, the New York Attorney
General and the Colorado Attorney General, and for recommending to the
independent trustees what actions, if any, should be taken by the AIM Funds in
light of all such reports; (ii) for overseeing the investigation(s) on behalf of
the independent trustees by special counsel for the independent trustees and the
independent trustees' financial expert of market timing activity in the AIM
Funds, and for recommending to the independent trustees what actions, if any,
should be taken by the AIM Funds in light of the results of such
investigation(s); (iii) for (a) reviewing the methodology developed by AIM's
Independent Distribution Consultant (the "Distribution Consultant") for the
monies ordered to be paid under the settlement order with the SEC, and making
recommendations to the independent trustees as to the acceptability of such
methodology and (b) recommending to the independent trustees whether to consent
to any firm with which the Distribution Consultant is affiliated entering into
any employment, consultant, attorney-client, auditing or other professional
relationship with AIM, or any of its present or former affiliates, directors,
officers, employees or agents acting in
15
their capacity as such for the period of the Distribution Consultant's
engagement and for a period of two years after the engagement; and (iv) for
taking reasonable steps to ensure that any AIM Fund which the Special Market
Timing Litigation Committee determines was harmed by improper market timing
activity receives what the Special Market Timing Litigation Committee deems to
be full restitution.
VALUATION COMMITTEE (IN PLACE PRIOR TO JANUARY 1, 2008)
The current members of the Valuation Committee are Messrs. Bunch, Pennock
(Vice Chair), Taylor, Dr. Soll, and Miss Quigley (Chair).
The Valuation Committee is responsible for: (i) developing a sufficient
knowledge of the valuation process and of AIM's Procedures for Valuing
Securities (Pricing Procedures) (the "Pricing Procedures") in order to carry out
their responsibilities; (ii) periodically reviewing information provided by AIM
or other advisers regarding industry developments in connection with valuation
and pricing, and making recommendations to the Board with respect to the Pricing
Procedures based upon such review; (iii) reviewing the reports described in the
Pricing Procedures and other information from AIM regarding fair value
determinations made pursuant to the Pricing Procedures by AIM's internal
valuation committee, and reporting to and making recommendations to the Board in
connection with such reports; (iv) receiving the reports of AIM's internal
valuation committee requesting approval of any changes to pricing vendors or
pricing methodologies as required by the Pricing Procedures, receiving the
annual report of AIM evaluating the pricing vendors, and approving changes to
pricing vendors and pricing methodologies as provided in the Pricing Procedures
and recommending the pricing vendors for approval by the Board annually; (v)
upon request of AIM, assisting AIM's internal valuation committee and/or the
Board in resolving particular fair valuation issues; (vi) receiving any reports
of concerns by AIM's internal valuation committee regarding actual or potential
conflicts of interest by investment personnel or others that could color their
input or recommendations regarding pricing issues, and receiving information
from AIM disclosing differences between valuation and pricing procedures used
for the AIM Funds and private funds, if any, advised by AIM for which AIM Fund
administration has exclusive accounting responsibility, and the reasons for such
differences; and (vii) in each of the foregoing areas, making regular reports to
the Board.
VALUATION, DISTRIBUTION AND PROXY OVERSIGHT COMMITTEE (EFFECTIVE JANUARY 1,
2008)
The Board has appointed Messrs. Baker, Bunch, Fields, Frischling (Chair),
Pennock (Vice Chair), and Taylor, and Drs. Mathai-Davis and Soll to be the
members of the Valuation, Distribution and Proxy Oversight Committee, effective
January 1, 2008.
The primary purposes of the Valuation, Distribution and Proxy Oversight
Committee are: (a) to address issues requiring action or oversight by the Board
of the AIM Funds (i) in the valuation of the AIM Funds' portfolio securities
consistent with the Pricing Procedures, (ii) in the oversight of creation and
maintenance by the principal underwriter of the AIM Funds of an effective
distribution and marketing system to build and maintain an adequate asset base
and to create and maintain economies of scale for the AIM Funds, (iii) in the
review of existing distribution arrangements for the AIM Funds under Rule 12b-1
and Section 15 of the 1940 Act,
16
and (iv) in the oversight of proxy voting on portfolio securities of the AIM
Funds; and (b) to make regular reports to the full Boards of the AIM Funds.
The Valuation, Distribution and Proxy Oversight Committee is responsible
for: (a) with regard to valuation, (i) developing an understanding of the
valuation process and the Pricing Procedures, (ii) reviewing the Pricing
Procedures and making recommendations to the full Boards with respect thereto,
(iii) reviewing the reports described in the Pricing Procedures and other
information from AIM regarding fair value determinations made pursuant to the
Pricing Procedures by AIM's internal valuation committee and making reports and
recommendations to the full Boards with respect thereto, (iv) receiving the
reports of AIM's internal valuation committee requesting approval of any changes
to pricing vendors or pricing methodologies as required by the Pricing
Procedures and the annual report of AIM evaluating the pricing vendors,
approving changes to pricing vendors and pricing methodologies as provided in
the Pricing Procedures, and recommending annually the pricing vendors for
approval by the full Boards; (v) upon request of AIM, assisting AIM's internal
valuation committee or the full Boards in resolving particular fair valuation
issues; (vi) reviewing the reports described in the Procedures for Determining
the Liquidity of Securities (the "Liquidity Procedures") and other information
from AIM regarding liquidity determinations made pursuant to the Liquidity
Procedures by AIM and making reports and recommendations to the full Boards with
respect thereto, and (vii) overseeing actual or potential conflicts of interest
by investment personnel or others that could affect their input or
recommendations regarding pricing or liquidity issues; (b) with regard to
distribution, (i) developing an understanding of mutual fund distribution and
marketing channels and legal, regulatory and market developments regarding
distribution, (ii) reviewing periodic distribution and marketing determinations
and annual approval of distribution arrangements and making reports and
recommendations to the full Boards with respect thereto, and (iii) reviewing
other information from the principal underwriter to the AIM Funds regarding
distribution and marketing of the AIM Funds and making recommendations to the
full Boards with respect thereto; and (c) with regard to proxy voting, (i)
overseeing the implementation of the Proxy Voting Guidelines (the "Guidelines")
and the Proxy Policies and Procedures (the "Proxy Procedures") by AIM and other
advisers, reviewing the Quarterly Proxy Voting Report and making recommendations
to the full Boards with respect thereto, (ii) reviewing the Guidelines and the
Proxy Procedures and information provided by AIM or other advisers regarding
industry developments and best practices in connection with proxy voting and
making recommendations to the full Boards with respect thereto, and (iii) in
implementing its responsibilities in this area, assisting AIM in resolving
particular proxy voting issues.
HOW OFTEN DID THE BOARD AND ITS COMMITTEES MEET?
The following table sets forth information regarding the number of meetings
held by the Board and each committee of the Board for the Trust's most recently
completed fiscal year. All of the current trustees then serving attended at
least 75% of the meetings of the Board or applicable committee held during the
most recent fiscal year.
17
SPECIAL MARKET
TIMING
AUDIT COMPLIANCE GOVERNANCE INVESTMENTS LITIGATION VALUATION
BOARD COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
----- --------- ---------- ---------- ----------- -------------- ---------
AIM STOCK FUNDS(1) 9 6 7 8 6 1 5
- ----------
(1) Information disclosed is for the fiscal year ended July 31, 2007.
The Fund normally does not hold annual shareholders' meetings; however, to
the extent that the Fund does hold annual shareholder meetings, the trustees are
encouraged, but not required to attend such meetings.
HOW DO SHAREHOLDERS COMMUNICATE WITH THE BOARD?
The Board provides a process for shareholders to send communications to the
Board. If any shareholder wishes to communicate with the Board or with an
individual trustee, such shareholder should send his, her or its communications
to Ivy B. McLemore, Senior Vice President, Corporate Communications.
Communications made to Mr. McLemore may be communicated by telephone, e-mail or
regular mail to the following address: A I M Management Group Inc., 11 Greenway
Plaza, Suite 100, Houston, TX 77046, (713) 214-1904,
ivy.mclemore@aiminvestments.com. All shareholder communications received by Mr.
McLemore shall be promptly forwarded to the Manager of Corporate Secretarial
Services of A I M Management Group Inc. who shall then promptly forward such
shareholder communications to the individual trustee of the Fund to whom they
were addressed or to the full Board.
WHAT ARE TRUSTEES AND OFFICERS PAID FOR THEIR SERVICES?
Each trustee who is not affiliated with AIM is compensated for his or her
services according to a fee schedule which recognizes the fact that such trustee
also serves as a trustee of other AIM Funds. Each such trustee receives a fee,
allocated among the AIM Funds for which he or she serves as a trustee, which
consists of an annual retainer and meeting fees. The Chair of the Board and
Chairs and Vice Chairs of certain committees receive additional compensation for
their services in such capacities.
Information regarding compensation paid or accrued for each trustee of the
Trust who was not affiliated with AIM during the year ended December 31, 2006 is
found in Exhibit B.
DO THE TRUSTEES HAVE A RETIREMENT PLAN?
The trustees have adopted a retirement plan for the trustees of the Trust
who are not affiliated with AIM. The trustees have also adopted a retirement
policy that permits each non-AIM-affiliated trustee to serve until December 31
of the year in which the trustee turns 72. A majority of the trustees may extend
from time to time the retirement date of a trustee.
18
Annual retirement benefits are available to each non-AIM-affiliated trustee
of the Trust and/or other AIM Funds (each, a "Covered Fund") who has at least
five years of credited service as a trustee (including service to a predecessor
fund) for a Covered Fund. Effective January 1, 2006, for retirements after
December 31, 2005, the retirement benefits will equal 75% of the trustee's
annual retainer paid or accrued by any Covered Fund during the twelve-month
period prior to retirement, including the amount of any retainer deferred under
a separate deferred compensation agreement between the Covered Fund and the
trustee. The amount of the annual retirement benefit does not include additional
compensation paid for Board meeting fees or compensation paid to the Chair of
the Board and the Chairs and Vice Chairs of certain Board committees, whether
such amounts are paid directly to the trustee or deferred. The annual retirement
benefit is payable in quarterly installments for a number of years equal to the
lesser of (i) sixteen years or (ii) the number of such trustee's credited years
of service. If a trustee dies prior to receiving the full amount of retirement
benefits, the remaining payments will be made to the deceased trustee's
designated beneficiary for the same length of time that the trustee would have
received the payments, based on his or her service. A trustee must have attained
the age of 65 (60 in the event of death or disability) to receive any retirement
benefit. A trustee may make an irrevocable election to commence payment of
retirement benefits upon retirement from the Board before age 72, subject to a
reduction for early payment.
DO ANY TRUSTEES HAVE DEFERRED COMPENSATION AGREEMENTS?
Messrs. Crockett, Edward K. Dunn (a former trustee), Fields, Frischling,
Louis S. Sklar (a former trustee) and Drs. Mathai-Davis and Soll (for purposes
of this paragraph only, the "Deferring Trustees") have each executed a Deferred
Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant
to the Compensation Agreements, the Deferring Trustees have the option to elect
to defer receipt of up to 100% of their compensation payable by the Trust, and
such amounts are placed into a deferral account and deemed to be invested in one
or more AIM Funds selected by the Deferring Trustees. Distributions from the
Deferring Trustees' deferral accounts will be paid in cash, generally in equal
quarterly installments over a period of up to ten (10) years (depending on the
Compensation Agreement) beginning on the date selected under the Compensation
Agreement. If a Deferring Trustee dies prior to the distribution of amounts in
his or her deferral account, the balance of the deferral account will be
distributed to his or her designated beneficiary. The Compensation Agreements
are not funded and, with respect to the payments of amounts held in the deferral
accounts, the Deferring Trustees have the status of unsecured creditors of the
Trust and of each other AIM Fund from which they are deferring compensation.
WHO ARE THE TRUST'S INDEPENDENT PUBLIC ACCOUNTANTS?
The Audit Committees of the Board of AIM Stock Funds has appointed
PricewaterhouseCoopers LLP ("PwC") as such Trust's independent public
accountants for the fiscal year ending July 31, 2008. Representatives of PwC are
expected to be available at the Special Meeting and to have the opportunity to
make a statement and respond to appropriate questions from the shareholders.
The Audit Committee of the Board has considered whether the provision of
the services below is compatible with maintaining the independence of PwC.
19
WHAT DID PWC BILL AIM STOCK FUNDS?
PwC billed AIM Stock Funds aggregate fees for services rendered to AIM
Stock Funds for the last two fiscal years as follows:
PERCENTAGE OF FEES PERCENTAGE OF FEES
BILLED APPLICABLE TO BILLED APPLICABLE
NON-AUDIT SERVICES TO NON-AUDIT SERVICES
FEES BILLED FOR PROVIDED FOR FISCAL FEES BILLED FOR PROVIDED FOR FISCAL
SERVICES RENDERED YEAR END 2007 SERVICES RENDERED YEAR END 2006
TO AIM STOCK FUNDS PURSUANT TO WAIVER TO AIM STOCK FUNDS PURSUANT TO WAIVER OF
FOR FISCAL OF PRE-APPROVAL FUNDS FOR FISCAL PRE-APPROVAL
YEAR END 2007 REQUIREMENT (1) YEAR END 2006 REQUIREMENT(1)
------------------ -------------------- ------------------ ---------------------
Audit Fees $76,028 N/A $100,367 N/A
Audit-Related Fees $ 0 0% $ 0 0%
Tax Fees(2) $18,572 0% $ 21,045 0%
All Other Fees $ 0 0% $ 0 0%
------- --------
Total Fees $94,600 0% $121,412 0%
------- --------
PwC billed AIM Stock Funds aggregate non-audit fees of $18,572 for the fiscal
year ended 2007, and $21,045 for the fiscal year ended 2006, for non-audit
services rendered to AIM Stock Funds.
(1) For the provision of non-audit services to AIM Stock Funds, the
pre-approval requirement is waived pursuant to a de minimis exception if
(i) such services were not recognized as non-audit services by AIM Stock
Funds at the time of engagement, (ii) the aggregate amount of all such
services provided is no more than 5% of the aggregate audit and non-audit
fees paid by AIM Stock Funds to PwC during a fiscal year, and (iii) such
services are promptly brought to the attention of AIM Stock Funds' Audit
Committee and approved by the Audit Committee prior to the completion of
the audit.
(2) Tax fees for the fiscal year end July 31, 2007 include fees billed for
reviewing tax returns. Tax fees for fiscal year end July 31, 2006 include
fees billed for reviewing tax returns.
WHAT DID PWC BILL AIM AND AIM AFFILIATES?
PwC did not bill any fees for non-audit services to AIM or any entity
controlling, controlled by or under common control with AIM that provides
ongoing services to the Fund for the last two fiscal years ended July 31, 2007
and July 31, 2006 for AIM Stock Funds.
The Audit Committee's Pre-Approval of Audit and Non-Audit Services Policies
and Procedures are set forth in Appendix I.
PROPOSAL 2
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve for the Fund a new investment
sub-advisory agreement (the proposed sub-advisory agreement) between AIM and
each of AIM Funds Management Inc.; INVESCO Asset Management Deutschland, GmbH;
INVESCO Asset
20
Management Ltd.; INVESCO Asset Management (Japan) Limited; INVESCO Australia
Limited; INVESCO Global Asset Management (N.A.), Inc.; INVESCO Hong Kong
Limited; INVESCO Institutional (N.A.) Inc.; and INVESCO Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers").
The form of the proposed sub-advisory agreement is set forth in Appendix
II. The Fund's advisory agreement with AIM expressly permits AIM to delegate any
or all of its rights, duties or obligations under the advisory agreement to one
or more sub-advisers and also expressly permits AIM to replace sub-advisers from
time to time in its discretion, in accordance with applicable law.
HOW WILL THE PROPOSED SUB-ADVISORY AGREEMENT BENEFIT MY FUND?
The Affiliated Sub-Advisers, which have offices and personnel that are
located in financial centers around the world, have been formed in part for the
purpose of researching and compiling information and making recommendations (i)
on the markets and economies of various countries and securities of companies
located in such countries and/or (ii) on various types of investments and
investment techniques, and providing investment advisory services. AIM and the
Board believe that the proposed sub-advisory agreement will benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of the Affiliated Sub-Advisers in managing the Fund.
Because AIM will pay all of the sub-advisory fees of the Affiliated Sub
Advisers, the proposed sub-advisory agreement will not affect the fees the Fund
pays to AIM pursuant to its advisory agreement.
The proposed sub-advisory agreement would allow AIM and the Fund to receive
investment advice and research services from the Affiliated Sub-Advisers and
would also permit AIM to grant one or more of the Affiliated Sub-Advisers
investment management authority for the Fund if AIM believes doing so would
benefit the Fund and its shareholders. The sub-advisory fees payable under the
proposed sub-advisory agreements will have no direct effect on the Fund or its
shareholders, as they are paid by AIM to the Affiliated Sub-Advisers.
AIM and the Board believe that the proposed sub-advisory agreement, if
approved by shareholders, will provide AIM with increased flexibility in
assigning portfolio managers to the Fund and will give the Fund access to
portfolio managers and investment personnel located in other offices, including
those outside the United States, who may have more specialized expertise on
local companies, markets and economies or on various types of investments and
investment techniques. Additionally, AIM and the Board believe that the Fund and
its shareholders may benefit from giving the Affiliated Sub-Advisers the ability
to execute portfolio transactions for the Fund from offices located outside the
United States. This ability should enable the Fund to participate more fully in
trading sessions of foreign exchanges and to react more quickly to changing
market conditions around the world.
The Fund's current portfolio managers are disclosed in the Fund's
prospectus. Any changes to the Fund's portfolio managers also will be disclosed
in the Fund's prospectus.
21
WHO ARE THE PROPOSED SUB-ADVISERS?
AIM Funds Management Inc. ("AFM") is a company incorporated in the province
of Ontario and has its principal office at 5140 Yonge Street, Suite 900,
Toronto, Ontario, Canada M2N 6X7. AFM has been an investment adviser since 1994.
INVESCO Asset Management Deutschland, GmbH ("INVESCO Deutschland") is a
German corporation with limited liability and has its principal office at
Bleichstrasse 60-62, Frankfurt, Germany 60313. INVESCO Deutschland has been an
investment adviser since 1998.
INVESCO Asset Management Ltd. ("IAML") is a United Kingdom corporation and
has its principal office at 30 Finsbury Square, London, EC2A 1AG, United
Kingdom. IAML has been an investment adviser since 2001.
INVESCO Asset Management (Japan) Limited ("INVESCO Japan") is a Japanese
corporation and has its principal office at 25th Floor, Shiroyama Trust Tower,
3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan. INVESCO Japan has been
an investment adviser since 1996.
INVESCO Australia Limited ("INVESCO Australia") is an Australian public
limited company and has its principal office at 333 Collins Street, Level 26,
Melbourne Vic 3000, Australia. INVESCO Australia has been an investment adviser
since 1983.
INVESCO Global Asset Management (N.A.), Inc. ("IGAM") is a company
incorporated in the state of Delaware and has its principal office at 1360
Peachtree Street, Suite 100, Atlanta, Georgia 30309. IGAM has been an investment
adviser since 1997.
INVESCO Hong Kong Limited ("INVESCO Hong Kong") is a Hong Kong corporation
and has its principal office at 32nd Floor, Three Pacific Place, 1 Queen's Road
East, Hong Kong. INVESCO Hong Kong has been an investment adviser since 1994.
INVESCO Institutional (N.A.), Inc. ("IINA") is a company incorporated in
the state of Delaware and has its principal office at One Midtown Plaza, 1360
Peachtree Street, N.E., Atlanta, Georgia 30309. IINA has been an investment
adviser since 1988.
INVESCO Senior Secured Management, Inc. ("ISSM") is a company incorporated
in the state of Delaware and has its principal office at 1166 Avenue of the
Americas, New York, New York 10036. ISSM has been as an investment adviser since
1992.
Each of the Affiliated Sub-Advisers other than INVESCO Australia currently
is registered with the SEC as an investment adviser. As required by the terms of
the proposed sub-advisory agreement, INVESCO Australia will be so registered
prior to providing any services to any of the Funds under the proposed
sub-advisory agreement.
Each of the Affiliated Sub-Advisers is an indirect wholly owned subsidiary
of INVESCO and an affiliate of AIM, the Fund's investment adviser. AIM is an
indirect wholly owned subsidiary of INVESCO. INVESCO is a Bermuda company and
has its principal office at 1360 Peachtree Street NE, Atlanta, Georgia 30309.
INVESCO and its subsidiaries comprise one of
22
the world's largest independent investment management organizations, with
approximately $521.1 billion in assets under management as of October 31, 2007.
A list of the names, addresses and principal occupations of the principal
executive officer and directors of each Affiliated Sub-Adviser is in Exhibit C.
WHICH TRUSTEES AND OFFICERS OF THE TRUST HAVE AN EQUITY INTEREST IN INVESCO OR
ARE OFFICERS AND/OR DIRECTORS OF THE AFFILIATED SUB-ADVISERS?
The following table lists the current trustees and executive officers of
the Trust who own shares of INVESCO and/or options to purchase shares of
INVESCO. The table also lists those current trustees and executive officers of
the Trust who are also officers and/or directors of an Affiliated Sub-Adviser.
Name and Position(s) Held with the Trust Position Held With Affiliated Sub-Adviser(s)
- ---------------------------------------- -----------------------------------------------
Martin L. Flanagan None
Trustee
Philip A. Taylor Director and officer of AFM
Trustee, President and
Principal Executive Officer
Sidney M. Dilgren None
Vice President, Treasurer and
Principal Financial Officer
John M. Zerr None
Senior Vice President,
Chief Legal Officer and Secretary
Lisa O. Brinkley None
Vice President
Kevin M. Carome None
Vice President
Karen Dunn Kelley None
Vice President
Todd L. Spillane Chief Compliance Officer of IGAM, IINA and ISSM
Chief Compliance Officer
Lance A. Rejsek None
Anti-Money Laundering Compliance Officer
23
WHAT ARE THE TERMS OF THE PROPOSED SUB-ADVISORY AGREEMENT?
The primary terms of the proposed sub-advisory agreement are as follows:
- The proposed sub-advisory agreement provides that AIM may, in its
discretion, appoint each Affiliated Sub-Adviser to provide one or more
of the following services: (i) investment advice to the Fund for all
or a portion of its investments; (ii) placing orders for the purchase
and sale of portfolio securities or other investments for the Fund; or
(iii) discretionary investment management of all or a portion of the
investments of the Fund. The proposed sub-advisory agreement provides
that the services and the portion of the investments of the Fund to be
advised or managed by each Affiliated Sub-Adviser shall be as agreed
from time to time by AIM and the Affiliated Sub-Advisers. With respect
to the portion of the investments of the Fund under its management,
each Affiliated Sub-Adviser is authorized to: (i) make investment
decisions on behalf of the Fund with regard to any stock, bond, other
security or investment instrument, including but not limited to
foreign currencies, futures, options and other derivatives, and with
regard to borrowing money; (ii) place orders for the purchase and sale
of securities or other investment instruments with such brokers and
dealers as the Affiliated Sub-Adviser may select; and (iii) upon the
request of AIM, provide additional investment management services to
the Fund, including but not limited to managing the Fund's cash and
cash equivalents and lending securities on behalf of the Fund.
- Each Affiliated Sub-Adviser will agree under the proposed sub-advisory
agreement, that, in placing orders with brokers and dealers, it will
attempt to obtain the best net result in terms of price and execution.
Consistent with this obligation, each Affiliated Sub-Adviser may, in
its discretion, purchase and sell portfolio securities from and to
brokers and dealers who sell shares of the Fund or provide the Fund,
AIM's other clients, or an Affiliated Sub-Adviser's other clients with
research, analysis, advice and similar services. Each Affiliated
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 such Affiliated
Sub-Adviser determining in good faith that such commission or spread
is reasonable in terms either of the particular transaction or of the
overall responsibility of AIM and such Affiliated Sub-Adviser to the
Fund and their other clients and that the total commissions or spreads
paid by the Fund will be reasonable in relation to the benefits to the
Fund over the long term.
- The proposed sub-advisory agreement requires that whenever an
Affiliated Sub-Adviser simultaneously places orders to purchase or
sell the same security on behalf of the Fund and one or more other
accounts advised by such Affiliated 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 proposed sub-advisory agreement permits each Affiliated
Sub-Adviser to perform any of all of the services contemplated by the
proposed sub-advisory agreement, including but not limited to
providing investment advice to the Fund and placing orders for the
purchase and sale of portfolio securities for the Fund, directly or
through such of
24
its subsidiaries or other affiliates, including each of the other
Affiliated Sub-Advisers, as such Affiliated Sub-Adviser determines.
- The proposed sub-advisory agreement requires that, in all matters
relating to its performance, each Affiliated Sub-Adviser act in
conformity with the Agreement and Declaration of Trust, By-Laws and
Registration Statement of the Trust and with the instructions and
directions of AIM and the Board and that each Affiliated Sub-Adviser
comply with the requirements of the 1940 Act, the rules, regulations,
exemptive orders and no-action positions thereunder, and all other
applicable laws and regulations.
- The proposed sub-advisory agreement provides that, to the extent an
Affiliated Sub-Adviser provides only investment advice or trading
services to AIM and the Fund, it will do so for no compensation from
either AIM or the Fund.
- The proposed sub-advisory agreement provides that, to the extent an
Affiliated Sub-Adviser manages a portion of the Fund's investments,
the fee that AIM will pay such Affiliated Sub-Adviser, computed daily
and paid monthly, will equal (i) 40% of the monthly compensation that
AIM receives from the Trust pursuant to its advisory agreement with
the Trust, multiplied by (ii) a fraction equal to the net assets of
the Fund as to which the Affiliated Sub-Adviser shall have provided
discretionary investment management services for that month divided by
the net assets of the Fund for that month. In no event shall the
aggregate monthly fees paid to the Affiliated Sub-Advisers under the
proposed sub-advisory agreement exceed 40% of the monthly compensation
AIM receives from the Trust pursuant to its advisory agreement with
the Trust, as reduced to reflect contractual or voluntary fee waivers
or expense limitations by AIM, if any. The proposed sub-advisory
agreement further provides that if, for any fiscal year of the Trust,
the amount of the advisory fee that the Fund would otherwise be
obligated to pay to AIM is reduced because of contractual or voluntary
fee waivers or expense limitations by AIM, the fee payable to each
Affiliated Sub-Adviser will be reduced proportionately; and to the
extent that AIM reimburses the Fund as a result of such expense
limitations, such Affiliated Sub-Adviser will reimburse AIM for such
reimbursement payments in the same proportion that the fee payable to
such Affiliated Sub-Adviser bears to the advisory fee.
- The proposed sub-advisory agreement requires each Affiliated
Sub-Adviser to maintain all books and records of the securities
transactions of the Fund in compliance with the requirements of the
federal securities laws and to furnish the Board and AIM with periodic
and special reports as the Board or AIM reasonably may request.
- The proposed sub-advisory agreement requires each Sub-Adviser to
maintain compliance procedures for the Fund that it and AIM reasonably
believe are adequate to ensure compliance with the federal securities
laws and the investment objective(s) and policies as stated in the
Fund's prospectus and statement of additional information.
- The proposed sub-advisory agreement requires each Affiliated
Sub-Adviser at its expense to make available to the Board and AIM at
reasonable times its portfolio managers and other appropriate
investment personnel, either in person or, at the mutual
25
convenience of AIM and the Affiliated Sub-Adviser, by telephone, in
order to review the investment policies, performance and other
investment related information regarding the Fund and to consult with
the Board and AIM regarding the Fund's investment affairs, including
economic, statistical and investment matters related to the Affiliated
Sub-Adviser's duties, and to provide periodic reports to AIM relating
to the investment strategies it employs.
- The proposed sub-advisory agreement requires each Affiliated
Sub-Adviser to assist in the fair valuation of portfolio securities
held by the Fund.
- The proposed sub-advisory agreement requires each Affiliated
Sub-Adviser, upon AIM's request, to review draft reports to
shareholders and other documents and provide comments on a timely
basis.
- The proposed sub-advisory agreement includes an express representation
and warranty by each Affiliated Sub-Adviser that it has adopted a code
of ethics meeting the requirements of applicable law.
- The proposed sub-advisory agreement requires each Affiliated
Sub-Adviser, unless otherwise directed by AIM or the Board, to vote
all proxies received in accordance with AIM's proxy voting policy or,
if the Affiliated Sub-Adviser has a proxy voting policy approved by
the Board, such Affiliated Sub-Adviser's proxy voting policy.
- The proposed sub-advisory agreement requires each Affiliated
Sub-Adviser to provide the Fund's custodian on each business day with
information relating to all transactions concerning the assets of the
Fund.
- The proposed sub-advisory agreement provides that AIM and each
Affiliated Sub-Adviser have signed one sub-advisory agreement for
administrative convenience to avoid a multiplicity of documents, but
that it is understood and agreed that the proposed sub-advisory
agreement shall constitute a separate sub-advisory agreement between
AIM and each Sub-Adviser with respect to the Fund.
The proposed sub-advisory agreement will continue from year to year for the
Fund only if continuance is specifically approved at least annually by (i) the
Board or the vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund, and (ii) the vote of a majority of independent
trustees cast at a meeting called for that purpose. The proposed sub-advisory
agreement is terminable for the Fund or any Affiliated Sub-Adviser: (i) 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 such Affiliated Sub-Adviser(s); or
(ii) by AIM on sixty days' written notice to such Affiliated Sub-Adviser(s); or
(iii) by an Affiliated Sub-Adviser on sixty days' written notice to the Trust.
Should the proposed sub-advisory agreement be terminated for an Affiliated
Sub-Adviser, AIM will assume the duties and responsibilities of such Affiliated
Sub-Adviser unless and until AIM appoints another Affiliated Sub-Adviser to
perform such duties and responsibilities. In addition, the proposed sub-advisory
agreement will terminate automatically if assigned.
26
WHAT FACTORS DID THE TRUSTEES CONSIDER IN APPROVING THE PROPOSED SUB-ADVISORY
AGREEMENT?
At in-person meetings held on December 12-13, 2007, the Board, including a
majority of the independent trustees, voting separately, approved the proposed
sub-advisory agreement for the Fund, effective on or about May 1, 2008. In so
doing, the Board determined that the proposed sub-advisory agreement is in the
best interests of the Fund and its shareholders and that the compensation to the
Affiliated Sub-Advisers under the proposed sub-advisory agreement is fair and
reasonable.
The independent trustees met separately during their evaluation of the
proposed sub-advisory agreement with independent legal counsel from whom they
received independent legal advice, and the independent trustees also received
assistance during their deliberations from the independent Senior Officer, a
full-time officer of the AIM Funds who reports directly to the independent
trustees. The proposed sub-advisory agreement was considered separately for the
Fund, although the Board also considered the common interests of all of the AIM
Funds in their deliberations. The Board comprehensively considered all of the
information provided to them and did not identify any particular factor that was
controlling. Furthermore, each trustee may have evaluated the information
provided differently from one another and attributed different weight to the
various factors.
Set forth below is a discussion of the material factors and related
conclusions that formed the basis for the Board's approval of the proposed
sub-advisory agreement for the Fund. The Board reached its conclusions after
careful discussion and analysis. The Board believes that they have carefully and
thoroughly examined the pertinent issues and alternatives. In recommending that
you approve the proposed sub-advisory agreement, the Board and the independent
trustees have considered what they believe to be in your best interests.
A. Nature, Extent and Quality of Services to be Provided by the
Affiliated Sub-Advisers
The Board reviewed the services to be provided by the Affiliated
Sub-Advisers under the proposed sub-advisory agreement and the credentials and
experience of the officers and employees of the Affiliated Sub-Advisers who will
provide these services. The Board concluded that the nature, extent and quality
of the services to be provided by the Affiliated Sub-Advisers were appropriate.
The Board noted that the Affiliated Sub-Advisers, which have offices and
personnel that are geographically dispersed in financial centers around the
world, have been formed in part for the purpose of researching and compiling
information and making recommendations on the markets and economies of various
countries and securities of companies located in such countries or on various
types of investments and investment techniques, and providing investment
advisory services. The Board concluded that the proposed sub-advisory agreement
will benefit the Fund and its shareholders by permitting AIM to utilize the
additional resources and talent of the Affiliated Sub-Advisers in managing the
Fund.
27
B. Fund Performance
The Board did not view Fund performance as a relevant factor in considering
whether to approve the proposed sub-advisory agreement for the Fund, as no
Affiliated Sub-Adviser currently serves as sub-adviser to the Fund.
C. Sub-Advisory Fees
The Board considered the services to be provided by the Affiliated
Sub-Advisers pursuant to the proposed sub-advisory agreement and the services to
be provided by AIM pursuant to the Fund's advisory agreement, as well as the
allocation of fees between AIM and the Affiliated Sub-Advisers pursuant to the
proposed sub-advisory agreement. The Board noted that the sub-advisory fees have
no direct effect on the Fund or its shareholders, as they are paid by AIM to the
Affiliated Sub-Advisers, and that AIM and the Affiliated Sub-Advisers are
affiliates. After taking account of the Fund's contractual sub-advisory fee
rate, as well as other relevant factors, the Board concluded that the Fund's
sub-advisory fees were fair and reasonable.
D. Financial Resources of the Affiliated Sub-Advisers
The Board considered whether each Affiliated Sub-Adviser is financially
sound and has the resources necessary to perform its obligations under the
proposed sub-advisory agreement, and concluded that each Affiliated Sub-Adviser
has the financial resources necessary to fulfill these obligations.
WHEN WILL PROPOSAL 2 BE IMPLEMENTED?
If Proposal 2 is approved, the proposed sub-advisory agreement will become
effective for each Fund, with respect to each Affiliated Sub-Adviser other than
INVESCO Australia, on or about May 1, 2008. If Proposal 2 is approved, the
proposed sub-advisory agreement will become effective for each Fund, with
respect to INVESCO Australia, on the later of on or about May 1, 2008 and the
date that INVESCO Australia is registered with the SEC as an investment adviser,
if INVESCO Australia is not so registered on or about May 1, 2008. Unless
terminated sooner by its terms, the proposed sub-advisory agreement for the Fund
will expire, unless continued by the Board, on June 30, 2009.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 2?
The Board, including the independent trustees of the Board, unanimously
recommends that you vote "FOR" Proposal 2.
28
PROPOSAL 3
APPROVAL OF CHANGES TO CERTAIN FUNDAMENTAL
INVESTMENT RESTRICTIONS OF THE FUND
WHAT AM I BEING ASKED TO APPROVE?
Pursuant to the 1940 Act, the Fund has adopted fundamental investment
restrictions covering certain types of investment practices that may be changed
only with shareholder approval. Investment restrictions that the Fund has not
specifically designated as being fundamental are considered to be
"non-fundamental" and may be changed by the Board without shareholder approval.
The Board is recommending that you approve changes to the Fund's
fundamental investment restrictions for the reasons set forth below. The changes
will conform these restrictions to a set of uniform model restrictions under
which most AIM Funds operate. The Board approved the changes to the investment
restrictions at in-person meetings held on December 12-13, 2007.
Although Proposals 3A through 3H all relate to the Fund's fundamental
investment restrictions, each will be voted on separately, as indicated on the
enclosed proxy card. If any particular proposal is not approved by the Fund's
shareholders, the current fundamental investment restriction of the Fund related
to that proposal will not be changed.
HOW WILL THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS BENEFIT MY FUND?
AIM and the Board expect that you will benefit from a set of uniform model
restrictions in a number of ways. The proposed uniform restrictions will provide
the Fund with as much investment flexibility as is possible under the 1940 Act.
AIM and the Board believe that eliminating the disparities among the various AIM
Funds' fundamental restrictions will enhance AIM's ability to manage the Fund's
assets efficiently and effectively in changing regulatory and investment
environments. The proposed fundamental restrictions will provide the Fund with
the ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the Securities and Exchange Commission ("SEC") without
receiving prior shareholder approval. In managing the Fund, AIM will remain
subject to the Board's oversight as well as policies and procedures adopted by
the Board.
WHAT ARE THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
The following is the text and a summary description of the proposed changes
to the Fund's fundamental restrictions. The current fundamental investment
restrictions for the Fund are set forth in Exhibit D.
Each proposed change to the Fund's fundamental investment restrictions is
discussed below. The proposed fundamental investment restrictions will provide
the Fund with the ability to operate under new interpretations of the 1940 Act
or pursuant to exemptive relief from the SEC without receiving prior shareholder
approval. This flexibility is referred to in the proposed investment
restrictions as being permitted by the "1940 Act laws, interpretations and
exemptions." If the proposed fundamental investment restrictions are approved,
the Board will
29
adopt corresponding non-fundamental investment restrictions, as applicable and
set forth below, that will function as internal operating guidelines for AIM to
follow in managing the Fund. If circumstances change, the Board may change or
eliminate any non-fundamental investment restriction in the future without
shareholder approval. AIM has informed the Board that it does not expect any of
the proposed changes, except as may be specifically noted below, to have a
material impact on the Fund's operations at the present time.
For each existing or proposed fundamental or non-fundamental restriction,
if a percentage restriction is adhered to at the time of an investment or
transaction, a later increase or decrease in percentage resulting from a change
in the values of the Fund's portfolio securities or the amount of its total
assets will not be considered a violation of the restriction (with the exception
of borrowing money from banks).
PROPOSAL 3A
MODIFICATION OF FUNDAMENTAL
RESTRICTION ON ISSUER DIVERSIFICATION
What Are the Proposed Changes?
Upon the approval of Proposal 3A by shareholders, the existing fundamental
restriction with regard to issuer diversification would be changed to read as
follows:
"The Fund is a "diversified company" as defined in the 1940 Act. The
Fund will not purchase the securities of any issuer if, as a result,
the Fund would fail to be a diversified company within the meaning of
the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules, and regulations are amended from time to time or
are interpreted from time to time by the SEC staff (collectively, the
"1940 Act Laws and Interpretations") or except to the extent that the
Fund may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act Laws and Interpretations, the "1940
Act Laws, Interpretations and Exemptions"). In complying with this
restriction, however, the Fund may purchase securities of other
investment companies to the extent permitted by the 1940 Act Laws,
Interpretations and Exemptions."
Discussion:
The Fund's current fundamental restriction on issuer diversification lists
the percentage standards set forth in the 1940 Act for a diversified fund. The
proposed modified policy adopts the same 1940 Act standards. However, by not
listing the percentage limitations, the proposed policy would change
automatically if the 1940 Act Laws, Interpretations, and Exemptions were to
change.
30
If you approve the proposed change, the following new non-fundamental
investment restriction will become effective for the Fund:
"In complying with the fundamental restriction regarding issuer
diversification, the Fund will not, with respect to 75% of its total
assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities and securities issued by other investment
companies), if, as a result, (i) more than 5% of the Fund's total
assets would be invested in the securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of
that issuer. The Fund may purchase securities of other investment
companies as permitted by the 1940 Act Laws, Interpretations and
Exemptions."
PROPOSAL 3B
MODIFICATION OF FUNDAMENTAL RESTRICTIONS
ON ISSUING SENIOR SECURITIES AND BORROWING MONEY
What Are the Proposed Changes?
Upon the approval of Proposal 3B, the existing fundamental restrictions on
issuing senior securities and borrowing money would be changed to read as
follows:
"The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions."
Discussion:
The 1940 Act establishes limits on the ability of the Fund to borrow money
and issue "senior securities," a term that is defined, generally, to refer to
obligations that have a priority over the Fund's shares of beneficial interest
(equivalent to common shares) with respect to the distribution of its assets or
the payment of dividends. The Fund's current fundamental restrictions on
borrowing and issuing senior securities are set forth separately. The Fund's
current fundamental restriction on borrowing sets forth the percentage standard
set forth in the 1940 Act. The proposed changes would combine the Fund's
restrictions on borrowing money and issuing senior securities as well as make
them consistent with related restrictions for other AIM Funds and no more
limiting than required by the 1940 Act. The Board believes that changing the
Fund's fundamental restriction in this manner will provide flexibility for
future contingencies.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for the Fund:
"In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the Fund may borrow money in an
amount not exceeding 33 1/3% of its total
31
assets (including the amount borrowed) less liabilities (other than
borrowings). The Fund may borrow from banks, broker-dealers, or an AIM
Fund. The Fund may not borrow for leveraging, but may borrow for
temporary or emergency purposes, in anticipation of or in response to
adverse market conditions, or for cash management purposes. The Fund
may not purchase additional securities when any borrowings from banks
exceed 5% of the Fund's total assets or when any borrowings from an
AIM Fund are outstanding."
PROPOSAL 3C
MODIFICATION OF FUNDAMENTAL RESTRICTION
ON UNDERWRITING SECURITIES
What Are the Proposed Changes?
Upon the approval of Proposal 3C, the existing fundamental restriction on
underwriting securities would be changed to read as follows:
"The Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the Fund may be considered to be an
underwriter under the Securities Act of 1933."
Discussion:
The proposed changes to this fundamental restriction would eliminate minor
differences in the wording of the Fund's current restriction on underwriting
securities as compared to other AIM Funds. The substance of the fundamental
restriction would remain unchanged.
PROPOSAL 3D
MODIFICATION OF FUNDAMENTAL RESTRICTION ON
INDUSTRY CONCENTRATION
What Are the Proposed Changes?
Upon the approval of Proposal 3D, the existing fundamental restriction on
industry concentration would be changed to read as follows:
"The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act Laws, Interpretations and Exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the Fund's investments in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (ii) tax-exempt obligations issued by
governments or political subdivisions of governments. In complying
with this restriction, the Fund will not consider a bank-
32
issued guaranty or financial guaranty insurance as a separate
security."
Discussion:
The Fund's current fundamental restriction on industry concentration limits
purchases of securities so that 25% or more of the Fund's total assets would not
be invested in securities of companies whose principal business activities are
in the same industry, except with regard to securities issued or guaranteed by
the U.S. government or any of its agencies or instrumentalities, and municipal
securities.
The proposed modified policy adopts the same 1940 Act standards as the
current fundamental restriction. However, by not listing the percentage
limitations, the proposed policy would change automatically if the 1940 Act
Laws, Interpretations, and Exemptions were to change. As a result, the proposed
changes would make the Fund's restriction on concentration no more limiting than
required by the 1940 Act. The Board believes that changing the Fund's
fundamental restriction in this manner will provide more flexibility for future
contingences. However, the Board does not currently intend the change to affect
the Fund's operations, under which the Fund does not invest 25% or more of its
total assets in securities of issuers having their principal business activities
in the same industry.
Accordingly, if you approve the proposed change, the following
non-fundamental investment restriction would also become effective for the Fund:
"In complying with the fundamental restriction regarding industry
concentration, the Fund may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in
the same industry."
PROPOSAL 3E
MODIFICATION OF FUNDAMENTAL RESTRICTION
ON REAL ESTATE INVESTMENTS
What Are the Proposed Changes?
Upon the approval of Proposal 3E, the existing fundamental restriction on
real estate investments would be changed to read as follows:
"The Fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the Fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein."
33
Discussion:
The proposed changes to this fundamental restriction would eliminate minor
differences in the wording of the Fund's current restriction on real estate
investments as compared to other AIM Funds. The substance of the fundamental
restriction would remain unchanged.
PROPOSAL 3F
MODIFICATION OF FUNDAMENTAL RESTRICTION
ON PURCHASING OR SELLING COMMODITIES
What Are the Proposed Changes?
Upon the approval of Proposal 3F, the existing fundamental restriction on
purchasing or selling physical commodities would be changed to read as follows:
"The Fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the Fund from
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
Discussion:
The proposed change to this fundamental restriction is intended to promote
uniformity with the analogous fundamental restriction of other AIM Funds. The
proposed restriction would narrow somewhat the scope of the current fundamental
restriction. Whereas the current fundamental restriction prohibits the purchase
or sale of physical commodities without exception, the proposed fundamental
restriction permits the purchase or sale of physical commodities acquired as a
result of ownership of securities or other instruments.
If you approve the proposed addition, the following non-fundamental
investment restriction would also become effective for the Fund:
"Notwithstanding the fundamental restriction with regard to engaging
in transactions involving futures contracts and options thereon or
investing in securities that are secured by physical commodities, the
Fund currently may not invest in any security (including futures
contracts or options thereon) that is secured by physical
commodities."
The Fund does not consider currencies or other financial commodities or
contracts and financial instruments to be physical commodities (which include,
for example, oil, precious metals and grains). Accordingly, as is the case with
the other AIM Funds that currently have the proposed restriction regarding
purchasing and selling physical commodities, the Fund will interpret the
proposed restriction and the related non-fundamental restriction to permit the
Fund, subject to the Fund's investment objective and general investment policies
(as stated in the Fund's prospectus and the Statement of Additional
Information), to invest directly in foreign
34
currencies and other financial commodities and to purchase, sell or enter into
commodity futures contracts and options thereon, foreign currency forward
contracts, foreign currency options, currency-, commodity- and financial
instrument-related swap agreements, hybrid instruments, interest rate or
securities-related or foreign currency-related hedging instruments or other
currency, commodity or financial instrument related derivatives, subject to
compliance with any applicable provisions of the federal securities or
commodities laws. The Fund also will interpret its fundamental restriction
regarding purchasing and selling physical commodities and its related
non-fundamental restriction to permit the Fund to invest in exchange-traded
funds that invest in physical and/or financial commodities, subject to the
limits described in the Fund's prospectus and the Statement of Additional
Information.
PROPOSAL 3G
MODIFICATION OF FUNDAMENTAL RESTRICTION ON MAKING LOANS
What Are the Proposed Changes?
Upon the approval of Proposal 3G, the existing fundamental restriction on
making loans would be changed to read as follows:
"The Fund may not make personal loans or loans of its assets to
persons who control or are under the common control with the Fund,
except to the extent permitted by 1940 Act Laws, Interpretations and
Exemptions. This restriction does not prevent the Fund from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and
participation interests."
Discussion:
The Fund's current fundamental restriction on lending securities and making
loans lists the percentage standards set forth in the 1940 Act for lending
securities and making loans. The proposed modified policy adopts the same 1940
Act standards. However, by not listing the percentage limitations, the proposed
policy would change automatically if the 1940 Act Laws, Interpretations, and
Exemptions were to change. The proposed change to this fundamental restriction
also is intended to promote uniformity with the analogous fundamental
restriction of other AIM Funds.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for the Fund:
"In complying with the fundamental restriction with regard to making
loans, the Fund may lend up to 33 1/3% of its total assets and may
lend money to an AIM Fund, on such terms and conditions as the SEC may
require in an exemptive order."
35
PROPOSAL 3H
MODIFICATION OF FUNDAMENTAL RESTRICTION
ON INVESTMENT IN INVESTMENT COMPANIES
What Are the Proposed Changes?
Upon the approval of Proposal 3H, the existing fundamental policy on
investments in other investment companies would be changed to read as follows:
"The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies and restrictions as the
Fund."
Discussion:
The proposed changes to this fundamental restriction would limit the scope
of the Fund's current restriction on investment in investment companies. The
current fundamental restriction permits the Fund to invest all of its assets in
an open-end management investment company managed by AIM or an affiliate or
successor thereof, with substantially the same investment objective, policies
and limitations as the Fund, whereas the proposed fundamental restriction would
permit these types of investments regardless of whether the investment company
were managed by AIM. The proposed change to this fundamental restriction also is
intended to promote uniformity with the analogous fundamental restriction of
other AIM Funds.
If you approve the proposed restriction, the Fund will have the ability to
invest all of its assets in another open-end investment company whether or not
managed by AIM or an AIM affiliate. Because the Fund does not currently intend
to do so, the following non-fundamental investment restriction will become
effective for the Fund:
"Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the Fund may not invest all of its
assets in the securities of a single open-end management investment
company with the same fundamental investment objective, policies, and
restrictions as the Fund."
WHEN WILL PROPOSALS 3A THROUGH 3H BE IMPLEMENTED?
If the holders of a majority of the Fund's outstanding voting securities
(as defined in the 1940 Act) approve each of the above proposals, the proposed
fundamental investment restrictions will replace the Fund's current fundamental
investment restrictions. Accordingly, the proposed fundamental investment
restrictions, along with the current fundamental investment restrictions that
have not changed, will become the fundamental investment restrictions under
which the Fund will operate. The Board anticipates that these proposals, if
approved, will be effective on or about May 1, 2008, upon appropriate disclosure
being made in the Fund's Prospectus and Statement of Additional Information.
36
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSALS 3A THROUGH 3H?
The Board, including the independent trustees of the Board, unanimously
recommends that you vote "FOR" Proposals 3A through 3H.
PROPOSAL 4
APPROVAL OF MAKING THE FUND'S INVESTMENT
OBJECTIVE(S) NON-FUNDAMENTAL
WHAT AM I BEING ASKED TO APPROVE?
The investment objective of the Fund is fundamental; therefore, any change
to it requires shareholder approval. The Board recommends that you approve
making the Fund's current investment objective non-fundamental. The current
investment objective for the Fund is set forth in the table below.
NAME OF FUND CURRENT INVESTMENT OBJECTIVE(S)
- ------------ ------------------------------------------------------
AIM Dynamics Fund The Fund's investment objective is long-term growth of
capital.
HOW WILL MAKING THE FUND'S INVESTMENT OBJECTIVE(S) NON-FUNDAMENTAL BENEFIT MY
FUND?
Making the Fund's investment objective non-fundamental gives the Board the
additional flexibility to make appropriate changes to the investment objective
to respond to new developments and changing trends in the market place without
the commensurate expense of seeking a shareholder vote. If made non-fundamental,
the Board would be able to modify the Fund's investment objective when deemed
appropriate. The Board does not anticipate making changes to the investment
objective of the Fund at the present time, but may, if warranted, propose such
changes in the future. In the event the Board were to change the Fund's
investment objective, shareholders would receive at least 60 days advance notice
prior to the change being implemented.
WHEN WILL PROPOSAL 4 BE IMPLEMENTED?
The Board anticipates that this proposal, if approved, will be effective on
or about May 1, 2008, upon appropriate disclosure being made in the Fund's
Prospectus and Statement of Additional Information.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 4?
The Board, including the independent trustees of the Board, unanimously
recommends that you vote "FOR" Proposal 4.
37
PROPOSAL 5
APPROVAL OF AN AMENDMENT TO THE AGREEMENT AND DECLARATION OF
TRUST TO PERMIT THE BOARD TO TERMINATE THE TRUST, THE FUND OR A
SHARE CLASS WITHOUT A SHAREHOLDER VOTE
WHAT AM I BEING ASKED TO APPROVE?
The Trust and the Fund are governed by an Amended and Restated Agreement
and Declaration of Trust, as amended ("Declaration of Trust"), and Amended and
Restated Bylaws, as amended. Currently under the Declaration of Trust, the
Trust, the Fund or a share class of the Fund may be terminated by: (i) a
shareholder vote of the Trust or the Fund or share class, respectively; or (ii)
if there are fewer than 100 shareholders of record of the Trust, the Fund or
share class, the trustees of the Trust.
The Board recommends that you approve an amendment to the Declaration of
Trust that would eliminate the requirement that shareholders approve the
termination of the Trust, the Fund or a share class if there are 100 or more
holders of record of the Trust, Fund or share class. Therefore, if Proposal 5 is
approved, the Board will be able to terminate the Trust, the Fund or any share
class of the Fund without incurring the expense of obtaining shareholder
approval, regardless of the number of shareholders of record.
You are being asked to vote on the amendment to the Trust's Declaration of
Trust so that, in the event that Proposal 6 is not approved by shareholders, the
Trust will have an amended Declaration of Trust.
Exhibit E sets forth the current text of the first paragraph of Section 6.1
of Article VI of the Declaration of Trust. Section 6.1(iii) is the provision of
the Declaration of Trust that requires a shareholder vote in order to approve
the termination of the Trust, the Fund or a share class if there are 100 or more
holders of record of the Trust, the Fund or share class. Section 6.1(vi)
requires a shareholder vote in order to amend any portion of Section 6.1.
Therefore, you are being asked to approve an amendment to Section 6.1 of the
Trust's Declaration of Trust that would replace the first paragraph of existing
Section 6.1 in its entirety with the following:
"Section 6.1 Voting Powers. The Shareholders shall have power to vote
only to: (i) elect Trustees, provided that a meeting of Shareholders has
been called for that purpose; (ii) remove Trustees, provided that a meeting
of Shareholders has been called for that purpose; (iii) approve the sale of
all or substantially all the assets of the Trust or 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 statutory trust; (iv) approve the merger
or consolidation of the Trust or any Portfolio or Class with and into
another Company or with and into any Portfolio or Class of the Trust,
unless (A) the primary purpose of such merger or consolidation is to change
the Trust's domicile or form of organization or form of statutory trust, or
(B) after giving effect to such merger or consolidation, based on the
number of Outstanding Shares 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
38
thereof, as the case may be; (v) approve any amendment to this Article VI,
Section 6.1; and (vi) approve such additional matters as may be required by
law or as the Trustees, in their sole discretion, shall determine."
HOW WILL THE PROPOSED CHANGE BENEFIT MY FUND?
Elimination of the shareholder approval requirement to terminate the Trust,
the Fund or a share class of the Fund gives the Board the flexibility to
terminate the Trust, the Fund or a share class of the Fund if circumstances
warrant without the commensurate expense of seeking a shareholder vote. Such
circumstances may include, among others, an inability to market the Fund in
current economic conditions or when the costs of managing the Fund exceed any
benefits its shareholders may receive. Neither state law nor the 1940 Act
require shareholder approval prior to the termination of the Trust, the Fund or
a share class. The Board would terminate the Trust, the Fund or a share class
only if they found that doing so was in the best interests of the shareholders
of the Trust, the Fund or a share class, as applicable.
In the event the Board were to terminate the Trust, the Fund or a share
class, shareholders would receive notice prior to such termination.
WHEN WILL PROPOSAL 5 BE IMPLEMENTED?
If Proposal 5 is approved, the amendment to the Trust's Declaration of
Trust will become effective on or about May 1, 2008.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 5?
The Board, including the independent trustees of the Board, unanimously
recommends that you vote "FOR" Proposal 5.
PROPOSAL 6
APPROVAL OF THE PLAN TO RESTRUCTURE THE FUND AS
A NEW SERIES PORTFOLIO OF AIM INVESTMENT SECURITIES FUNDS
WHAT AM I BEING ASKED TO APPROVE?
The Trust, a Delaware statutory trust, currently is comprised of two series
portfolios: the Fund and AIM S&P 500 Index Fund. AIM has identified the Fund as
appropriate to be restructured as new series portfolio of AIM Investment
Securities Funds ("AIS"), an existing open-end management investment company
organized as a Delaware statutory trust.
The Board has approved the Plan, which provides for a series of
transactions to restructure the Fund (the "Current Fund") as a corresponding
series (the "New Fund") of AIS. Under the Plan, the Current Fund will transfer
all of its assets to the New Fund in exchange solely for voting shares of
beneficial interest in the New Fund and the New Fund's assumption of all the
Current Fund's liabilities (collectively, the "Restructuring"). A form of the
Plan relating to the proposed Restructuring is set forth in Appendix III.
39
At the Special Meeting, shareholders of the Fund will be asked to approve
the Restructuring. Approval of the Plan requires the affirmative vote of a
majority of the votes cast by the shareholders of the Current Fund.
HOW WILL THE PROPOSED RESTRUCTURING BENEFIT MY FUND?
The Restructuring is being proposed to simplify the organizational
structure and reduce the costs of the AIM Funds. The operations of the New Fund
following the Restructuring will be substantially similar to those of the
predecessor Current Fund. Restructuring the Current Fund as a New Fund of AIS
will have the effect of consolidating the record-keeping, accounting, financial
reporting and securities law compliance in a single investment company, which
will in turn create greater operating efficiencies for the AIM Funds. AIS, like
the Trust, operates as an open-end management investment company registered with
the SEC under the 1940 Act.
WHAT WILL THE PROPOSED RESTRUCTURING INVOLVE?
To accomplish the Restructuring, the New Fund has been established as a
series portfolio of AIS. On the closing date, the Current Fund will transfer all
of its assets to the corresponding classes of the New Fund in exchange solely
for a number of full and fractional classes of shares of the New Fund equal to
the number of full and fractional shares of beneficial interest of the
corresponding classes of the Current Fund then outstanding and the New Fund's
assumption of the Current Fund's liabilities. Immediately thereafter, the
Current Fund will distribute those New Fund shares to its shareholders in
complete liquidation of the Current Fund. Upon completion of the Restructuring,
each shareholder of the Current Fund will be the owner of full and fractional
shares of the New Fund equal in number and aggregate net asset value to the
shares he or she held in the Current Fund. After the consummation of the
Restructuring, the Current Fund will be terminated as a designated series of the
Trust.
The obligations of the Trust and AIS under the Plan are subject to various
conditions stated therein. To provide against unforeseen events, the Plan may be
terminated or amended at any time prior to the closing of the Restructuring by
action of the Board, notwithstanding the approval of the Plan by the
shareholders of the Current Fund. However, no amendments may be made that would
materially adversely affect the interests of shareholders of the Current Fund.
The Trust and AIS 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 shareholders of the Current Fund.
The Plan authorizes the Trust to acquire one share of each class of the New
Fund and, as the sole shareholder of the New Fund prior to the Restructuring, to
do each of the following:
- Approve for the New Fund a new investment advisory agreement with
AIM that will be substantially identical to the Current Fund's
existing investment advisory agreement with AIM.
- Approve for the New Fund a new sub-advisory agreement between AIM
and each of AIM Funds Management Inc.; INVESCO Asset Management
Deutschland, GmbH; INVESCO Asset Management Ltd.; INVESCO Asset
Management
40
(Japan) Limited; INVESCO Australia Limited; INVESCO Global Asset
Management (N.A.), Inc.; INVESCO Hong Kong Limited; INVESCO
Institutional (N.A.) Inc.; and INVESCO Senior Secured Management,
Inc. (collectively; the "Affiliated Sub-Advisers") that will be
substantially identical to the proposed sub-advisory agreement
that the shareholders of the Current Fund are being asked to
approve under Proposal 2. Information on the new sub-advisory
agreement is set forth above under Proposal 2. If Proposal 2 is
not approved by shareholders of the Current Fund, the Trust will
not approve a sub-advisory agreement between AIM and the
Affiliated Sub-Advisers for the corresponding New Fund.
- Approve for the New Fund a new administrative services agreement
with AIM that will be substantially identical to the Trust's
existing administrative services agreement with AIM.
- Approve for the New Fund a distribution agreement with A I M
Distributors, Inc. ("ADI"). The proposed distribution agreement
will provide for substantially identical distribution services as
currently provided to the Current Fund by ADI.
- Approve a distribution plan pursuant to Rule 12b-1 under the 1940
Act for each class of the New Fund (other than Institutional
Class shares) that will be substantially identical to the Current
Fund's existing distribution plan for that class.
- Approve for the New Fund a custodian agreement with State Street
Bank and Trust Company and a transfer agency and servicing
agreement with AIM Investment Services, Inc., each of which
currently provides such services to the Current Fund, and a
multiple class plan pursuant to Rule 18f-3 of the 1940 Act. Each
of the custodian agreement, transfer agency and servicing
agreement and multiple class plan pursuant to Rule 18f-3 will be
substantially identical to the agreements and multiple class plan
that exist for the Current Fund.
- Ratify the selection of PricewaterhouseCoopers, LLP, the
registered independent public accountants for the Current Fund,
as the registered independent public accountants for the New
Fund.
- Approve such other agreements and plans as are necessary for the
New Fund's operation as a series of an open-end management
investment company.
AIS's transfer agent will establish for each shareholder an account
containing the appropriate number of shares of each class of the New Fund. Such
accounts will be identical to the accounts currently maintained by the Trust's
transfer agent for each shareholder of the Current Fund. Shares held in Current
Fund accounts will automatically be designated as shares of the New Fund. Any
certificates for Current Fund shares issued before the Restructuring will
represent shares of the New Fund after the Restructuring. Shareholders of the
New Fund will not have the right to demand or require AIS to issue share
certificates. Any account options or
41
privileges on accounts of shareholders under the Current Fund will be replicated
on the New Fund account. No sales charges will be imposed in connection with the
Restructuring.
Assuming your approval of Proposal 6, the Trust currently contemplates that
the Restructuring will be consummated on or about May 1, 2008.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE RESTRUCTURING?
The Trust and AIS will receive an opinion of Ballard Spahr Andrews &
Ingersoll, LLP to the effect that the Restructuring will qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended. Accordingly, the Current Fund, the New Fund and the
shareholders of the Current Fund will recognize no gain or loss for Federal
income tax purposes as a result of the Restructuring. Shareholders of the
Current Fund should consult their tax advisers regarding these and other federal
income tax effects, if any, of the Restructuring in light of their individual
circumstances and as to state and local tax consequences, if any, of the
Restructuring.
DO SHAREHOLDERS HAVE APPRAISAL RIGHTS?
Appraisal rights are not available to shareholders. However, shareholders
retain the right to redeem their shares of the Current Fund or the New Fund, as
the case may be, at any time before or after the Restructuring.
HOW DOES AIS COMPARE TO THE TRUST?
GENERAL
AIS and the Trust are both Delaware statutory trusts. The operations of AIS
and the Trust, as Delaware statutory trusts, are governed by the terms of their
respective Amended and Restated Agreements and Declarations of Trust, Amended
and Restated Bylaws and applicable Delaware law.
STRUCTURE OF AIS
AIS is an existing statutory trust established under the laws of the State
of Delaware by the filing of a certificate of trust in the office of the
Secretary of State of Delaware. AIS has established a new series portfolio
corresponding to and having identical designations as the Current Fund. AIS has
also established classes of the New Fund corresponding to and having identical
designations as the classes of the Current Fund. The New Fund will have the same
investment objectives, policies, and restrictions as the Current Fund. AIS's
fiscal year is the same as that of the Trust. The New Fund will not have any
operations prior to the Restructuring. Initially, the Trust will be the sole
shareholder of the New Fund.
As a Delaware statutory trust, AIS's operations are governed by its Amended
and Restated Agreement and Declaration of Trust, as amended (the "AIS
Declaration"), and Amended and Restated Bylaws, as amended, and applicable
Delaware law. Certain issues relating to the form of organization of both AIS
and the Trust are summarized below. The
42
operations of AIS will continue to be subject to the provisions of the 1940 Act
and the rules and regulations thereunder.
TRUSTEES AND OFFICERS OF AIS
Subject to the provisions of the AIS Declaration, the business of AIS will
be managed by its trustees, who have all powers necessary or convenient to carry
out their responsibilities. The responsibilities, powers, and fiduciary duties
of the trustees of AIS and the Trust are identical to one another. All of the
current trustees of the Trust currently serve as trustees of AIS.
All of the current officers of the Trust, currently serve as officers of
AIS and those current officers of the Trust will perform the same functions on
behalf of the New Fund and AIS following the Restructuring that they now perform
on behalf of Current Fund and the Trust.
SHARES OF AIS
The beneficial interests in the New Fund will be represented by
transferable shares, par value $0.01 per share. As is the case with the Trust,
shareholders do not have the right to demand or require AIS to issue share
certificates. The trustees have the power under the AIS Declaration to establish
new series and classes of shares. The AIS Declaration permits the trustees to
issue an unlimited number of shares of each class and series.
The Current Fund currently has the classes of shares set forth in Exhibit
A. AIS has established for the New Fund the classes that currently exist for the
Current Fund. Shares of each class of the New Fund will have rights, privileges,
and terms substantially similar to those of the corresponding class of the
Current Fund.
LIABILITY OF SHAREHOLDERS
The Delaware Statutory Trust Act provides that shareholders of a Delaware
statutory trust shall be entitled to the same limitations of liability extended
to shareholders of private for-profit corporations. There is, however, a remote
possibility that, under certain circumstances, shareholders of a Delaware
statutory trust might be held personally liable for the trust's obligations to
the extent the courts of another state that does not recognize such limited
liability were to apply the laws of such state to a controversy involving such
obligations. The AIS Declaration and the Trust's Declaration of Trust (together
with the AIS Declaration, the "Declarations of Trust") provide that shareholders
of the Trust and AIS, as applicable, shall not be subject to any personal
liability for acts or obligations of the Trust and AIS and that every written
agreement, obligation or other undertaking made or issued by the Trust and AIS,
as applicable, shall contain a provision to the effect that shareholders are not
personally liable thereunder. In addition, the Declarations of Trust provide for
indemnification out of the property of the Trust and AIS, as applicable, for any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder. Therefore, the risk of any shareholder incurring
financial loss beyond his or her investment due to shareholder liability is
limited to circumstances in which the Trust or AIS, as applicable, itself is
unable to meet its obligations and the express disclaimer of shareholder
liabilities is determined not to be effective. Given the nature of the assets
and operations of the Trust and AIS, the possibility of the Trust or AIS, as
applicable, being unable to meet its obligations is considered remote, and even
if a claim were
43
brought against the Trust or AIS, and a court determined that shareholders were
personally liable, it would likely not impose a material obligation on a
shareholder.
ELECTION OF TRUSTEES; TERMS
The shareholders of each of the Trust and AIS have elected a majority of
the trustees of the Trust and AIS respectively. Such trustees serve for the life
of the Trust and AIS, subject to their earlier death, incapacitation,
resignation, retirement or removal (see below). In the case of any vacancy on
the Board or AIS's Board of Trustees (the "AIS Board" and together with the
Board, the "Boards of Trustees"), a majority of the trustees may appoint a
successor to fill such vacancy. The right of the Boards of Trustees to appoint
trustees to fill vacancies without shareholder approval is subject to the
provisions of the 1940 Act.
REMOVAL OF TRUSTEES
A trustee of the Trust and AIS may be removed at any time by a written
instrument signed by at least two-thirds of the trustees or by vote of
two-thirds of the outstanding shares of the Trust and AIS, respectively.
MEETINGS OF SHAREHOLDERS
The Trust and AIS are not required to hold annual meetings of shareholders
unless required by the 1940 Act and do not intend to do so. The bylaws of each
of the Trust and AIS provide that any trustee may call a special meeting of
shareholders and the trustees shall call a special meeting of the shareholders
solely for the purpose of removing one or more trustees upon written request of
the holders of not less than 10% of the outstanding shares of the Trust and AIS,
as applicable. Special meetings may be called for the purpose of electing
trustees or for any other action requiring shareholder approval, or for any
matter deemed by the trustees to be necessary or desirable.
LIABILITY OF TRUSTEES AND OFFICERS; INDEMNIFICATION
Delaware law provides that trustees of a statutory trust shall not be
liable to the statutory trust or its shareholders for acting in good faith
reliance on the provisions of its governing instrument and that the trustee's
liabilities may be expanded or restricted by such instrument. Under the
Declarations of Trust, the trustees and officers of the Trust and AIS are not
liable for any act or omission or any conduct whatsoever in their capacity as
trustees, except for liability to the trust or shareholders due to willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of trustee. Delaware law allows a
statutory trust to indemnify and hold harmless any trustee or other person
against any and all claims and demands. The Declarations of Trust provide for
the indemnification of their respective trustees and officers to the extent that
such trustees and officers act in good faith and reasonably believe that their
conduct is in the best interests of such trust, except with respect to any
matter in which it has been determined that such trustee acted with willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties.
44
TERMINATION
Pursuant to the Declarations of Trust, each of the Trust and AIS or any
series or class of shares of beneficial interest in such trust may be terminated
by: (1) a majority shareholder vote of such trust or the affected series or
class, or (2) if there are fewer than 100 shareholders of record of such trust
or of such terminating series or class, the trustees pursuant to written notice
to the shareholders of such trust or the affected series or class.
Shareholders of the Current Fund will be voting on Proposal 5, which would
eliminate the requirement that shareholders approve the termination of the Trust
or a series or class of its shares of beneficial interest if there are 100 or
more shareholders of record of the Trust or of such terminating series or class.
Shareholders of the series portfolios of AIS will be voting on a proposal that
is substantially the same as Proposal 5. If shareholders of the series
portfolios of AIS approve such proposal, shareholders of the New Fund would not
be solicited to vote on the termination of AIS, the New Fund or a class of its
shares of beneficial interest even if Proposal 5 is not approved by shareholders
of the Current Fund.
VOTING RIGHTS OF SHAREHOLDERS
The Declarations of Trust grant shareholders power to vote only with
respect to the following: (i) election of trustees, provided that a meeting of
shareholders has been called for that purpose; (ii) removal of trustees,
provided that a meeting of shareholders has been called for that purpose; (iii)
termination of such trust or a series or class of its shares of beneficial
interest, provided that a meeting of shareholders has been called for that
purpose; (iv) sale of all or substantially all of the assets of such trust or
one of its investment portfolios; (v) merger or consolidation of such trust or
any of its investment portfolios, with certain exceptions; (vi) approval of any
amendments to shareholders' voting rights under such Declarations of Trust, and
(vii) approval of such additional matters as may be required by law or as the
trustees, in their sole discretion, shall determine.
As set forth above under "How Does AIS Compare to the Trust?- Termination"
if shareholders of the series portfolios of AIS approve Proposal 5, which would
eliminate the requirement that shareholders approve the termination of AIS or a
series or class of its shares of beneficial interest, shareholders of the New
Fund will not be solicited to vote on the termination of AIS or the New Fund or
a class of its shares of beneficial interest even if Proposal 5 is not approved
by shareholders of the Current Fund.
DISSENTERS' RIGHTS
Neither Delaware law nor the Declarations of Trust confer upon shareholders
rights of appraisal or dissenters' rights.
AMENDMENTS TO ORGANIZATION DOCUMENTS
Consistent with Delaware law, the Boards of Trustees may, without
shareholder approval, amend their respective Declarations of Trust at any time,
except to eliminate any voting rights pertaining to the shares of such trust,
without approval of the majority of the shares of such trust.
45
The trustees shall have the power to alter, amend or repeal the bylaws of such
trust or adopt new bylaws at any time.
The foregoing discussion above is only a summary of certain of these
issues. Shareholders should refer to the provisions of these documents and state
law directly for more details. Copies of the Declarations of Trust and the
Amended and Restated Bylaws of the Trust and AIS are available to shareholders
without charge upon written request to the Trust or AIS.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 6?
The Board, including the independent trustees of the Board, unanimously
recommends that you vote "FOR" Proposal 6.
PENDING LITIGATION
Civil lawsuits, including a regulatory proceeding and purported class
action and shareholder derivative suits, have been filed against certain of the
AIM Funds, AIM, INVESCO Funds Group, Inc. ("IFG"), ADI and/or related entities
and individuals, depending on the lawsuit, alleging among other things: (i) that
the defendants permitted improper market timing and related activity in the AIM
Funds; and (ii) that certain AIM Funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by
regulators or private litigants against the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals in the future.
You can find more detailed information concerning all of the above matters,
including the parties to the civil lawsuits and summaries of the various
allegations and remedies sought in such lawsuits, in the Fund's public filings
with the SEC and on AIM's internet website (http://www.aiminvestments.com).
As a result of the matters discussed above, investors in the AIM Funds
might react by redeeming their investments. This might require the AIM Funds to
sell investments to provide for sufficient liquidity and could also have an
adverse effect on the investment performance of the AIM Funds.
ADDITIONAL INFORMATION
WHO IS THE FUND'S INVESTMENT ADVISER AND ADMINISTRATOR?
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, is the investment adviser and administrator for the Fund.
WHO IS THE FUND'S PRINCIPAL UNDERWRITER?
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, is the principal underwriter for the Fund.
46
WHO ARE THE OFFICERS OF THE TRUST?
Information regarding the current officers of the Trust can be found in
Exhibit F.
HOW MANY SHARES OF THE FUND DOES MANAGEMENT OWN?
Information regarding the ownership of each class of the Fund's shares by
the trustees, nominees, and current executive officers of the Trust can be found
in Exhibit G.
DOES ANYONE OWN MORE THAN 5% OF THE FUND?
A list of the name, address and percent ownership of each person who, as of
October 31, 2007, to the knowledge of the Trust owned 5% or more of any class of
the outstanding shares of the Fund can be found in Exhibit H.
DO TRUSTEES OWN SHARES OF THE FUND?
The dollar range of equity securities beneficially owned by each trustee
and nominee as of October 31, 2007 (i) in the Fund and (ii) on an aggregate
basis, in all registered investment companies overseen by the trustee and
nominee within the AIM Funds complex, can be found in Exhibit I.
47
APPENDIX I
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the AIM Funds (the "Funds")
Last Amended September 18, 2006
I. STATEMENT OF PRINCIPLES
Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and
Exchange Commission ("SEC") ("Rules"), the Audit Committees of the Funds' (the
"Audit Committee") Board of Trustees (the "Board") are responsible for the
appointment, compensation and oversight of the work of independent accountants
(an "Auditor"). As part of this responsibility and to assure that the Auditor's
independence is not impaired, the Audit Committees pre-approve the audit and
non-audit services provided to the Funds by each Auditor, as well as all
non-audit services provided by the Auditor to the Funds' investment adviser and
to affiliates of the adviser that provide ongoing services to the Funds
("Service Affiliates") if the services directly impact the Funds' operations or
financial reporting. The SEC Rules also specify the types of services that an
Auditor may not provide to its audit client. The following policies and
procedures comply with the requirements for pre-approval and provide a mechanism
by which management of the Funds may request and secure pre-approval of audit
and non-audit services in an orderly manner with minimal disruption to normal
business operations.
Proposed services either may be pre-approved without consideration of specific
case-by-case services by the Audit Committees ("general pre-approval") or
require the specific pre-approval of the Audit Committees ("specific
pre-approval"). As set forth in these policies and procedures, unless a type of
service has received general pre-approval, it will require specific pre-approval
by the Audit Committees. Additionally, any fees exceeding 110% of estimated
pre-approved fee levels provided at the time the service was pre-approved will
also require specific approval by the Audit Committees before payment is made.
The Audit Committees will also consider the impact of additional fees on the
Auditor's independence when determining whether to approve any additional fees
for previously pre-approved services.
The Audit Committees will annually review and generally pre-approve the services
that may be provided by each Auditor without obtaining specific pre-approval
from the Audit Committee. The term of any general pre-approval runs from the
date of such pre-approval through September 30th of the following year, unless
the Audit Committees consider a different period and state otherwise. The Audit
Committees will add to or subtract from the list of general pre-approved
services from time to time, based on subsequent determinations.
The purpose of these policies and procedures is to set forth the guidelines to
assist the Audit Committees in fulfilling their responsibilities.
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II. DELEGATION
The Audit Committees may from time to time delegate pre-approval authority to
one or more of its members who are Independent Trustees. All decisions to
pre-approve a service by a delegated member shall be reported to the Audit
Committee at its next quarterly meeting.
III. AUDIT SERVICES
The annual audit services engagement terms will be subject to specific
pre-approval of the Audit Committees. Audit services include the annual
financial statement audit and other procedures such as tax provision work that
is required to be performed by the independent auditor to be able to form an
opinion on the Funds' financial statements. The Audit Committee will obtain,
review and consider sufficient information concerning the proposed Auditor to
make a reasonable evaluation of the Auditor's qualifications and independence.
In addition to the annual Audit services engagement, the Audit Committees may
grant either general or specific pre-approval of other audit services, which are
those services that only the independent auditor reasonably can provide. Other
Audit services may include services such as issuing consents for the inclusion
of audited financial statements with SEC registration statements, periodic
reports and other documents filed with the SEC or other documents issued in
connection with securities offerings.
IV. NON-AUDIT SERVICES
The Audit Committees may provide either general or specific pre-approval of any
non-audit services to the Funds and its Service Affiliates if the Audit
Committees believe that the provision of the service will not impair the
independence of the Auditor, is consistent with the SEC's Rules on auditor
independence, and otherwise conforms to the Audit Committee's general principles
and policies as set forth herein.
AUDIT-RELATED SERVICES
"Audit-related services" are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements or that are traditionally performed by the independent auditor.
Audit-related services include, among others, accounting consultations related
to accounting, financial reporting or disclosure matters not classified as
"Audit services"; assistance with understanding and implementing new accounting
and financial reporting guidance from rulemaking authorities; and agreed-upon
procedures related to mergers, compliance with ratings agency requirements and
interfund lending activities.
TAX SERVICES
"Tax services" include, but are not limited to, the review and signing of the
Funds' federal tax returns, the review of required distributions by the Funds
and consultations regarding tax matters such as the tax treatment of new
investments or the impact of new regulations. The Audit Committee will
scrutinize carefully the retention of the Auditor in connection with a
transaction initially recommended by the Auditor, the major business purpose of
which may be tax avoidance or the tax treatment of which may not be supported in
the Internal Revenue Code and
I-2
related regulations. The Audit Committee will consult with the Funds' Treasurer
(or his or her designee) and may consult with outside counsel or advisors as
necessary to ensure the consistency of Tax services rendered by the Auditor with
the foregoing policy.
No Auditor shall represent any Fund or any Service Affiliate before a tax court,
district court or federal court of claims.
Under rules adopted by the Public Company Accounting Oversight Board and
approved by the SEC, in connection with seeking Audit Committee pre-approval of
permissible Tax services, the Auditor shall:
1. Describe in writing to the Audit Committees, which writing may be in
the form of the proposed engagement letter:
a. The scope of the service, the fee structure for the engagement,
and any side letter or amendment to the engagement letter, or any
other agreement between the Auditor and the Fund, relating to the
service; and
b. Any compensation arrangement or other agreement, such as a
referral agreement, a referral fee or fee-sharing arrangement,
between the Auditor and any person (other than the Fund) with
respect to the promoting, marketing, or recommending of a
transaction covered by the service;
2. Discuss with the Audit Committees the potential effects of the
services on the independence of the Auditor; and
3. Document the substance of its discussion with the Audit Committees.
ALL OTHER AUDITOR SERVICES
The Audit Committees may pre-approve non-audit services classified as "All other
services" that are not categorically prohibited by the SEC, as listed in Exhibit
1 to this policy.
V. PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS
Pre-approval of estimated fees or established amounts for services to be
provided by the Auditor under general or specific pre-approval policies will be
set periodically by the Audit Committees. Any proposed fees exceeding 110% of
the maximum estimated pre-approved fees or established amounts for pre-approved
audit and non-audit services will be reported to the Audit Committees at the
quarterly Audit Committees meeting and will require specific approval by the
Audit Committees before payment is made. The Audit Committee will always factor
in the overall relationship of fees for audit and non-audit services in
determining whether to pre-approve any such services and in determining whether
to approve any additional fees exceeding 110% of the maximum pre-approved fees
or established amounts for previously pre-approved services.
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VI. PROCEDURES
On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit
Committees for general pre-approval, a list of non-audit services that the Funds
or Service Affiliates of the Funds may request from the Auditor. The list will
describe the non-audit services in reasonable detail and will include an
estimated range of fees and such other information as the Audit Committee may
request.
Each request for services to be provided by the Auditor under the general
pre-approval of the Audit Committees will be submitted to the Funds' Treasurer
(or his or her designee) and must include a detailed description of the services
to be rendered. The Treasurer or his or her designee will ensure that such
services are included within the list of services that have received the general
pre-approval of the Audit Committees. The Audit Committees will be informed at
the next quarterly scheduled Audit Committees meeting of any such services for
which the Auditor rendered an invoice and whether such services and fees had
been pre-approved and if so, by what means.
Each request to provide services that require specific approval by the Audit
Committees shall be submitted to the Audit Committees jointly by the Fund's
Treasurer or his or her designee and the Auditor, and must include a joint
statement that, in their view, such request is consistent with the policies and
procedures and the SEC Rules.
Each request to provide tax services under either the general or specific
pre-approval of the Audit Committees will describe in writing: (i) the scope of
the service, the fee structure for the engagement, and any side letter or
amendment to the engagement letter, or any other agreement between the Auditor
and the audit client, relating to the service; and (ii) any compensation
arrangement or other agreement between the Auditor and any person (other than
the audit client) with respect to the promoting, marketing, or recommending of a
transaction covered by the service. The Auditor will discuss with the Audit
Committees the potential effects of the services on the Auditor's independence
and will document the substance of the discussion.
Non-audit services pursuant to the de minimis exception provided by the SEC
Rules will be promptly brought to the attention of the Audit Committees for
approval, including documentation that each of the conditions for this
exception, as set forth in the SEC Rules, has been satisfied.
On at least an annual basis, the Auditor will prepare a summary of all the
services provided to any entity in the investment company complex as defined in
section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of
the engagement and the fees associated with those services.
The Audit Committees have designated the Funds' Treasurer to monitor the
performance of all services provided by the Auditor and to ensure such services
are in compliance with these policies and procedures. The Funds' Treasurer will
report to the Audit Committee on a periodic basis as to the results of such
monitoring. Both the Funds' Treasurer and management of AIM will immediately
report to the chairman of the Audit Committee any breach of these policies and
procedures that comes to the attention of the Funds' Treasurer or senior
management of AIM.
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EXHIBIT 1 TO PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND
PROCEDURES
CONDITIONALLY PROHIBITED NON-AUDIT SERVICES (NOT PROHIBITED IF THE FUND CAN
REASONABLY CONCLUDE THAT THE RESULTS OF THE SERVICE WOULD NOT BE SUBJECT TO
AUDIT PROCEDURES IN CONNECTION WITH THE AUDIT OF THE FUND'S FINANCIAL
STATEMENTS)
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
CATEGORICALLY PROHIBITED NON-AUDIT SERVICES
- Management functions
- Human resources
- Broker-dealer, investment adviser, or investment banking services
- Legal services
- Expert services unrelated to the audit
- Any service or product provided for a contingent fee or a commission
- Services related to marketing, planning, or opining in favor of the
tax treatment of confidential transactions or aggressive tax position
transactions, a significant purpose of which is tax avoidance
- Tax services for persons in financial reporting oversight roles at the
Fund
- Any other service that the Public Company Oversight Board determines
by regulation is impermissible.
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APPENDIX II
FORM OF MASTER INTERGROUP SUB-ADVISORY CONTRACT FOR MUTUAL
FUNDS
This contract is made as of May 1, 2008, by and among A I M Advisors, Inc.
(the "Adviser") and each of AIM Funds Management Inc., INVESCO Asset Management
Deutschland, GmbH, INVESCO Asset Management Ltd., INVESCO Asset Management
(Japan) Limited, INVESCO Australia Limited, INVESCO Global Asset Management
(N.A.), Inc., INVESCO Hong Kong Limited, INVESCO Institutional (N.A.), Inc. and
INVESCO Senior Secured Management, Inc. (each a "Sub-Adviser" and, collectively,
the "Sub-Advisers").
WHEREAS:
A) The Adviser has entered into an investment advisory agreement with
[NAME OF AIM REGISTRANT] (the "Trust"), an open-end management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), with respect to the funds set forth
in Exhibit A attached hereto (each a "Fund");
B) The Adviser is authorized to delegate certain, any or all of its
rights, duties and obligations under investment advisory agreements to
sub-advisers, including sub-advisers that are affiliated with the
Adviser;
C) Each Sub-Adviser represents that it is registered with the U.S.
Securities and Exchange Commission ("SEC") as an investment adviser
under the Investment Advisers Act of 1940 ("Advisers Act") as an
investment adviser, or will be so registered prior to providing any
services to any of the Funds under this Contract, and engages in the
business of acting as an investment adviser; and
D) The Sub-Advisers and their affiliates have personnel in various
locations throughout the world and have been formed in part for the
purpose of researching and compiling information and recommendations
on the economies of various countries and securities of issuers
located in such countries or on various types of investments and
investment techniques, and providing investment advisory services in
connection therewith.
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Adviser hereby appoints each Sub-Adviser as a sub-adviser of
each Fund for the period and on the terms set forth herein. Each Sub-Adviser
accepts such appointment and agrees to render the services herein set forth, for
the compensation herein provided.
2. Duties as Sub-Adviser. Subject to paragraph 7 below, the Adviser may, in its
discretion, appoint each Sub-Advisor to perform one or more of the following
services with respect to all or a portion of the investments of each Fund. The
services and the portion of the investments of
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each Fund to be advised or managed by each Sub-Adviser shall be as agreed upon
from time to time by the Adviser and the Sub-Advisers. Each Sub-Adviser shall
pay the salaries and fees of all personnel of such Sub-Adviser performing
services for the Funds related to research, statistical and investment
activities.
(a) Investment Advice. If and to the extent requested by the Adviser, each
Sub-Adviser shall provide investment advice to one or more of the Funds and the
Adviser with respect to all or a portion of the investments of such Fund(s) or
with respect to various investment techniques, and in connection with such
advice shall furnish such Fund(s) and the Adviser with such factual information,
research reports and investment recommendations as the Adviser may reasonably
require.
(b) Order Execution. If and to the extent requested by the Adviser, each
Sub-Adviser shall place orders for the purchase and sale of portfolio securities
or other investments for one or more of the Funds. In so doing, each Sub-Adviser
agrees that it shall comply with paragraph 3 below.
(c) Discretionary Investment Management. If and to the extent requested by
the Adviser, each Sub-Adviser shall, subject to the supervision of the Trust's
Board of Trustees (the "Board") and the Adviser, manage all or a portion of the
investments of one or more of the Funds in accordance with the investment
objectives, policies and limitations provided in the Trust's Registration
Statement and such other limitations as the Trust or the Adviser may impose with
respect to such Fund(s) by notice to the applicable Sub-Adviser(s) and otherwise
in accordance with paragraph 5 below. With respect to the portion of the
investments of a Fund under its management, each Sub-Adviser is authorized to:
(i) make investment decisions on behalf of the Fund with regard to any stock,
bond, other security or investment instrument, including but not limited to
foreign currencies, futures, options and other derivatives, and with regard to
borrowing money; (ii) place orders for the purchase and sale of securities or
other investment instruments with such brokers and dealers as the Sub-Adviser
may select; and (iii) upon the request of the Adviser, provide additional
investment management services to the Fund, including but not limited to
managing the Fund's cash and cash equivalents and lending securities on behalf
of the Fund. In selecting brokers or dealers to execute trades for the Funds,
each Sub-Adviser will comply with its written policies and procedures regarding
brokerage and trading, which policies and procedures shall have been approved by
the Board. All discretionary investment management and any other activities of
each Sub-Adviser shall at all times be subject to the control and direction of
the Adviser and the Board.
3. Broker-Dealer Relationships. Each Sub-Adviser agrees that, in placing orders
with brokers and dealers, it will attempt to obtain the best net result in terms
of price and execution. Consistent with this obligation, each 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, the Adviser's
other clients, or a Sub-Adviser's other clients with research, analysis, advice
and similar services. Each 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 such Sub-Adviser determining in
good faith that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of the Adviser and such
Sub-Adviser to the Funds and their other clients and that the total commissions
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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 a Sub-Adviser, or any affiliated person thereof,
except in accordance with the applicable securities laws and the rules and
regulations thereunder and any exemptive orders currently in effect. Whenever a
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 such 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.
4. Books and Records. Each Sub-Adviser will maintain all required books and
records with respect to the securities transactions of the Funds, and will
furnish the Board and the Adviser with such periodic and special reports as the
Board or the Adviser reasonably may request. Each Sub-Adviser hereby agrees that
all records which it maintains for the Adviser are the property of the Adviser,
and agrees to preserve for the periods prescribed by applicable law any records
which it maintains for the Adviser and which are required to be maintained, and
further agrees to surrender promptly to the Adviser any records which it
maintains for the Adviser upon request by the Adviser.
5. Further Duties.
(a) In all matters relating to the performance of this Contract, each
Sub-Adviser will act in conformity with the Agreement and Declaration of Trust,
By-Laws and Registration Statement of the Trust and with the instructions and
directions of the Adviser and the Board and will comply with the requirements of
the 1940 Act, the rules, regulations, exemptive orders and no-action positions
thereunder, and all other applicable laws and regulations.
(b) Each Sub-Adviser shall maintain compliance procedures for the Funds
that it and the Adviser reasonably believe are adequate to ensure compliance
with the federal securities laws (as defined in Rule 38a-1 of the 1940 Act) and
the investment objective(s) and policies as stated in the Funds' prospectuses
and statements of additional information. Each Sub-Adviser at its expense will
provide the Adviser or the Trust's Chief Compliance Officer with such compliance
reports relating to its duties under this Contract as may be requested from time
to time. Notwithstanding the foregoing, each Sub-Adviser will promptly report to
the Adviser any material violations of the federal securities laws (as defined
in Rule 38a-1 of the 1940 Act) that it is or should be aware of or of any
material violation of the Sub-Adviser's compliance policies and procedures that
pertain to the Funds.
(c) Each Sub-Adviser at its expense will make available to the Board and
the Adviser at reasonable times its portfolio managers and other appropriate
personnel, either in person or, at the mutual convenience of the Adviser and the
Sub-Adviser, by telephone, in order to review the investment policies,
performance and other investment related information regarding the Funds and to
consult with the Board and the Adviser regarding the Funds' investment affairs,
including economic, statistical and investment matters related to the
Sub-Adviser's duties hereunder, and will provide periodic reports to the Adviser
relating to the investment strategies it employs. Each Sub-Adviser and its
personnel shall also cooperate fully with counsel and auditors for, and the
Chief Compliance Officer of, the Adviser and the Trust.
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(d) Each Sub-Adviser will assist in the fair valuation of portfolio
securities held by the Funds. The Sub-Adviser will use its reasonable efforts to
provide, based upon its own expertise, and to arrange with parties independent
of the Sub-Adviser such as broker-dealers for the provision of, valuation
information or prices for securities for which prices are deemed by the Adviser
or the Trust's administrator not to be readily available in the ordinary course
of business from an automated pricing service. In addition, each Sub-Adviser
will assist the Funds and their agents in determining whether prices obtained
for valuation purposes accurately reflect market price information relating to
the assets of the Funds at such times as the Adviser shall reasonably request,
including but not limited to, the hours after the close of a securities market
and prior to the daily determination of a Fund's net asset value per share.
(e) Each Sub-Adviser represents and warrants that it has adopted a code of
ethics meeting the requirements of Rule 17j-1 under the 1940 Act and the
requirements of Rule 204A-1 under the Advisers Act and has provided the Adviser
and the Board a copy of such code of ethics, together with evidence of its
adoption, and will promptly provide copies of any changes thereto, together with
evidence of their adoption. Upon request of the Adviser, but in any event no
less frequently than annually, each Sub-Adviser will supply the Adviser a
written report that (A) describes any issues arising under the code of ethics or
procedures since the Sub-Adviser's last report, including but not limited to
material violations of the code of ethics or procedures and sanctions imposed in
response to the material violations; and (B) certifies that the procedures
contained in the Sub-Adviser's code of ethics are reasonably designed to prevent
"access persons" from violating the code of ethics.
(f) Upon request of the Adviser, each Sub-Adviser will review draft reports
to shareholders and other documents provided or available to it and provide
comments on a timely basis. In addition, each Sub-Adviser and each officer and
portfolio manager thereof designated by the Adviser will provide on a timely
basis such certifications or sub-certifications as the Adviser may reasonably
request in order to support and facilitate certifications required to be
provided by the Trust's Principal Executive Officer and Principal Financial
Officer and will adopt such disclosure controls and procedures in support of the
disclosure controls and procedures adopted by the Trust as the Adviser, on
behalf of the Trust, deems are reasonably necessary.
(g) Unless otherwise directed by the Adviser or the Board, each Sub-Adviser
will vote all proxies received in accordance with the Adviser's proxy voting
policy or, if the Sub-Adviser has a proxy voting policy approved by the Board,
the Sub-Adviser's proxy voting policy. Each Sub-Adviser shall maintain and shall
forward to the Funds or their designated agent such proxy voting information as
is necessary for the Funds to timely file proxy voting results in accordance
with Rule 30b1-4 of the 1940 Act.
(h) Each Sub-Adviser shall provide the Funds' custodian on each business
day with information relating to all transactions concerning the assets of the
Funds and shall provide the Adviser with such information upon request of the
Adviser.
6. Services Not Exclusive. The services furnished by each Sub-Adviser hereunder
are not to be deemed exclusive and such 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
II-4
limit or restrict the right of any director, officer or employee of a
Sub-Adviser, who may also be a Trustee, officer or employee of the Trust, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
7. Use of Subsidiaries and Affiliates. Each Sub-Adviser may perform any or all
of the services contemplated hereunder, including but not limited to providing
investment advice to the Funds pursuant to paragraph 2(a) above and placing
orders for the purchase and sale of portfolio securities or other investments
for the Funds pursuant to paragraph 2(b) above, directly or through such of its
subsidiaries or other affiliates, including each of the other Sub-Advisers, as
such Sub-Adviser shall determine; provided, however, that performance of such
services through such subsidiaries or other affiliates shall have been approved,
when required by the 1940 Act, by (i) a vote of a majority of the independent
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of a party to this Contract, other than as Board
members ("Independent Trustees"), cast in person at a meeting called for the
purpose of voting on such approval, and/or (ii) a vote of a majority of that
Fund's outstanding voting securities.
8. Compensation.
(a) The only fees payable to the Sub-Advisers under this Contract are for
providing discretionary investment management services pursuant to paragraph
2(c) above. For such services, the Adviser will pay each Sub-Adviser a fee,
computed daily and paid monthly, equal to (i) 40% of the monthly compensation
that the Adviser receives from the Trust pursuant to its advisory agreement with
the Trust, multiplied by (ii) the fraction equal to the net assets of such Fund
as to which the such Sub-Adviser shall have provided discretionary investment
management services pursuant to paragraph 2(c) above for that month divided by
the net assets of such Fund for that month. This fee shall be payable on or
before the last business day of the next succeeding calendar month. This fee
shall be reduced to reflect contractual or voluntary fee waivers or expense
limitations by the Adviser, if any, in effect from time to time as set forth in
paragraph 9 below. In no event shall the aggregate monthly fees paid to the
Sub-Advisers under this Contract exceed 40% of the monthly compensation that the
Adviser receives from the Trust pursuant to its advisory agreement with the
Trust, as reduced to reflect contractual or voluntary fee waivers or expense
limitations by the Adviser, if any.
(b) If this Contract becomes effective or terminates before the end of any
month, the fees 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.
(c) If a Sub-Adviser provides the services under paragraph 2(c) above to a
Fund for a period that is less than a full month, the fees for such period shall
be prorated according to the proportion which such period bears to the
applicable full month.
9. Fee Waivers and Expense Limitations. If, for any fiscal year of a Fund, the
amount of the advisory fee which such Fund would otherwise be obligated to pay
to the Adviser is reduced because of contractual or voluntary fee waivers or
expense limitations by the Adviser, the fee
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payable to each Sub-Adviser pursuant to paragraph 8 above shall be reduced
proportionately; and to the extent that the Adviser reimburses the Fund as a
result of such expense limitations, such Sub-Adviser shall reimburse the Adviser
that proportion of such reimbursement payments which the fee payable to each
Sub-Adviser pursuant to paragraph 8 above bears to the advisory fee under this
Contract.
10. Limitation of Liability of Sub-Adviser and Indemnification. No Sub-Adviser
shall be liable for any costs or liabilities arising from any error of judgment
or mistake of law or any loss suffered by a Fund or the Trust 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 such Sub-Adviser in
the performance by such Sub-Adviser of its duties or from reckless disregard by
such Sub-Adviser of its obligations and duties under this Contract. Any person,
even though also an officer, partner, employee, or agent of a Sub-Adviser, who
may be or become a Trustee, officer, employee or agent of the Trust, shall be
deemed, when rendering services to a Fund or the Trust or acting with respect to
any business of a Fund or the Trust to be rendering such service to or acting
solely for the Fund or the Trust and not as an officer, partner, employee, or
agent or one under the control or direction of such Sub-Adviser even though paid
by it.
11. Duration and Termination.
(a) This Contract shall become effective with respect to each Sub-Adviser
upon the later of the date hereabove written and the date that such Sub-Adviser
is registered with the SEC as an investment adviser under the Advisers Act, if a
Sub-Adviser is not so registered as of the date hereabove written; provided,
however, 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, when required by the 1940 Act.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in force and effect until June 30, 2009. 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(s) or any
Sub-Adviser(s) this Contract may be terminated at any time, without the payment
of any penalty, (i) by vote of the Board or by a vote of a majority of the
outstanding voting securities of such Fund(s) on sixty days' written notice to
such Sub-Adviser(s); or (ii) by the Adviser on sixty days' written notice to
such Sub-Adviser(s); or (iii) by a Sub-Adviser on sixty days' written notice to
the Trust. Should this Contract be terminated with respect to a Sub-Adviser, the
Adviser shall assume the duties and responsibilities of such Sub-Adviser unless
and until the Adviser appoints another Sub-Adviser to perform such duties and
responsibilities. Termination of this Contract with respect to one or more
Fund(s) or Sub-Adviser(s) shall not affect the continued effectiveness of
II-6
this Contract with respect to any remaining Fund(s) or Sub-Adviser(s). This
Contract will automatically terminate in the event of its assignment.
12. 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, when required by the 1940 Act, no amendment of this Contract shall
be effective until approved by vote of a majority of the Fund's outstanding
voting securities.
13. Notices. Any notices under this Contract shall be writing, addressed and
delivered, telecopied or mailed postage paid, to the other party entitled to
receipt thereof at such address as such party may designate for the receipt of
such notice. Until further notice to the other party, it is agreed that the
address of the Trust and the Adviser shall be 11 Greenway Plaza, Suite 100,
Houston, Texas 77046. Until further notice to the other party, it is agreed that
the address of each Sub-Adviser shall be set forth in Exhibit B attached hereto.
14. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Texas and the 1940 Act. To the extent that the applicable laws
of the State of Texas conflict with the applicable provisions of the 1940 Act,
the latter shall control.
15. Multiple Sub-Advisory Agreements. This Contract has been signed by multiple
parties; namely the Adviser, on one hand, and each Sub-Adviser, on the other.
The parties have signed one document for administrative convenience to avoid a
multiplicity of documents. It is understood and agreed that this document shall
constitute a separate sub-advisory agreement between the Adviser and each
Sub-Adviser with respect to each Fund, as if the Adviser and such Sub-Adviser
had executed a separate sub-advisory agreement naming such Sub-Adviser as a
sub-adviser to each Fund. With respect to any one Sub-Adviser, (i) references in
this Contract to "a Sub-Adviser" or to "each Sub-Adviser" shall be deemed to
refer only to such Sub-Adviser, and (ii) the term "this Contract" shall be
construed according to the foregoing provisions.
16. 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. Any question of interpretation of any term or
provision of this Contract having a counterpart in or otherwise derived from a
term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission ("SEC") issued pursuant to said Acts.
In addition, where the effect of a requirement of the 1940 Act or the Advisers
Act reflected in any provision of the Contract is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
II-7
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated as of the day and year first above
written.
A I M ADVISORS, INC. AIM FUNDS MANAGEMENT INC.
Adviser Sub-adviser
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
INVESCO ASSET MANAGEMENT
DEUTSCHLAND, GMBH
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
INVESCO ASSET MANAGEMENT LTD.
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
II-8
INVESCO ASSET MANAGEMENT
(JAPAN) LIMITED
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
INVESCO AUSTRALIA LIMITED
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
INVESCO GLOBAL ASSET
MANAGEMENT (N.A.), INC.
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
INVESCO HONG KONG LIMITED
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
II-9
INVESCO INSTITUTIONAL (N.A.), INC.
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
INVESCO SENIOR SECURED MANAGEMENT, INC.
Sub-adviser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
II-10
EXHIBIT A
FUNDS
[List all series portfolios]
II-11
EXHIBIT B
ADDRESSES OF SUB-ADVISERS
AIM Funds Management Inc.
5140 Yonge Street
Suite 900
Toronto, Ontario
Canada M2N 6X7
INVESCO Asset Management Deutschland, GmbH
Bleichstrasse 60-62
Frankfurt, Germany 60313
INVESCO Asset Management Ltd.
30 Finsbury Square
London, United Kingdom
EC2A 1AG
INVESCO Asset Management (Japan) Limited
25th Floor, Shiroyama Trust Tower
3-1, Toranoman 4-chome, Minato-Ku
Tokyo, Japan 105-6025
INVESCO Australia Limited
333 Collins Street, Level 26
Melbourne Vic 3000, Australia
INVESCO Global Asset Management (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
INVESCO Hong Kong Limited
32nd Floor
Three Pacific Place
1 Queen's Road East
Hong Kong
INVESCO Institutional (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
INVESCO Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
II-12
APPENDIX III
AIM STOCK FUNDS
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
December ___, 2007, by and between AIM Stock Funds, a Delaware statutory trust
("ASTF"), acting on its own behalf and on behalf of its series portfolio, AIM
Dynamics Fund, identified on Schedule A to this Agreement, and AIM Investment
Securities Funds, a Delaware statutory trust (the "Trust"), acting on its own
behalf and on behalf of its series portfolio, AIM Dynamics Fund, identified on
Schedule A.
BACKGROUND
ASTF is organized as a series management investment company and is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended. ASTF currently publicly offers shares of
beneficial interest representing interests in two separate series portfolios,
one of which is listed on Schedule A and is referred to in this Agreement as the
"Current Fund" and the other of which is not covered by this Agreement.
The Board of Trustees of ASTF has designated multiple classes of shares of
beneficial interest that represent interests in the Current Fund. Each of these
classes is listed on Schedule B to this Agreement and is referred to in this
Agreement as a "Current Fund Class."
The Board of Trustees of ASTF has determined that it would be in the best
interests of the shareholders of the Current Fund for the Current Fund to
reorganize as an investment portfolio of the Trust. In anticipation of such
reorganization, the Board of Trustees of the Trust has established an additional
series portfolio corresponding to the Current Fund (the "New Fund"), and has
designated multiple classes of shares of beneficial interest in the New Fund
corresponding to the Current Fund Classes (each a "New Fund Class"). Schedule A
lists the New Fund and Schedule B lists the New Fund Classes.
The Current Fund desires to provide for its Reorganization (the
"Reorganization") through the transfer of all of its assets to the corresponding
New Fund in exchange for the assumption by such New Fund of the liabilities of
the corresponding Current Fund and the issuance by the Trust to such Current
Fund of shares of beneficial interest in the New Fund ("New Fund Shares"). New
Fund Shares received by a Current Fund will have an aggregate net asset value
equal to the aggregate net asset value of the shares of the Current Fund
immediately prior to the Reorganization (the "Current Fund Shares"). Each
Current Fund will then distribute the New Fund Shares it has received to its
shareholders.
The Reorganization is subject to, and shall be effected in accordance with,
the terms of this Agreement. This Agreement is intended to be and is adopted by
ASTF, on its own behalf and on behalf of the Current Fund, and by the Trust, on
its own behalf and on behalf of the New Fund, as a Plan of Reorganization within
the meaning of the regulations under Section 368(a) of the Internal Revenue Code
of 1986, as amended.
III-1
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
Any capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the preamble or background to this Agreement. In addition,
the following terms shall have the following meanings:
1.1 "Assets" shall mean all assets including, 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 the Current Fund's books, and other property owned by the
Current Fund at the Effective Time.
1.2 "Closing" shall mean the consummation of the transfer of Assets,
assumption of Liabilities and issuance of shares described in Sections 2.1 and
2.2 of this Agreement, together with the related acts necessary to consummate
the Reorganization, to occur on the date set forth in Section 3.1.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Current Fund" shall mean the series portfolio of ASTF as shown on
Schedule A.
1.5 "Current Fund Class" shall mean each class of shares of beneficial
interest in the Current Fund as shown on Schedule B.
1.6 "Current Fund Shares" shall mean the shares of the Current Fund
outstanding immediately prior to the Reorganization.
1.7 "Effective Time" shall have the meaning set forth in Section 3.1.
1.8 "Liabilities" shall mean all liabilities of the Current Fund including,
without limitation, all debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
determinable at the Effective Time, and whether or not specifically referred to
herein.
1.9 "New Fund" shall mean the series portfolio of the Trust, which shall
correspond to the Current Fund as shown on Schedule A.
1.10 "New Fund Class" shall mean each class of shares of beneficial
interest in the New Fund, one of which shall correspond to one of the Current
Fund Classes as shown on Schedule B.
1.11 "New Fund Shares" shall mean those shares of beneficial interest in
the New Fund issued to the Current Fund hereunder.
III-2
1.12 "Registration Statement" shall have the meaning set forth in Section
5.4.
1.13 "RIC" shall mean a "regulated investment company" (as defined under
Subchapter M of the Code).
1.14 "SEC" shall mean the Securities and Exchange Commission.
1.15 "Shareholder(s)" shall mean the Current Fund's shareholder(s) of
record, determined as of the Effective Time.
1.16 "Shareholders Meeting" shall have the meaning set forth in Section
5.1.
1.17 "Transfer Agent" shall have the meaning set forth in Section 2.2.
1.18 "1940 Act" shall mean the Investment Company Act of 1940, as amended.
2. PLAN OF REORGANIZATION.
2.1 ASTF agrees, on behalf of the Current Fund, to assign, sell, convey,
transfer and deliver all of the Assets of the Current Fund to New Fund. The
Trust, on behalf of the New Fund, agrees in exchange therefore:
(a) to issue and deliver to the Current Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares of each New
Fund Class designated on Schedule B equal to the number of full and
fractional Current Fund Shares of the Current Fund Class designated on
Schedule B; and
(b) to assume all of the Current Fund's Liabilities.
Such transactions shall take place at the Closing.
2.2 At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Shares issued pursuant to Section 5.2 shall be
redeemed by the New Fund for $10.00 and (b) the Current Fund shall distribute
the New Fund Shares received by it pursuant to Section 2.1 to the Current Fund's
Shareholders in exchange for such Shareholders' Current Fund Shares. Such
distribution shall be accomplished through opening accounts, by the transfer
agent for the Trust (the "Transfer Agent"), on the New Fund's share transfer
books in the Shareholders' names and transferring New Fund Shares to such
accounts. 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 of each New Fund Class due that Shareholder. All outstanding Current Fund
Shares, including those represented by certificates, shall simultaneously be
canceled on the Current Fund's share transfer books. The Trust shall not issue
certificates representing the New Fund Shares in connection with the
Reorganization. However, certificates representing Current Fund Shares shall
represent New Fund Shares after the Reorganization.
2.3 Following receipt of the required shareholder vote and as soon as
reasonably practicable after the Closing, the status of the Current Fund as a
designated series of ASTF shall be terminated.
III-3
2.4 Any transfer taxes payable on issuance of New Fund Shares in the name
other than that of the registered holder of the Current Fund Shares exchanged
therefore shall be paid by the person whom such New Fund Shares are to be
issued, as a condition of such transfer.
2.5 Any reporting responsibility of ASTF or the Current Fund to a public
authority is and shall remain its responsibility up to and including the date on
which it is terminated.
3. CLOSING.
3.1 The Closing shall occur at the principal office of ASTF on April 30,
2008, 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 ASTF's and the Trust's close of business on the date of the
Closing or at such other time as the parties may agree (the "Effective Time").
3.2 ASTF or its fund accounting agent shall deliver to the Trust at the
Closing, a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by the Current Fund to the New
Fund, as reflected on the New Fund's books immediately following the Closing,
does or will conform to such information on the Current Fund's books immediately
before the Closing. ASTF shall cause the custodian for the Current Fund to
deliver at the Closing a certificate of an authorized officer of the custodian
stating that (a) the Assets held by the custodian will be transferred to the 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.
3.3 ASTF shall deliver to the Trust at the Closing a list of the names and
addresses of each Shareholder of the Current Fund and the number of outstanding
Current Fund Shares of the Current Fund Class owned by each Shareholder, all as
of the Effective Time, certified by ASTF's Secretary or Assistant Secretary. The
Trust shall cause the Transfer Agent to deliver at the Closing a certificate as
to the opening on the New Fund's share transfer books of accounts in the
Shareholders' names. The Trust shall issue and deliver a confirmation to ASTF
evidencing the New Fund Shares to be credited to the Current Fund at the
Effective Time or provide evidence satisfactory to ASTF that such shares have
been credited to the Current 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.
3.4 ASTF and the 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.
4. REPRESENTATIONS AND WARRANTIES.
4.1 ASTF represents and warrants on its own behalf and on behalf of the
Current Fund as follows:
III-4
(a) ASTF is a statutory 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 of
Delaware;
(b) ASTF is duly registered as an open-end series management
investment company under the 1940 Act, and such registration is in full
force and effect;
(c) The Current Fund is a duly established and designated series of
ASTF;
(d) At the Closing, the Current Fund will have good and marketable
title to its Assets and full right, power, and authority to sell, assign,
transfer, and deliver its Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, the New Fund will acquire
good and marketable title to the Assets;
(e) The New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
(f) The Current Fund is a "fund" as defined in Section 851(g)(2) of
the Code; the Current Fund qualified for treatment as a RIC for each
taxable year since it commenced operations that has ended (or will end)
before the Closing 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); the Current Fund has no earnings and profits
accumulated in any taxable year in which the provisions of Subchapter M did
not apply to it; and the Current Fund has made all distributions for each
calendar year that has ended (or will end) before the Closing 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 calendar
year;
(g) There is no plan or intention of the Shareholders who individually
own 5% or more of the Current Fund Shares and, to the best of ASTF's
knowledge, there is no plan or intention of the remaining Shareholders to
redeem or otherwise dispose of the New Fund Shares to be received by them
in the Reorganization. ASTF 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 the Current Fund as a series
of an open-end investment company. Consequently, ASTF is not aware of any
plan that would cause the percentage of Shareholder interests, if any, that
will be disposed of as a result of or at the time of the Reorganization to
be one percent (1%) or more of the shares of the Current Fund outstanding
as of the Effective Time;
(h) The Liabilities were incurred by the Current Fund in the ordinary
course of its business and are associated with the Assets;
(i) ASTF 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;
III-5
(j) As of the Effective Time, the Current Fund will not have
outstanding any warrants, options, convertible securities, or any other
type of rights pursuant to which any person could acquire Current Fund
Shares except for the right of investors to acquire its shares at net asset
value in the normal course of its business as a series of an open-end
diversified management investment company operating under the 1940 Act;
(k) At the Effective Time, the performance of this Agreement with
respect to the Current Fund shall have been duly authorized by all
necessary action by the Current Fund's shareholders; and
(l) The fair market value of the Assets of the Current Fund
transferred to the New Fund will equal or exceed the sum of the Liabilities
assumed by the New Fund plus the amount of Liabilities, if any, to which
the transferred Assets are subject.
4.2 The Trust represents and warrants on its own behalf and on behalf of
the New Fund as follows:
(a) The Trust is a statutory 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 of Delaware;
(b) The Trust is duly registered as an open-end management investment
company under the 1940 Act. At the Effective Time, the New Fund Shares to
be issued pursuant to Section 2.1 of this Agreement shall be duly
registered under the Securities Act of 1933 by a Registration Statement
filed with the SEC;
(c) At the Effective Time, the New Fund will be a duly established and
designated series of the Trust;
(d) The New Fund has not commenced operations nor will it commence
operations until after the Closing;
(e) Prior to the Effective Time, there will be no issued and
outstanding shares in the New Fund or any other securities issued by the
Trust on behalf of the New Fund, except as provided in Section 5.2;
(f) No consideration other than New Fund Shares (and the New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization;
(g) The New Fund Shares to be issued and delivered to the Current 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 the New Fund, fully paid and nonassessable;
(h) The 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;
III-6
(i) The Trust, on behalf of the 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 an open-end
investment company; nor does the Trust, on behalf of the 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
such business or to the extent necessary to comply with its legal
obligation under Section 22(e) of the 1940 Act;
(j) The 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 or dispositions necessary to maintain its qualification as
a RIC; and
(k) There is no plan or intention for the New Fund to be dissolved or
merged into another corporation or statutory trust or "fund" thereof
(within the meaning of Section 851(g)(2) of the Code) following the
Reorganization.
4.3 Each of ASTF and the Trust, on its own behalf and on behalf of the
Current Fund or the New Fund, as appropriate, represents and warrants as
follows:
(a) The fair market value of the New Fund Shares of the New Fund
received by each Shareholder will be equal to the fair market value of the
Current Fund Shares of the Current Fund surrendered in exchange therefor;
(b) Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares of the New Fund and will own
such shares solely by reason of their ownership of the Current Fund Shares
of the Current Fund immediately before the Reorganization;
(c) The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
(d) There is no intercompany indebtedness between the Current Fund and
the New Fund that was issued or acquired, or will be settled, at a
discount; and
(e) Immediately following consummation of the Reorganization, the 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 the Current Fund held or was subject to
immediately prior to the Reorganization. Assets used to pay (i) expenses,
(ii) all redemptions (other than redemptions at the usual rate and
frequency of the Current Fund as a series of an open-end investment
company), and (iii) distributions (other than regular, normal
distributions), made by the Current Fund after the date of this Agreement
will, in the aggregate, constitute less than one percent (1%) of its net
assets.
5. COVENANTS.
5.1 As soon as practicable after the date of this Agreement, ASTF shall
call a meeting of the shareholders of the Current Fund (the "Shareholders
Meeting") to consider and act on this
III-7
Agreement and, in connection therewith, the sale of the Current Fund's assets
and the termination of the Current Fund as a designated series of ASTF. The
Board of Trustees of ASTF shall recommend that shareholders approve this
Agreement and, in connection therewith, the sale of the Current Fund's assets
and the termination of the Current Fund as a designated series of ASTF. Approval
of this agreement by shareholders of the Current Fund will authorize ASTF, and
ASTF hereby agrees, to vote on the matters referred to in Sections 5.2 and 5.3
for the New Fund.
5.2 Prior to the Closing, ASTF shall acquire one New Fund Share in each New
Fund Class of the New Fund for the purpose of enabling ASTF to elect ASTF's
trustees as the Trust's trustees (to serve without limit in time, except as they
may resign or be removed by action of the Trust's trustees or shareholders), to
ratify the selection of the Trust's independent accountants, and to vote on the
matters referred to in Section 5.3.
5.3 Immediately prior to the Closing, the Trust (on its own behalf and with
respect to the New Fund or each New Fund Class, as appropriate) shall enter into
a Master Investment Advisory Agreement, a Master Sub-Advisory Agreement, a
Master Administrative Services Agreement, Master Distribution Agreements, a
Custodian Agreement, and a Transfer Agency and Servicing Agreement; shall adopt
plans of distribution pursuant to Rule 12b-l of the 1940 Act, a multiple class
plan pursuant to Rule 18f-3 of the 1940 Act; and shall enter into or adopt, as
appropriate, such other agreements and plans as are necessary for the New Fund's
operation as a series of an open-end investment company. Each such agreement and
plan shall have been approved by the Trust's trustees and, to the extent
required by law, by such of those trustees who are not "interested persons" of
the Trust (as defined in the 1940 Act) and by ASTF as the sole shareholder of
the New Fund.
5.4 ASTF or the Trust, as appropriate, shall file with the SEC one or more
post-effective amendments to the Company's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended, and the 1940 Act, as amended (the
"Registration Statement"), which (i) will contain such amendments to such
Registration Statement as are determined by the Trust to be necessary and
appropriate to effect the Reorganization and (ii) will register the New Fund
Shares to be issued pursuant to Section 2.1 of this Agreement, and shall use its
best efforts to have such post-effective amendment or amendments to the
Registration Statement become effective as of the Closing.
6. CONDITIONS PRECEDENT.
The obligations of ASTF, on its own behalf and on behalf of the Current
Fund, and the Trust, on its own behalf and on behalf of the New Fund, will 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:
6.1 The shareholders of the Current Fund shall have approved this Agreement
and the transactions contemplated by this Agreement in accordance with
applicable law.
III-8
6.2 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 ASTF or the Trust to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain such consults, orders,
and permits would not involve a risk of a material adverse effect on the assets
or properties of either the Current Fund or the New Fund, provided that either
ASTF or the Trust may for itself waive any of such conditions.
6.3 Each of ASTF and the Trust shall have received an opinion from Ballard
Spahr Andrews & Ingersoll, 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 of representation
that ASTF and the Trust shall use their best efforts to deliver to such counsel)
and the certificates delivered pursuant to Section 3.4. Such opinion shall be
substantially to the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
(a) The Reorganization will constitute a "reorganization" within the
meaning of section 368(a) of the Code, and the Current Fund and the New
Fund will each be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
(b) No gain or loss will be recognized by the Current Fund on the
transfer of its Assets to the New Fund solely in exchange for New Fund
Shares and the New Fund's assumption of the Liabilities or on the
distribution of New Fund Shares to the Shareholders;
(c) No gain or loss will be recognized by the New Fund upon its
receipt of the Assets in exchange for New Fund Shares and the New Fund's
assumption of the Liabilities;
(d) The basis to the New Fund of the Assets will be the same as the
basis of such assets in the hands the Current Fund immediately before the
Reorganization, and the New Fund's holding period for the Assets will
include the Current Fund's holding period therefor;
(e) A Shareholder will recognize no gain or loss on the exchange of
Current Fund Shares solely for New Fund Shares pursuant to the
Reorganization; and
(f) A Shareholder's basis for the New Fund Shares received in the
Reorganization will be the same as the basis for the Current Fund Shares
surrendered in exchange therefor, and a Shareholder's holding period for
the New Fund Shares received will include its holding period for the
Current Fund Shares surrendered, provided that the Shareholder holds the
Current Fund Shares as capital assets at the Effective Time.
III-9
6.4 No stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the SEC (and not withdrawn or terminated).
At any time prior to the Closing, any of the foregoing conditions (except
those set forth in Sections 6.1 and 6.3) may be waived by the trustees of either
ASTF or the Trust if, in their judgment, such waiver will not have a material
adverse effect on the interests of the Current Fund's Shareholders.
7. EXPENSES.
Except as otherwise provided in Section 4.3(c), 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.
8. ENTIRE AGREEMENT.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties.
9. AMENDMENT.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding its approval with respect to the Current Fund by the
shareholders of that Current Fund, in such a 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.
10. TERMINATION.
This Agreement may be terminated with respect to the Current Fund at any
time at or prior to the Effective Time, whether before or after approval by the
shareholders of that Current Fund:
10.1 By either ASTF or the Trust (a) in the event of the other party'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
December 31, 2008; or
10.2 By the parties' mutual agreement.
Except as otherwise provided in Section 7, in the event of termination
under Sections 10.1(c) or 10.2, there shall be no liability for damages on the
part of either ASTF or the Trust or the Current Fund or the New Fund, to the
other.
III-10
11. MISCELLANEOUS.
11.1 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.
11.2 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.
11.3 The execution and delivery of this Agreement have been authorized by
the Trust's trustees, and this Agreement has been executed and delivered by a
duly authorized officer of the Trust in his or her capacity as an officer of the
Trust intending to bind the Trust as provided herein, and no officer, trustee or
shareholder of the Trust shall be personally liable for the liabilities or
obligations of the Trust incurred hereunder. The liabilities and obligations of
the Trust pursuant to this Agreement shall be enforceable against the assets of
the New Fund only and not against the assets of the Trust generally.
III-11
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.
Attest: AIM STOCK FUNDS, on behalf of its series
portfolio listed in Schedule A
By:
- ------------------------------------- ------------------------------------
Title:
---------------------------------
Attest: AIM INVESTMENT SECURITIES FUNDS,
on behalf of its series portfolio
listed in Schedule A
By:
- ------------------------------------- ------------------------------------
Title:
---------------------------------
III-12
SCHEDULE A
SERIES OF AIM STOCK FUNDS CORRESPONDING SERIES OF AIM INVESTMENT
(THE "CURRENT FUND") SECURITIES FUNDS (THE "NEW FUND")
- ------------------------- --------------------------------------
AIM Dynamics Fund AIM Dynamics Fund
III-13
SCHEDULE B
CLASSES OF THE CURRENT FUND CORRESPONDING CLASSES OF THE NEW FUND
- --------------------------- -------------------------------------
AIM Dynamics Fund AIM Dynamics Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Class R Shares Class R Shares
Investor Class Shares Investor Class Shares
Institutional Class Shares Institutional Class Shares
III-14
EXHIBIT A
SHARES OF AIM STOCK FUNDS
OUTSTANDING ON NOVEMBER 30, 2007
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND (CLASS) NOVEMBER 30, 2007
- -------------------- -----------------
AIM Dynamics Fund
Class A .................................................
Class B..................................................
Class C..................................................
Class R..................................................
Institutional Class......................................
Investor Class...........................................
AIM S&P 500 Index Fund
Institutional Class......................................
Investor Class...........................................
A-1
EXHIBIT B
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for
each trustee of the Trust who was not affiliated with AIM during the year ended
December 31, 2006.
AGGREGATE RETIREMENT ESTIMATED ANNUAL
COMPENSATION FROM BENEFITS ACCRUED BENEFITS UPON TOTAL COMPENSATION
NAME OF TRUSTEE TRUST(1) BY ALL AIM FUNDS(2) RETIREMENT(3) FROM ALL AIM FUNDS(4)
--------------- ----------------- ------------------- ---------------- ---------------------
Bob R. Baker $4,288 $230,089 $177,882 $225,000
Frank S. Bayley 4,595 160,600 126,750 241,000
James T. Bunch 3,981 149,379 126,750 203,500
Bruce L. Crockett 8,030 83,163 126,750 402,000
Albert R. Dowden 4,595 105,204 126,750 242,000
Jack M. Fields 3,981 104,145 126,750 210,000
Carl Frischling(5) 3,981 91,932 126,750 210,000
Prema Mathai-Davis 4,169 102,401 126,750 217,500
Lewis F. Pennock 3,981 85,580 126,750 210,000
Ruth H. Quigley(6) 4,595 187,330 126,750 242,000
Larry Soll 3,981 193,510 146,697 210,000
Raymond Stickel, Jr. 4,595 77,561 126,750 230,750
- ----------
(1) Amounts shown are as of AIM Stock Fund's most recent fiscal year end. The
total amount of compensation deferred by all trustees of AIM Stock Funds,
during the fiscal year ended July 31, 2007, including earnings, was
$11,964.
(2) During the fiscal year ended July 31, 2007, the total amount of expenses
allocated to AIM Stock Funds, in respect of such retirement benefits was
$36,128.
(3) These amounts represent the estimated annual benefits payable by the AIM
Funds upon the trustee's retirement and assumes each trustee serves until
his or her anticipated retirement date.
(4) All trustees currently serve as trustees of 16 registered investment
companies advised by AIM.
(5) During the fiscal year ended July 31, 2007, AIM Stock Funds paid $15,957 in
legal fees to Kramer Levin Naftalis & Frankel LLP ("Kramer Levin") for
services rendered by such firm as counsel to the independent trustees of
AIM Stock Funds. Mr. Frischling is a partner of Kramer Levin.
(6) Miss Quigley will retire effective as of December 31, 2007.
B-1
EXHIBIT C
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF AFFILIATED SUB-ADVISERS
AIM FUNDS MANAGEMENT INC.
The following table provides information with respect to the principal
executive officer and the directors of AIM Funds Management Inc. The business
address of the principal executive officer and each director is 5140 Yonge
Street, Suite 900, Toronto, Ontario M2N 6X7.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
Philip Alexander Taylor Director, President and Director, Chief Executive Officer and President, AIM
Chief Executive Officer Mutual Fund Dealer Inc. (registered broker dealer),
A I M Advisors, Inc., AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services (registered investment
advisor and registered transfer agent) and 1371
Preferred Inc. (holding company); AIM Trimark
Corporate Class Inc. -(corporate mutual fund company)
and AIM Trimark Canada Fund Inc. (corporate mutual
fund company); Director, Chairman, Chief Executive
Officer and President, A I M Management Group Inc.,
and A I M Capital Management, Inc. (registered
investment advisor); Director and President, INVESCO
Funds Group, Inc. (registered investment advisor and
registered transfer agent) and AIM GP Canada Inc.
(general partner for limited partnership); Director,
A I M Distributors, Inc. (registered broker dealer);
Director and Chairman, AIM Investment Services, Inc.
(registered transfer agent), and INVESCO
Distributors, Inc. (registered broker dealer);
Director, President and Chairman, IVZ Callco Inc.
(holding company), INVESCO Inc. (holding company) and
AIM Canada Holdings Inc. (holding company); Trustee,
President and Principal Executive Officer, The AIM
Family of Funds(R) (other than AIM Treasurer's Series
Trust, Short-Term Investments Trust and Tax-Free
Investments Trust only); Trustee and Executive Vice
President, The AIM Family of Funds(R) (AIM Treasurer's
Series Trust, Short-Term Investments Trust and
Tax-Free Investments Trust only); and Manager,
PowerShares Capital Management LLC.
David Colvin Warren Director, Chief Financial Vice President, 1371 Preferred Inc., AIM Funds
Officer and Executive Vice Management Inc., AIM Mutual Fund Dealer Inc., INVESCO
President Inc., and IVZ Callco Inc.; Director, AIM Canada
Holdings Inc. and AIM GP Canada Inc.; Senior Vice
President and Chief Administration Officer, A I M
Advisors, Inc., A I M Capital Management, Inc. and
AIM Private Asset Management, Inc.; and Senior Vice
President, A I M Management Group Inc.
C-1
Peter Intraligi Director, Chief Operating Director and Senior Vice President, 1371 Preferred
Officer and Executive Vice Inc.; Director, AIM Canada Holdings Inc.; Director,
President Chief Operating Officer and Executive Vice President,
AIM Funds Management Inc. and IVZ Callco Inc.;
Director and Executive Vice President, INVESCO Inc.
Susan J. Han Director, General Counsel, Director, General Counsel, Senior Vice President and
Senior Vice President and Secretary, AIM Funds Management Inc. and 1371
Secretary Preferred Inc.; Director and Secretary, INVESCO Inc.,
AIM Canada Holdings Inc., AIM Mutual Fund Dealer
Inc., AIM GP Canada Inc. and IVZ Callco Inc.; Senior
Vice President, General Counsel and Secretary, AIM
Trimark Corporate Class Inc. and AIM Trimark Canada
Fund Inc.
Graham Anderson Director and Senior Vice Director, Senior Vice President, Investments
President, Investments Operations, AIM Funds Management Inc.
Operations
INVESCO ASSET MANAGEMENT DEUTSCHLAND, GMBH
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Asset Management Deutschland,
GmbH. The business address of the principal executive officer and each director
is Bleichstrasse 60-62, Frankfurt, Germany 60313.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
[Karl-George Bayer Director Managing Director, INVESCO Asset Management
Deutschland GmbH.
Bernhard Lander Director Need to locate information
Alexander Heinrich Director Managing Director, INVESCO Asset Management
Lehmann Deutschland GmbH and President, INVESCO Asset
Management (Switzerland) Ltd.
Christian Puschmann Director Director, INVESCO Holding Germany Ltd & Co OHG and
INVESCO Kapitalanlagegesellschaft mbH; and Manager,
INVESCO Asset Management Deutschland GmbH.]
INVESCO ASSET MANAGEMENT LTD.
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Asset Management Ltd. The
business address of the principal
C-2
executive officer and each director is 30 Finsbury Square, London, EC2A 1AG,
United Kingdom.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
[Robert John Duthie Director Director, Atlantic Wealth Management Limited, C M
Investment Nominees Limited, INVESCO Administration
Services Limited, INVESCO Asset Management Limited,
INVESCO Fund Managers Limited, INVESCO Global
Investment Funds Limited, INVESCO Group Limited,
INVESCO GT Asset Management PLC, INVESCO North
American Group Limited, INVESCO Pacific Group Limited,
INVESCO Pensions Limited, INVESCO Savings Scheme
(Nominees) Limited, INVESCO Trustee Corporation
Limited, INVESCO UK Holdings PLC, INVESCO UK Limited,
Perpetual Administration Limited, Perpetual plc,
Perpetual Portfolio Management Limited, Perpetual Unit
Trust Management (Nominees) Limited and Sermon Lane
Nominees Limited.
Roderick George Howard Director Director, Atlantic Wealth Management Limited, C M
Ellis Investment Nominees Limited, INVESCO Administration
Services Limited, INVESCO Asset Management Limited,
INVESCO Asset Management SA, INVESCO CE SA, INVESCO CE
Services SA, INVESCO Continental Europe Holdings SA,
INVESCO Continental Europe Service Centre SA, INVESCO
Fund Managers Limited, INVESCO Global Investment Funds
Limited, INVESCO Group Limited, INVESCO GT Asset
Management PLC, INVESCO Holland B.V., INVESCO
International (Southern Africa) Limited, INVESCO
Pacific Group Limited, INVESCO Pensions Limited,
INVESCO Real Estate Limited, INVESCO Savings Scheme
(Nominees) Limited, INVESCO UK Holdings PLC, INVESCO
UK Limited, Perpetual Administration Limited,
Perpetual plc, Perpetual Portfolio Management Limited,
Perpetual Unit Trust Management (Nominees) Limited and
Sermon Lane Nominees Limited; Supervisory Board,
INVESCO Asset Management Oesterreich GmbH and INVESCO
Kapitalanlagegesellschaft mbH; Director and Deputy
Chairman, INVESO Global Asset Management (Bermuda)
Limited; and Director, Chief Executive Officer and
President, INVESCO Pacific Holdings Limited.
C-3
Robert John Yerbury Director Director and Chief Executive, Atlantic Wealth
Management Limited, INVESCO Administration Services
Limited, INVESCO Asset Management Limited, INVESCO
Fund Managers Limited, INVESCO Global Investment Funds
Limited, INVESCO Pension Limited and Perpetual
Portfolio Management Limited; Director, INVESCO UK
Limited and Perpetual plc; and Executive Management
and Senior Managing Director, INVESCO PLC.
John Rowland Director Director, Atlantic Wealth Management Limited, INVESCO
Administration Services Limited, INVESCO Asset
Management Ireland Limited, INVESCO Asset Management
Limited, INVESCO Fund Managers Limited, INVESCO Global
Distributors Limited, INVESCO Global Investment Funds
Limited, INVESCO Management S.A., INVESCO UK Limited,
Investment Fund Administrators Limited and Perpetual
Portfolio Management Limited.
Graeme John Proudfoot Director Director, Atlantic Wealth Management Limited, C M
Investment Nominees Limited, INVESCO Administration
Services Limited, INVESCO Asset Management Limited,
INVESCO Fund Managers Limited, INVESCO Global
Investment Funds Limited, INVESCO Group Limited,
INVESCO GT Asset Management PLC, INVESCO International
Holdings Limited, INVESCO North American Group
Limited, INVESCO Pacific Group Limited, INVESCO
Savings Scheme (Nominees) Limited, INVESCO Trustee
Corporation Limited, INVESCO UK Holdings PLC, INVESCO
UK Limited, IST 123 LTD, Lombard Place Securities
Limited, Perpetual Administration Limited, Perpetual
plc, Perpetual Unit Trust Management (Nominees)
Limited, Sermon Lane Nominees Limited; Alternate
Director, INVESCO Japan Discovery Trust plc; Director
and Secretary, AMVESCAP Limited and Atlantic Wealth
Holdings Limited; Director and Vice President, INVESCO
Pacific Holdings Limited; and Secretary, Royal Canoe
Club Trust.
Ian David Trevers Director Director, INVESCO Administration Services Limited,
INVESCO Asset Management Limited, INVESCO Fund
Managers Limited, INVESCO Global Investment Funds
Limited, and INVESCO Pensions Limited.
Nigel Marcus Doman Director Director, A I M Global Management Company Limited and
INVESCO Asset Management Limited.]
C-4
INVESCO ASSET MANAGEMENT (JAPAN) LIMITED
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Asset Management (Japan) Limited.
The business address of the principal executive officer and each director is
25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo
105-6025, Japan.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
Andrew Tak Shing Lo Director Chairman and Director, County Investment Management
Pty Ltd, Invesco Asset Management Australia (Holdings)
Ltd, Invesco Australia Limited and Invesco Pacific
Partner Ltd; Director, Invesco Asset Management
(Japan) Ltd, Invesco Asset Management Asia Limited.,
Invesco Asset Management Pacific Limited., Invesco
Asset Management Singapore Ltd., Invesco Hong Kong
Limited, INVESCO Great Wall Fund Management Company
Limited, Invesco Pacific Holdings Limited, and Invesco
Taiwan Limited; Executive Management Committee,
Invesco PLC; and Vice President, Invesco Institutional
(N.A.), Inc.
[Atsushi Kawakami Director Director, INVESCO Asset Management (Japan) Ltd.
Alexander Maurice Prout Chief Executive Officer Chief Representative Director, INVESCO Asset
Management (Japan) Ltd.
Masakazu Hasegawa Director Director, INVESCO Asset Management (Japan) Ltd. and
INVESCO Pacific Partner Ltd.]
INVESCO AUSTRALIA LIMITED
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Australia Limited. The business
address of the principal executive officer and each director is 333 Collins
Street, Level 26, Melbourne, Victoria 3000, Australia.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
[__________] [______] [____________________________________________________]
C-6
INVESCO GLOBAL ASSET MANAGEMENT (N.A.), INC.
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Global Asset Management (N.A.),
Inc. The business address of the principal executive officer and each director
is One Midtown Plaza, 1360 Peachtree Street, N.E., Atlanta, Georgia 30309.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
Kirk Fredrick Holland Chief Executive Officer Chief Executive Officer and President, INVESCO Global
and President Asset Management (N.A.), Inc.; and Vice President,
INVESCO Institutional (N.A.), Inc.
David Alexander Hartley Director and Chief Director, Atlantic Trust Company, N.A., INVESCO (NY)
Financial Officer Trust Company, INVESCO National Trust Company, INVESCO
Realty, Inc. and INVESCO Senior Secured Management,
Inc.; Director, Chief Financial Officer and Vice
President, INVESCO Asset Management (Bermuda) Ltd.;
Director and Chief Financial Officer, INVESCO Global
Asset Management (N.A.), Inc. and INVESCO
Institutional (N.A.), Inc.; Treasurer and Chief
Accounting Officer, A I M Advisors, Inc., A I M
Capital Management, Inc. and AIM Private Asset
Management, Inc.; Treasurer and Chief Financial
Officer, A I M Distributors, Inc., A I M Management
Group Inc., and AIM Investment Services, Inc., and
Treasurer, AIM Global Holdings, Inc., A I M Global
Ventures, Co., AIM Retirement Services, Inc., INVESCO
Distributors, Inc., and INVESCO Funds Group, Inc.
Gregory Mark Armour Director Chairman and Director, INVESCO Global Asset Management
(N.A.) Inc., INVESCO Private Capital Investments,
Inc., INVESCO Private Capital, Inc. and INVESCO Senior
Secured Management, Inc.; Chairman, Chief Executive
Officer and President, INVESCO Institutional (N.A),
Inc. and INVESCO Realty, Inc. Director and President,
INVESCO Asset Management (Bermuda) Ltd.; and Senior
Managing Director, INVESCO PLC.
C-7
INVESCO HONG KONG LIMITED
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Hong Kong Limited. The business
address of the principal executive officer and each director is 32nd Floor,
Three Pacific Place, 1 Queen's Road East, Hong Kong.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
Andrew Tak Shing Lo Director and Chief Chairman and Director, County Investment Management
Executive Officer Pty Ltd, Invesco Asset Management Australia (Holdings)
Ltd, Invesco Australia Limited and Invesco Pacific
Partner Ltd; Director, Invesco Asset Management
(Japan) Ltd, Invesco Asset Management Asia Limited.,
Invesco Asset Management Pacific Limited., Invesco
Asset Management Singapore Ltd., Invesco Hong Kong
Limited, INVESCO Great Wall Fund Management Company
Limited, Invesco Pacific Holdings Limited, and Invesco
Taiwan Limited; Executive Management Committee,
Invesco PLC; and Vice President, Invesco Institutional
(N.A.), Inc.
Jeremy Charles Simpson Director Director, INVESCO (B.V.I) NOMINEES LIMITED, Invesco
Asset Management Asia Ltd, Invesco Asset Management
Australia (Holdings) Ltd, Invesco Asset Management
Pacific Limited, Invesco Asset Management Singapore
Ltd, Invesco Australia Limited and Invesco Pacific
Holdings Limited; Director and Finance Director,
Invesco Hong Kong Limited; Director and Deputy
Chairman, Invesco Pacific Partner Ltd; and Secretary,
IRE (Hong Kong) Limited.
Gracie Yuen See Liu Director Director, INVESCO (B.V.I) NOMINEES LIMITED, Invesco
Asset Management Asia Limited and Invesco Hong Kong
Limited.
John Gerald Greenwood Director Director, Invesco Asset Management Asia Limited and
Invesco Asset Management Singapore Ltd; and Director
and Vice Chairman, Invesco Hong Kong Limited.
Siu Mei Lee Director Director, INVESCO (B.V.I) NOMINEES LIMITED, Invesco
Asset Management Asia Limited and Invesco Hong Kong
Limited.
C-8
Anna Seen Ming Tong Director Director, INVESCO (B.V.I) NOMINEES LIMITED, Invesco
Asset Management Asia Limited, Invesco Asset
Management Pacific Limited, Invesco Asset Management
Singapore Ltd and Invesco Hong Kong Limited.
INVESCO INSTITUTIONAL (N.A.), INC.
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Institutional (N.A.), Inc. The
business address of the principal executive officer and each director is One
Midtown Plaza, 1360 Peachtree Street, N.E., Atlanta, Georgia 30309.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
David Alexander Hartley Director and Chief Director, Atlantic Trust Company, N.A., INVESCO (NY)
Financial Officer Trust Company, INVESCO National Trust Company, INVESCO
Realty, Inc. and INVESCO Senior Secured Management,
Inc.; Director, Chief Financial Officer and Vice
President, INVESCO Asset Management (Bermuda) Ltd.;
Director and Chief Financial Officer, INVESCO Global
Asset Management (N.A.), Inc. and INVESCO
Institutional (N.A.), Inc.; Treasurer and Chief
Accounting Officer, A I M Advisors, Inc., A I M
Capital Management, Inc. and AIM Private Asset
Management, Inc.; Treasurer and Chief Financial
Officer, A I M Distributors, Inc., A I M Management
Group Inc., and AIM Investment Services, Inc., and
Treasurer, AIM Global Holdings, Inc., A I M Global
Ventures, Co., AIM Retirement Services, Inc., INVESCO
Distributors, Inc., and INVESCO Funds Group, Inc.
Gregory Mark Armour Director, Chief Executive Chairman and Director, INVESCO Global Asset Management
Officer and President (N.A.) Inc., INVESCO Private Capital Investments,
Inc., INVESCO Private Capital, Inc. and INVESCO Senior
Secured Management, Inc.; Chairman, Chief Executive
Officer and President, INVESCO Institutional (N.A),
Inc. and INVESCO Realty, Inc. Director and President,
INVESCO Asset Management (Bermuda) Ltd.; and Senior
Managing Director, INVESCO PLC.
C-9
INVESCO SENIOR SECURED MANAGEMENT, INC.
The following table provides information with respect to the principal
executive officer and the directors of INVESCO Senior Secured Management, Inc.
The business address of the principal executive officer and each director is
1166 Avenue of the Americas, New York, New York 10036.
NAME POSITION PRINCIPAL OCCUPATION
- ---- -------------------------- ------------------------------------------------------
David Alexander Hartley Director and Chief Director, Atlantic Trust Company, N.A., INVESCO (NY)
Financial Officer Trust Company, INVESCO National Trust Company, INVESCO
Realty, Inc. and INVESCO Senior Secured Management,
Inc.; Director, Chief Financial Officer and Vice
President, INVESCO Asset Management (Bermuda) Ltd.;
Director and Chief Financial Officer, INVESCO Global
Asset Management (N.A.), Inc. and INVESCO
Institutional (N.A.), Inc.; Treasurer and Chief
Accounting Officer, A I M Advisors, Inc., A I M
Capital Management, Inc. and AIM Private Asset
Management, Inc.; Treasurer and Chief Financial
Officer, A I M Distributors, Inc., A I M Management
Group Inc., and AIM Investment Services, Inc., and
Treasurer, AIM Global Holdings, Inc., A I M Global
Ventures, Co., AIM Retirement Services, Inc., INVESCO
Distributors, Inc., and INVESCO Funds Group, Inc.
Gregory Stoeckle Managing Director Managing Director and President, INVESCO Senior
and President Secured Management, Inc. and Senior Vice President,
INVESCO Private Capital, Inc.
Gregory Mark Armour Director Chairman and Director, INVESCO Global Asset Management
(N.A.) Inc., INVESCO Private Capital Investments,
Inc., INVESCO Private Capital, Inc. and INVESCO Senior
Secured Management, Inc.; Chairman, Chief Executive
Officer and President, INVESCO Institutional (N.A),
Inc. and INVESCO Realty, Inc. Director and President,
INVESCO Asset Management (Bermuda) Ltd.; and Senior
Managing Director, INVESCO PLC.
C-10
EXHIBIT D
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AIM DYNAMICS FUND
(1) The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities or municipal securities) if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(2) The Fund may not with respect to 75% of the Fund's total assets, purchase
the securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities, or securities of
other investment companies) if, as a result, (i) more than 5% of the Fund's
total assets would be invested in the securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer;
(3) The Fund may not underwrite securities of other issuers, except insofar as
it may be deemed to be an underwriter under the 1933 Act in connection with the
disposition of the Fund's portfolio securities;
(4) The Fund may not borrow money, except that the Fund may borrow money in an
amount not exceeding 33 1/3 % of its total assets (including the amount
borrowed) less liabilities (other than the borrowings);
(5) The Fund may not issue senior securities, except as permitted under the 1940
Act;
(6) The Fund may not lend any security or make any loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to the purchase of debt securities or to repurchase
agreements;
(7) The Fund may not purchase or sell physical commodities; however, this policy
shall not prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars, and other
financial instruments;
(8) The Fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business); and
(9) The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company managed by AIM or an affiliate or a successor
thereof, with substantially the same fundamental investment objective, policies,
and limitations as the Fund.
D-1
EXHIBIT E
CURRENT TEXT OF THE FIRST PARAGRAPH OF SECTION 6.1 OF THE DECLARATION OF TRUST
"Section 6.1 Voting Powers. The Shareholders shall have power to vote only
to: (i) elect Trustees, provided that a meeting of Shareholders has been called
for that purpose; (ii) remove Trustees, provided that a meeting of Shareholders
has been called for that purpose; (iii) approve the termination of the Trust or
any Portfolio or Class, provided that the Trustees have called a meeting of the
Shareholders for the purpose of approving any such termination, unless, as of
the date on which the Trustees have determined to so terminate the Trust or such
Portfolio or Class, there are fewer than 100 holders of record of the Trust or
of such terminating Portfolio or Class; (iv) approve the sale of all or
substantially all the assets of the Trust or 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 statutory trust; (v) approve the merger or consolidation
of the Trust or any Portfolio or Class with and into another Company or with and
into any Portfolio or Class of the Trust, unless (A) the primary purpose of such
merger or consolidation is to change the Trust's domicile or form of
organization or form of statutory trust, or (B) after giving effect to such
merger or consolidation, based on the number of Outstanding Shares 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 thereof, as the case may be; (vi) approve any amendment to
this Article VI, Section 6.1; and (vii) approve such additional matters as may
be required by law or as the Trustees, in their sole discretion, shall
determine."
E-1
EXHIBIT F
OFFICERS OF TRUST
The following table provides information with respect to the current
officers of the Trust. Each officer is elected by the Board and serves for a one
year term or until his or her successor is elected and qualified. The business
address of each of the following persons is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
Name, Year of Birth and Officer Principal Occupation(s) During
Position(s) Held with Trust Since Name of Trust(s) Past 5 Years
- --------------------------- ------- ---------------- ------------------------------
Philip A. Taylor(1) - 1954 2006 AIM Stock Funds Information about Mr. Taylor
President and Principal is presented earlier in this
Executive Officer proxy statement under
"Proposal 1 - Election of
Trustees - Who Are the
Nominees? - Nominees Who
Currently Are Interested
Persons."
- ----------
(1) Mr. Taylor is considered an interested person of the Fund because he is an
officer and a director of the adviser to, and a director of the principal
underwriter of the Fund.
Russell C. Burk - 1958 2005 AIM Stock Funds Senior Vice President and
Senior Vice President and Senior Officer, The AIM Family
Senior Officer of Funds(R)
Formerly: Director of
Compliance and Assistant
General Counsel, ICON
Advisers, Inc.; Financial
Consultant, Merrill Lynch;
General Counsel and Director
of Compliance, ALPS Mutual
Funds, Inc.
John M. Zerr - 1962 2006 AIM Stock Funds Director, Senior Vice
Senior Vice President, President, Secretary and
Chief Legal Officer and General Counsel, A I M
Secretary Management Group Inc., A I M
Advisors, Inc. and A I M
Capital Management, Inc.;
Director, Vice President and
Secretary, INVESCO
Distributors, Inc. and AIM
Investment Services, Inc.;
Director, Senior Vice
President and Secretary, A I M
Distributors, Inc.; Director
and Vice President, INVESCO
Funds Group, Inc.; Senior Vice
President, Chief Legal Officer
and Secretary, The AIM Family
of Funds(R); and Manager,
PowerShares Capital Management
LLC
Formerly: Director, Vice
President and Secretary, Fund
Management Company; Vice
President, A I M Capital
Management, Inc.; Chief
F-1
Name, Year of Birth and Officer Principal Occupation(s) During
Position(s) Held with Trust Since Name of Trust(s) Past 5 Years
- --------------------------- ------- ---------------- ------------------------------
Operating Officer, Senior Vice
President, General Counsel and
Secretary, Liberty Ridge
Capital, Inc. (an investment
adviser); Vice President and
Secretary, PBHG Funds (an
investment company); Vice
President and Secretary, PBHG
Insurance Series Fund (an
investment company); Chief
Operating Officer, General
Counsel and Secretary, Old
Mutual Investment Partners (a
broker-dealer); General
Counsel and Secretary, Old
Mutual Fund Services (an
administrator); General
Counsel and Secretary, Old
Mutual Shareholder Services (a
shareholder servicing center);
Executive Vice President,
General Counsel and Secretary,
Old Mutual Capital, Inc. (an
investment adviser); and Vice
President and Secretary, Old
Mutual Advisors Funds (an
investment company)
Lisa O. Brinkley - 1959 2004 AIM Stock Funds Global Compliance Director,
Vice President INVESCO PLC; and Vice
President, The AIM Family of
Funds(R)
Formerly: Senior Vice
President, A I M Management
Group Inc.; Senior Vice
President and Chief Compliance
Officer, A I M Advisors, Inc.;
Vice President and Chief
Compliance Officer, A I M
Capital Management, Inc. and A
I M Distributors, Inc.; Vice
President, AIM Investment
Services, Inc. and Fund
Management Company; Senior
Vice President and Chief
Compliance Officer, The AIM
Family of Funds(R); and Senior
Vice President and Compliance
Director, Delaware Investments
Family of Funds
Kevin M. Carome - 1956 2003 AIM Stock Funds Senior Vice President and
Vice President General Counsel, INVESCO PLC;
Director, INVESCO Funds Group,
Inc.; Director and Secretary,
IVZ, Inc. and INVESCO Group
Services, Inc.; Secretary,
INVESCO North America
Holdings, Inc.; and Vice
President, The AIM Family of
Funds(R)
F-2
Name, Year of Birth and Officer Principal Occupation(s) During
Position(s) Held with Trust Since Name of Trust(s) Past 5 Years
- --------------------------- ------- ---------------- ------------------------------
Formerly: Director, Senior
Vice President, Secretary and
General Counsel, A I M
Management Group Inc. and A I
M Advisors, Inc.; Senior Vice
President, A I M Distributors,
Inc.; Director, Vice President
and General Counsel, Fund
Management Company; Vice
President, A I M Capital
Management, Inc. and AIM
Investment Services, Inc.; and
Senior Vice President, Chief
Legal Officer and Secretary,
The AIM Family of Funds(R);
Director and Vice President,
INVESCO Distributors, Inc.;
Chief Executive Officer and
President, INVESCO Funds
Group; Senior Vice President
and General Counsel, Liberty
Financial Companies, Inc.; and
Senior Vice President and
General Counsel, Liberty Funds
Group, LLC
Sidney M. Dilgren - 1961 2004 AIM Stock Funds Vice President , A I M
Vice President, Treasurer Advisors, Inc. and A I M
and Principal Financial Capital Management Inc.; and
Officer Vice President, Treasurer and
Principal Financial Officer,
The AIM Family of Funds(R)
Formerly: Fund Treasurer,
A I M Advisors, Inc.; Senior
Vice President, AIM Investment
Services, Inc. and Vice
President, A I M Distributors,
Inc.
Karen Dunn Kelley - 1960 2003 AIM Stock Funds Head of INVESCO's World Wide
Vice President Fixed Income and Cash
Management Group; Director of
Cash Management and Senior
Vice President, A I M
Advisors, Inc. and A I M
Capital Management, Inc.;
Executive Vice President, A I
M Distributors, Inc.; Vice
President, The AIM Family of
Funds(R) (other than AIM
Treasurer's Series Trust,
Short-Term Investments Trust
and Tax-Free Investments
Trust); and President and
Principal Executive Officer,
The AIM Family of Funds(R)
(AIM Treasurer's Series Trust,
Short-Term Investments Trust
and Tax-Free Investments Trust
only)
F-3
Name, Year of Birth and Officer Principal Occupation(s) During
Position(s) Held with Trust Since Name of Trust(s) Past 5 Years
- --------------------------- ------- ---------------- ------------------------------
Formerly: Director and
President, Fund Management
Company; Chief Cash Management
Officer and Managing Director,
A I M Capital Management,
Inc.; Vice President, A I M
Advisors, Inc. and The AIM
Family of Funds(R) (AIM
Treasurer's Series Trust,
Short-Term Investments Trust
and Tax-Free Investments Trust
only)
Lance A. Rejsek - 1967 2005 AIM Stock Funds Anti-Money Laundering
Anti-Money Laundering Compliance Officer, A I M
Compliance Officer Advisors, Inc., A I M Capital
Management, Inc., A I M
Distributors, Inc., AIM
Investment Services, Inc., AIM
Private Asset Management, Inc.
and The AIM Family of Funds(R)
Formerly: Anti-Money
Laundering Compliance Officer,
Fund Management Company;
Manager of the Fraud
Prevention Department, AIM
Investment Services, Inc.
Todd L. Spillane - 1958 2006 AIM Stock Funds Senior Vice President, A I M
Chief Compliance Officer Management Group Inc.; Senior
Vice President and Chief
Compliance Officer, A I M
Advisors, Inc. and A I M
Capital Management, Inc.;
Chief Compliance Officer, The
AIM Family of Funds(R),
INVESCO Global Asset
Management (N.A.), Inc. (an
investment adviser), INVESCO
Institutional (N.A.), Inc. (an
investment adviser), INVESCO
Private Capital, Inc. (an
investment adviser), INVESCO
Private Capital Investments,
Inc. (holding company) and
INVESCO Senior Secured
Management, Inc. (an
investment adviser); and Vice
President, A I M Distributors,
Inc. and AIM Investment
Services, Inc.
Formerly: Chief Compliance
Officer and Vice President,
Fund Management Company; Vice
President, A I M Capital
Management, Inc.; Global Head
of Product Development,
AIG-Global Investment Group,
Inc.; Chief Compliance Officer
and Deputy
F-4
Name, Year of Birth and Officer Principal Occupation(s) During
Position(s) Held with Trust Since Name of Trust(s) Past 5 Years
- --------------------------- ------- ---------------- ------------------------------
General Counsel,
AIG-SunAmerica Asset
Management, and Chief
Compliance Officer, Chief
Operating Officer and Deputy
General Counsel, American
General Investment Management
F-5
EXHIBIT G
SECURITY OWNERSHIP OF MANAGEMENT
To the best knowledge of the Trust, the following table sets forth certain
information regarding the ownership, as of October 31, 2007, of shares of
beneficial interest of each class of AIM Dynamics Fund by the trustees,
nominees, and current executive officers of the Trust. No information is given
as to a class if a trustee, nominee or current executive officer held no shares
of such class as of October 31, 2007.
NUMBER OF SHARES OF
NAME OF THE FUNDS PERCENT OF
TRUSTEE/NOMINEE/OFFICER FUND AND CLASS OWNED BENEFICIALLY CLASS
----------------------- --------------------- ------------------- ----------
Martin L. Flanagan ............ AIM Dynamics Fund 109.190 *
(Institutional Class)
Frank S. Bayley ............... AIM Dynamics Fund 555.343 *
(Class A)
Albert R. Dowden .............. AIM Dynamics Fund 1,426.618 *
(Class A)
Larry Soll .................... AIM Dynamics Fund 132.802 *
(Investor Class)
John M. Zerr .................. AIM Dynamics Fund 97.496 *
(Institutional Class)
Sidney M. Dilgren ............. AIM Dynamics Fund 4,120.740 *
(Institutional Class)
Karen Dunn Kelley ............. AIM Dynamics Fund 926.474 *
(Class A)
AIM Dynamics Fund 2,923.805 *
(Institutional Class)
Lance A. Rejsek ............... AIM Dynamics Fund 3,249.077 *
(Institutional Class)
All trustees, nominees, and AIM Dynamics Fund 2,908.435 *
current executive officers as a (Class A)
group..........................
AIM Dynamics Fund 10,500.308 *
(Institutional Class)
AIM Dynamics Fund 132.802 *
(Investor Class)
- ----------
* To the best knowledge of the Trust, the ownership of shares of AIM Dynamics
Fund by trustees, nominees and current executive officers of the Trust as a
group constituted less than 1% of each class of AIM Dynamics Fund as of
October 31, 2007.
G-1
EXHIBIT H
OWNERSHIP OF SHARES OF THE FUND
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person who,
as of October 31, 2007, to the best knowledge of the Trust owned 5% or more of
any class of the outstanding shares of AIM Dynamics Fund. A shareholder who owns
beneficially 25% or more of the outstanding securities of AIM Dynamics Fund is
presumed to "control" the Fund as defined in the 1940 Act. Such control may
affect the voting rights of other shareholders.
NUMBER OF SHARES PERCENT OF CLASS
NAME AND ADDRESS OF RECORD OWNER CLASS OWNED OF RECORD OWNED OF RECORD*
- -------------------------------- ------------------- ---------------- ----------------
Merrill Lynch Pierce Fenner & Smith Class A 865,205.77 9.50%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East 2nd Fl
Jacksonville, FL 32246-6484
Pershing LLC Class B 239,837.06 8.94%
1 Pershing Plz
Jersey City, NJ 07399-0001
Merrill Lynch Pierce Fenner & Smith Class B 162,482.32 6.06%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East 2nd Fl
Jacksonville, FL 32246-6484
Merrill Lynch Pierce Fenner & Smith Class C 232,252.45 13.93%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East 2nd Fl
Jacksonville, FL 32246-6484
Pershing LLC Class C 138,202.54 8.29%
1 Pershing Plz
Jersey City, NJ 07399-0001
MG Trust Co TTEE 401K Class R 28,333.16 15.24%
Rubenstein Associates Inc TTEE
FBO Rubenstein Associates Inc
700 17th St Ste 300
Denver, CO 80202-3531
MG Trustco TTEE Class R 18,464.26 9.93%
RCI Inc
700 17th St Ste 300
Denver, CO 80202-3531
H-1
Attn Mut Funds 11270 W Park Pl Class R 14,698.85 7.91%
NFS LLC Febo
Marshall & Ilsley Trust Co
FBO Bank 98 Dly Rcrdkpg
Ste 400
Milwaukee, WI 53224
First Command Bank Trust Institutional Class 2,031,937.18 25.66%
FBO First Command Sip
Attention: Trust Department
P.O. Box 901075
Fort Worth, TX 76101-2075
AIM Growth Allocation Institutional Class 1,440,037.28 18.19%
Fund Omnibus Account
c/o AIM Advisors
11 E Greenway Plz Ste 100
Houston, TX 77046-1113
FIIOC Agent Institutional Class 1,435,993.20 18.14%
Employee Benefit Plans
100 Magellan Way KW1C
Covington, KY 41015-1987
AIM Moderate Growth Allocation Institutional Class 974,950.49 12.31%
Fund Omnibus Account
c/o AIM Advisors
11 Greenway Plz Ste 100
Houston, TX 77046-1113
GPC Securities Inc as agent for Institutional Class 913,977.78 11.54%
Merrill Lynch BK & TR Co FSB TTEE
FBO AMVESCAP 401K Plan
P.O. Box 105117
Atlanta, GA 30348-5117
Charles Schwab & Co Inc Investor Class 6,059,722.12 9.51%
Special Custody Acct for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4151
Nationwide Life Insurance Co Investor Class 4,026,214.23 6.32%
QPVA (EISP)
IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
Nat'l Financial Services Corp Investor Class 3,378,992.71 5.30%
The Exclusive Benefit of Cust
One World Financial Center
200 Liberty Street 5th Fl
Attn: Kate Recon
New York, NY 10281-5503
H-2
American United Life Ins Co Investor Class 3,207,033.52 5.03%
Group Retirement Annuity
Separate Account II
P.O. Box 1995
Indianapolis, IN 46206-9102
- ----------
* The Trust has no knowledge of whether all or any portion of the shares
owned of record are also owned beneficially.
H-3
EXHIBIT I
TRUSTEE OWNERSHIP OF FUND SHARES
Set forth below is the dollar range of equity securities beneficially owned
by each trustee and nominee as of October 31, 2007 (i) in the Fund and (ii) on
an aggregate basis, in all registered investment companies overseen by the
trustee within the AIM Funds complex.
DOLLAR RANGE OF EQUITY SECURITIES PER FUND
INTERESTED TRUSTEES
-------------------------------------
MARTIN L. FLANAGAN PHILIP A. TAYLOR
------------------ ----------------
AIM STOCK FUNDS
AIM Dynamics Fund
Aggregate Dollar Range of Equity
Securities in All Registered
Investment Companies Overseen By
Trustee in the AIM Funds Complex
I-1
DOLLAR RANGE OF EQUITY SECURITIES PER FUND
INDEPENDENT TRUSTEES
---------------------------------------------------------------
BOB R. FRANK S. JAMES T. BRUCE L. ALBERT R. JACK M.
BAKER BAYLEY BUNCH(1) CROCKETT DOWDEN FIELDS(1)
------ -------- -------- -------- --------- ---------
AIM STOCK FUNDS
AIM Dynamics Fund
Aggregate Dollar Range of Equity
Securities in All Registered
Investment Companies Overseen By
Trustee in the AIM Funds Complex
- ----------
(1) Amounts shown include the total amount of compensation deferred by the
trustee at his or her election pursuant to a deferred compensation plan.
Such deferred compensation is placed in a deferral account and deemed to be
invested in one or more of the AIM Funds.
I-2
DOLLAR RANGE OF EQUITY SECURITIES PER FUND
INDEPENDENT TRUSTEES
-----------------------------------------------------------------------------
CARL PREMA MATHAI LEWIS F. RUTH H. LARRY RAYMOND
FRISCHLING(1) DAVIS(1) PENNOCK QUIGLEY SOLL(1) STICKEL, JR.(1)
------------- ------------ -------- ------- ------- ---------------
AIM STOCK FUNDS
AIM Dynamics Fund
Aggregate Dollar Range of Equity
Securities in All Registered Investment
Companies Overseen By Trustee in the
AIM Funds Complex
- ----------
(1) Amounts shown include the total amount of compensation deferred by the
trustee at his or her election pursuant to a deferred compensation plan.
Such deferred compensation is placed in a deferral account and deemed to be
invested in one or more of the AIM Funds.
I-3
-------------------------------------------------------------------------
FOUR EASY WAYS TO VOTE YOUR PROXY
INTERNET: Go to WWW.XXXXXXXXXXXXXX.XXX and follow the online directions.
TELEPHONE: Call 1-800-XXX-XXXX and follow the simple instructions.
MAIL: Vote, sign, date and return your proxy by mail.
(AIM INVESTMENTS(R) LOGO) IN PERSON: Vote at the Special Meeting of Shareholders.
-------------------------------------------------------------------------
999 999 999 999 99
AIM DYNAMICS FUND (THE "FUND") PROXY SOLICITED BY THE BOARD OF TRUSTEES (THE "BOARD")
AN INVESTMENT PORTFOLIO OF AIM STOCK FUNDS (THE "TRUST") PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD FEBRUARY 29, 2008
The undersigned hereby appoints Philip A. Taylor, John M. Zerr and Sidney M. Dilgren, and any one of them separately, proxies with
full power of substitution in each, and hereby authorizes them to represent and to vote, as designated on the reverse of this proxy
card, at the Special Meeting of Shareholders on February 29, 2008, at 3:00 p.m., Central Time, and at any adjournment or
postponement thereof, all of the shares of the Fund which the undersigned would be entitled to vote if personally present. IF THIS
PROXY IS SIGNED AND RETURNED WITH NO CHOICE INDICATED, THE SHARES WILL BE VOTED "FOR" EACH NOMINEE AND "FOR" THE APPROVAL OF EACH
PROPOSAL.
NOTE: IF YOU VOTE BY TELEPHONE OR ON THE INTERNET, PLEASE DO
NOT RETURN YOUR PROXY CARD.
(ARROW)
PROXY MUST BE SIGNED AND DATED BELOW.
Dated
---------------
----------------------------------------------------------------
----------------------------------------------------------------
Signature(s) (if held jointly) (SIGN IN THE BOX)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY
CARD. All joint owners should sign. When signing as executor,
administrator, attorney, trustee or guardian or as custodian for
a minor, please give full title as such. If a corporation,
limited liability company, or partnership, please sign in full
entity name and indicate the signer's position with the entity.
(ARROW)
*--+
(ARROW) PLEASE FILL IN BOX AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X] (ARROW)
PLEASE DO NOT USE FINE POINT PENS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD. THE BOARD RECOMMENDS VOTING "FOR" EACH PROPOSAL.
WITHHOLD
AUTHORITY
FOR FOR ALL FOR ALL
ALL NOMINEES EXCEPT*
1. To elect 13 trustees to the Board of Trustees of the Trust, each of whom will serve until his [ ] [ ] [ ] 1.
or her successor is elected and qualified:
(01) Bob R. Baker (08) Carl Frischling
(02) Frank S. Bayley (09) Prema Mathai-Davis
(03) James T. Bunch (10) Lewis F. Pennock
(04) Bruce L. Crockett (11) Larry Soll, Ph.D.
(05) Albert R. Dowden (12) Raymond Stickel, Jr.
(06) Jack M. Fields (13) Philip A. Taylor
(07) Martin L. Flanagan
* TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND WRITE
THE NOMINEE'S NUMBER(S) ON THE LINE PROVIDED.
-------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve a new sub-advisory agreement for the Fund between A I M Advisors, Inc. and each [ ] [ ] [ ] 2.
of AIM Funds Management Inc.; INVESCO Asset Management Deutschland, GmbH; INVESCO Asset
Management Ltd.; INVESCO Asset Management (Japan) Limited; INVESCO Australia Limited;
INVESCO Global Asset Management (N.A.), Inc.; INVESCO Hong Kong Limited; INVESCO
Institutional (N.A.), Inc.; and INVESCO Senior Secured Management, Inc.
3. To approve changing certain fundamental investment restrictions of the Fund to provide the
Fund with more investment flexibility:
a. Modification of Fundamental Restriction on Issuer Diversification. [ ] [ ] [ ] a.
b. Modification of Fundamental Restrictions on Issuing Senior Securities and Borrowing Money. [ ] [ ] [ ] b.
c. Modification of Fundamental Restriction on Underwriting Securities. [ ] [ ] [ ] c.
d. Modification of Fundamental Restriction on Industry Concentration. [ ] [ ] [ ] d.
e. Modification of Fundamental Restriction on Real Estate Investments. [ ] [ ] [ ] e.
f. Modification of Fundamental Restriction on Purchasing or Selling Commodities. [ ] [ ] [ ] f.
g. Modification of Fundamental Restriction on Making Loans. [ ] [ ] [ ] g.
h. Modification of Fundamental Restriction on Investment in Investment Companies. [ ] [ ] [ ] h.
4. To approve making the investment objective of the Fund non-fundamental. [ ] [ ] [ ] 4.
5. To approve an amendment to the Trust's Agreement and Declaration of Trust that would permit [ ] [ ] [ ] 5.
the Board of Trustees of the Trust to terminate the Trust, the Fund and each other series
portfolio of the Trust, or a share class without a shareholder vote.
6. To approve an Agreement and Plan of Reorganization that provides for the restructuring of [ ] [ ] [ ] 6.
the Fund as a new series portfolio of AIM Investment Securities Funds, an existing open-end
management investment company organized as a Delaware statutory trust, the transfer of all
of the Fund's assets and liabilities to the new series portfolio and the termination of the
Fund as a designated series of the Trust.
PROXIES ARE AUTHORIZED TO VOTE, IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE VOTE, SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
(ARROW) (ARROW)