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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
_______________________________________________________________________________
AIM EQUITY FUNDS, INC.
(For its Series Portfolio:
AIM Aggressive Growth Fund)
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
_______________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________________
5) Total fee paid:
_______________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_______________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________________
3) Filing Party:
_______________________________________________________________________________
4) Date Filed:
_______________________________________________________________________________
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THE AIM FAMILY OF FUNDS--Registered Trademark--
11 Greenway Plaza, Suite 1919
Houston, TX 77046
November 27, 1996
Dear Shareholder:
As you may know, A I M Management Group Inc. ("AIM Management"), the parent
company of A I M Advisors, Inc. ("AIM"), the investment adviser to the AIM
Family of Funds--Registered Trademark--, has entered into an agreement under
which AIM Management will merge with a subsidiary of INVESCO plc ("INVESCO"). As
a result of this merger, it is necessary for the shareholders of each of the AIM
Funds to approve a new investment advisory agreement (and in some cases, a new
subadvisory agreement).
The following important facts about the transaction are outlined below:
- The merger has no effect on the number of shares you own or the value of
those shares.
- The advisory fees and expenses charged to your Fund will not change as a
result of this merger.
- The investment objectives of the Fund will remain the same and key
employees of AIM will continue to manage your Funds as they have in the
past.
- The merger will not change the quality of the investment management and
shareholder services that you have received over the years.
Shareholders are also being asked to approve Directors/Trustees, to approve
certain proposed changes in fundamental policies and to ratify the selection of
independent accountants. After careful consideration, the Board of
Directors/Trustees of your Fund has unanimously approved these proposals and
recommends that you read the enclosed materials carefully and then vote FOR all
proposals.
Since all of the AIM Funds are required to conduct shareholder meetings, you
will receive at least one statement and a proxy card for each Fund you own.
Please vote each proxy card you receive.
Your vote is important. Please take a moment now to sign and return your proxy
cards in the enclosed postage paid return envelope. If we do not hear from you
after a reasonable amount of time you may receive a telephone call from our
proxy solicitor, Shareholder Communications Corporation, reminding you to vote
your shares.
Thank you for your cooperation and continued support.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
ENCLOSED YOU WILL FIND ONE OR MORE PROXY CARDS RELATING TO EACH OF THE
FUNDS FOR WHICH YOU ARE ENTITLED TO VOTE. PLEASE INDICATE YOUR VOTING
INSTRUCTIONS ON EACH OF THE ENCLOSED PROXY CARDS, DATE AND SIGN THEM, AND RETURN
THEM IN THE ENVELOPE PROVIDED. IF YOU SIGN, DATE AND RETURN A PROXY CARD BUT
GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE NOMINEES FOR
TRUSTEE OR DIRECTOR NAMED IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL OTHER
PROPOSALS INDICATED ON THE CARDS. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO
THE FUNDS OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR
PROXY CARDS PROMPTLY. UNLESS PROXY CARDS ARE SIGNED BY THE APPROPRIATE PERSONS
AS INDICATED IN THE INSTRUCTIONS BELOW, THEY WILL NOT BE VOTED.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. for
example:
REGISTRATION VALID SIGNATURE
- ------------------------------------------------------------ ------------------------------
Trust Accounts
(1) ABC Trust Account.................................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78................ Jane B. Doe
Partnership Accounts
(1) The XYZ Partnership................................ Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership............... Jane B. Smith, General Partner
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGMA/UTMA......................................... John B. Smith
(2) Estate of John B. Smith............................ John B. Smith, Jr., Executor
(1) ABC Corp. ......................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp. ......................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer.................. John Doe
(4) ABC Corp. Profit Sharing Plan...................... John Doe, Trustee
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AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 7, 1997
------------------------------
TO THE SHAREHOLDERS:
An annual meeting of shareholders of AIM Equity Funds, Inc. ("AEF") will be
held on Friday, February 7, 1997 at 2:00 p.m. local time at 11 Greenway Plaza,
Suite 1919, Houston, Texas, with respect to the series portfolio listed above
(the "Fund"), for the following purposes:
(1) To elect nine Directors, each of whom will serve until his successor
is elected and qualified.
(2) To approve a new Investment Advisory Agreement with A I M Advisors,
Inc.
(3) To eliminate the fundamental investment policy restricting
investments in other investment companies and to amend certain
related fundamental investment policies.
(4) To ratify the selection of KPMG Peat Marwick LLP as independent
accountants for the fiscal year ending in 1997.
(5) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on December 3, 1996 are
entitled to vote at the joint annual meeting and any adjournments. If you attend
the joint annual meeting, you may vote your shares in person. If you expect to
attend the annual meeting in person, please notify the Fund by calling
1-800- - . If you do not expect to attend the annual meeting, please fill
in, date, sign and return the proxy card in the enclosed envelope which requires
no postage if mailed in the United States.
It is important that you return your signed proxy card promptly so that a
quorum may be assured.
December 20, 1996
Charles T. Bauer
Chairman of the Board of Directors
- ---------------
GROUP C
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AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 7, 1997
------------------------------
The accompanying proxy is solicited by the Board of Directors of AIM Equity
Funds, Inc. ("AEF" or the "Company") on behalf of the series portfolio listed
above (the "Fund"), in connection with the annual meeting of shareholders of the
Fund to be held at the offices of A I M Advisors, Inc. ("AIM"), 11 Greenway
Plaza, Suite 1919, Houston, Texas at 2:00 p.m. local time on February 7, 1997
(the "Annual Meeting"). A shareholder can revoke the proxy prior to its use by
appearing at the Annual Meeting and voting in person, by giving written notice
of such revocation to the Secretary of AEF, or by returning a subsequently dated
proxy. If you expect to attend the Annual Meeting in person, please notify the
Fund by calling 1-800- - .
The proposals to be presented at the Annual Meeting are as follows:
(1) To elect nine Directors, each of whom will serve until his successor is
elected and qualified.
(2) To approve a new Investment Advisory Agreement with A I M Advisors,
Inc.
(3) To eliminate the fundamental investment policy restricting investments
in other investment companies and to amend certain related fundamental
investment policies.
(4) To ratify the selection of KPMG Peat Marwick LLP as independent
accountants for the fiscal year ending in 1997.
Upon the request of any shareholder, the Fund will furnish, without charge,
a copy of its annual report for its most recent fiscal year. All such requests
should be directed to AIM at 1-800-347-4246.
VOTING
Shareholders of record at the close of business on December 3, 1996 (the
"Record Date") will be entitled to one vote per share on all business of the
Annual Meeting. AEF had shares of its Common Stock outstanding on the
Record Date. The number of shares outstanding on the Record Date for each series
portfolio of AEF is set forth in Annex A. It is expected that this proxy
statement and the accompanying proxy will be first sent to shareholders on or
about December 20, 1996.
The affirmative vote of a plurality of votes cast is necessary to elect the
Board of Directors, i.e., the nominees receiving the most votes will be elected
(Proposal 1). The favorable vote of the holders of a "majority of the
outstanding voting securities" of the Fund, as defined in the Investment Company
Act of 1940, as amended (the "1940 Act") is required to approve the Fund's new
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Investment Advisory Agreement (Proposal 2), and to approve the elimination of
the Fund's fundamental investment policy restricting investments in other
investment companies and to amend certain related fundamental investment
policies (Proposal 3). The 1940 Act defines a "majority of the outstanding
voting securities" of a Fund to mean the lesser of (a) the vote of holders of
67% or more of the shares of Common Stock of the Fund present in person or by
proxy at the Annual Meeting, if the holders of more than 50% of the outstanding
voting shares of the Fund are present in person or by proxy, or (b) the vote of
the holders of more than 50% of the outstanding Common Stock of the Fund. An
affirmative vote of a majority of votes cast is necessary to ratify the
selection of the independent accountant for the Fund (Proposal 4).
The Board of Directors of AEF has named Charles T. Bauer, Chairman, Robert
H. Graham, President, and Carol F. Relihan, Secretary, of AEF, as proxies.
Unless specific instructions are given to the contrary in the accompanying
proxy, the proxies will vote FOR the election of each Director named in the
proxy statement, FOR the approval of the new Investment Advisory Agreement, FOR
the proposal to eliminate the Fund's fundamental investment policy restricting
investment in other investment companies and to amend certain related
fundamental investment policies, and FOR the ratification of the selection of
KPMG Peat Marwick LLP as independent accountants for the Fund. Abstentions and
broker non-votes (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other person
entitled to vote shares on a particular matter with respect to which the broker
or nominee does not have discretionary power) with respect to any proposal will
be counted for purposes of determining whether a quorum is present at the Annual
Meeting. Abstentions and broker non-votes do not count as votes cast but have
the same effect as casting a vote against proposals that require the vote of a
majority of the shares present at the Annual Meeting, provided a quorum exists.
A quorum will be deemed present with respect to a Fund if the holders of more
than 50% of the outstanding voting securities of such Fund are present in person
or voting by proxy.
The Board of Directors of AEF currently knows of no other matters to be
presented at the Annual Meeting. If any other matters properly come before the
Annual Meeting, the proxies will vote in accordance with their best judgment.
The proxies may propose to adjourn the meeting to permit further solicitation of
proxies or for other purposes. Any such adjournment will require the affirmative
vote of a majority of the votes cast.
PROPOSAL 1 --
ELECTION OF DIRECTORS
For election of directors at the Annual Meeting, the Board of Directors of
AEF has approved the nomination of Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, John F. Kroeger, Robert H. Graham, Lewis F. Pennock,
Ian W. Robinson, and Louis S. Sklar, each of whom is currently a Director of
AEF, each to serve as Director until his successor is elected and qualified. All
of the nominees presently serve as Directors, Trustees or officers of the ten
open-end management investment companies advised by AIM (all such investment
companies and their series portfolios, if any, are referred to collectively as
the "AIM Funds").
The proxies will vote for the election of the nominees named below unless
authority to vote for any or all of the nominees is withheld in the proxy. A
nominee must receive affirmative votes from a plurality of the votes cast at a
meeting at which a quorum is present to be elected. Each of the
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nominees has indicated that he is willing to serve as a Director. If any or all
of the nominees should become unavailable for election due to events not now
known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the Directors who are not "interested persons" of AEF, as
defined in the 1940 Act, may recommend.
The following table sets forth certain information concerning the
Directors:
DIRECTOR (1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ---------------------------- --------- -----------------------------------------------------
Charles T. Bauer (77)* 05/20/88 (1) Director, Chairman and Chief Executive Officer,
A I M Management Group Inc. and Chairman of the Board
of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company. (2)
Director/Trustee of the AIM Funds.
Bruce L. Crockett (52) 10/04/93 (1) Formerly, Director, President and Chief Executive
Officer, COMSAT Corporation (includes COMSAT World
Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International
Ventures); President and Chief Operating Officer,
COMSAT Corporation; President, World Systems
Division, COMSAT Corporation; and Chairman, Board of
Governors of INTELSAT; (each of the COMSAT companies
listed above is an international communication,
information and entertainment-distribution services
company). (2) Director/Trustee of the AIM Funds.
Owen Daly II (72) 05/24/88 (1) Formerly, Director, CF&I Steel Corp., Monumental
Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation. (2) Director/Trustee of the
AIM Funds; and Director, Cortland Trust Inc.
(investment company).
Carl Frischling (59)** 05/24/88 (1) Partner, Kramer, Levin, Naftalis & Frankel (law
firm). Formerly, Partner, Reid & Priest (law firm);
and prior thereto, Partner, Spengler Carlson Gubar
Brodsky & Frischling (law firm). (2) Director/Trustee
of the AIM Funds.
- ---------------
* Mr. Bauer is an "interested person" of the Company, as defined in the 1940
Act, primarily because of his positions with AIM, and its affiliated
companies, as set forth above, and through his ownership of stock of A I M
Management Group Inc., which owns all of the outstanding stock of AIM.
** Mr. Frischling is an "interested person" of the Company, as defined in the
1940 Act, primarily because of payments received by his law firm for
services to the Fund.
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DIRECTOR (1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ---------------------------- --------- -----------------------------------------------------
Robert H. Graham (49)*** 05/10/94 (1) Director, President and Chief Operating Officer,
A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; and Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., A I M
Institutional Fund Services, Inc. and Fund Management
Company. (2) Director/Trustee of the AIM Funds.
John F. Kroeger (72) 05/24/88 (1) Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm). (2)
Director/Trustee of the AIM Funds; and Director, Flag
Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone
Income Fund, Inc., Flag Investors Equity Partners
Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc.,
Managed Municipal Fund, Inc., Flag Investors Value
Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag
Investors Real Estate Securities Fund, Inc., Alex
Brown Cash Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment companies).
Lewis F. Pennock (54) 05/24/88 (1) Attorney in private practice in Houston, Texas.
(2) Director/Trustee of the AIM Funds.
Ian W. Robinson (73) 10/24/93 (1) Formerly, Executive Vice President and Chief
Financial Officer, Bell Atlantic Management Services,
Inc. (provider of centralized management services to
telephone companies); Executive Vice President, Bell
Atlantic Corporation (parent of seven telephone
companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and
Diamond State Telephone Company. (2) Director/Trustee
of the AIM Funds.
Louis S. Sklar (56) 04/27/89 (1) Executive Vice President, Development and
Operations, Hines Interests Limited Partnership (real
estate development). (2) Director/Trustee of the AIM
Funds.
- ---------------
*** Mr. Graham is an "interested person" of the Company, as defined in the 1940
Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of A I M
Management Group Inc., which owns all of the outstanding stock of AIM.
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The Company does not hold regular annual meetings at which Directors are
elected.
During the year ending December 31, 1996, AEF's Board of Directors met
eight times. AEF has three standing committees of the Board of Directors: the
Audit Committee, the Investments Committee and the Nominating and Compensation
Committee. During the year ending December 31, 1996, the Audit Committee met
four times, the Investments Committee met four times, and the Nominating and
Compensation Committee met two times. During such year, AEF's Directors attended
at least 75% of the aggregate of the number of meetings of the Board of
Directors and all committees.
The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman),
Pennock and Robinson. The Audit Committee for AEF is responsible for meeting
with the Fund's auditors to review audit procedures and results and to consider
any matters arising from an audit to be brought to the attention of the
Directors as a whole with respect to the Fund's fund accounting or its internal
accounting controls, or for considering such other matters as the Board of
Directors may determine. None of the members of the Audit Committee is an
"interested person" of the Company, as defined by the 1940 Act.
The members of the Investments Committee of the Company are Messrs. Bauer,
Crockett, Daly (Chairman), Kroeger and Pennock. The Investments Committee is
responsible for reviewing portfolio compliance, brokerage allocation, portfolio
investment pricing issues, interim dividend and distribution issues, or
considering such other matters as the Board of Directors may from time to time
determine. Mr. Bauer is an "interested person" of the Company, as defined by the
1940 Act.
The members of the Nominating and Compensation Committee of the Company are
Messrs. Crockett, Daly, Kroeger, Pennock (Chairman), and Sklar. The Nominating
and Compensation Committee is responsible for considering and nominating
individuals to stand for election as Directors who are not interested persons,
reviewing from time to time the compensation payable to the Directors who are
not "interested persons" of the Company defined by the 1940 Act, or considering
such other matters as the Board of Directors may from time to time determine.
The Nominating and Compensation Committee does not consider nominees for
Director recommended by shareholders. None of the members of the Nominating and
Compensation Committee is an "interested person" of the Fund, as defined by the
1940 Act.
COMPENSATION OF DIRECTORS
Each Director is reimbursed for expenses incurred in attending each meeting
of the Board of Directors or any committee thereof. Each Director who is not
also an officer of the Company is compensated for his services according to a
fee schedule which recognizes the fact that such Director also serves as a
director or trustee of other AIM Funds. Each such Director receives a fee,
allocated among the AIM Funds, which consists of an annual retainer component
and a meeting fee component.
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Set forth below is information regarding compensation paid or accrued
estimated for the calendar year ending December 31, 1996 for each Director of
the Company:
RETIREMENT TOTAL
AGGREGATE BENEFITS ACCRUED COMPENSATION
COMPENSATION BY ALL AIM FROM ALL AIM
DIRECTOR FROM AEF(1) FUNDS(2) FUNDS(3)
-------------------------------------- ----------- ---------------- ------------
Charles T. Bauer...................... 0 0 0
Bruce L. Crockett..................... $18,347 $ 38,621 $ 67,000
Owen Daly II.......................... 18,276 82,607 67,000
Carl Frischling....................... 18,347 56,863 67,000
Robert H. Graham...................... 0 0 0
John F. Kroeger....................... 17,777 83,654 65,000
Lewis F. Pennock...................... 18,026 33,702 66,000
Ian W. Robinson....................... 18,347 64,793 67,000
Louis S. Sklar........................ 18,069 47,593 65,500
- ------------------------------
(1) The total amount of compensation deferred by all Directors of AEF estimated
for the year ending December 31, 1996, including interest earned thereon, is
$75,752.
(2) During the year ending December 31, 1996, the total amount of expenses
allocated to the Company in respect of such retirement benefits is $163,136
for AEF.
(3) Each Director serves as a Director or Trustee of a total of ten AIM Funds.
Data reflect estimated total compensation earned during the calendar year
ending December 31, 1996.
------------------------------
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Retirement Plan"), each Director who is an "Eligible
Director" (as defined in the Retirement Plan) may be entitled to certain
benefits upon retirement from the Board of Directors. Pursuant to the Retirement
Plan, the normal retirement date is the date on which the Eligible Director has
attained age 65 and has completed at least five years of continuous service with
one or more of the AIM Funds. Each Eligible Director is entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the AIM Funds for such Eligible Director during the
twelve-month period immediately preceding the Eligible Director's retirement
(including amounts deferred under a separate agreement between the AIM Funds and
the Eligible Director) for the number of such Eligible Director's years of
service (not in excess of ten years of service) completed with respect to any of
the AIM Funds. If an Eligible Director dies after attaining the normal
retirement date but before receipt of any benefits under the Retirement Plan
commences, the Eligible Director's surviving spouse (if any) shall receive a
quarterly survivor's benefit equal to 50% of the amount payable to the deceased
Eligible Director for no more than ten years beginning the first day of the
calendar quarter following the date of the Eligible Director's death. Payments
under the Retirement Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits payable
to an Eligible Director upon retirement assuming various compensation and years
of service classifications. The estimated
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credited years of service for Messrs. Crockett, Daly, Frischling, Kroeger,
Pennock, Robinson and Sklar are 9, 10, 19, 19, 15, 9, and 7, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
NUMBER OF YEARS ANNUAL COMPENSATION PAID BY ALL AIM FUNDS
OF SERVICE WITH -------------------------------------------
THE AIM FUNDS $55,000 $60,000 $65,000
- --------------- ------- ------- -------
10.................................. $41,250 $45,000 $48,750
9................................... 37,125 40,500 43,875
8................................... 33,000 36,000 39,000
7................................... 28,875 31,500 34,125
6................................... 24,750 27,000 29,250
5................................... 20,625 22,500 24,375
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "Deferring Directors") have each executed a Deferred
Compensation Agreement (collectively, the "DC Agreements"). Pursuant to the DC
Agreements, the Deferring Directors may elect to defer receipt of up to 100% of
their compensation payable by the Fund, and such amounts are placed into a
deferral account. Currently, the Deferring Directors may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the Deferring Directors' deferral accounts will be
paid in cash generally in equal quarterly installments over a period of ten
years beginning on the date the Deferring Director's retirement benefits
commence under the Retirement Plan. The Company's Board of Directors, in their
sole discretion, may accelerate or extend the distribution of such deferral
accounts after a Deferring Director's termination of service as a Director of
the Company. If a Deferring Director dies prior to the distribution of amounts
in his deferral account, the balance of the deferral account will be distributed
to his designated beneficiary in a single lump sum payment as soon as
practicable after such Deferring Director's death. The DC Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the Deferring Directors have the status of unsecured creditors of the
Funds and of each other AIM Fund from which they are deferring compensation.
MATERIAL LEGAL PROCEEDINGS
A claim, Saltzberg v. AIM Equity Funds, Inc., et al., Case No. H96-3657
(S.D. Tex. filed October 25, 1996), has recently been brought against AIM and
certain other subsidiaries of AIM Management. The claim was instituted under
section 36(b) of the 1940 Act and seeks to recover damages allegedly suffered by
AIM Aggressive Growth Fund in connection with fees paid for marketing and
shareholder services after AIM Aggressive Growth Fund was closed to new
investors. AIM Management is investigating whether there is any basis at all for
this claim and intends to defend it vigorously.
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PROPOSAL 2 --
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
INTRODUCTION
Shareholders are being asked to approve a new Investment Advisory Agreement
(the "New Advisory Agreement") that, except as discussed below with respect to
the licensing of the "AIM" name, has no material changes in its terms and
conditions, no changes in fees, and no material changes in the way the Fund is
managed, advised or operated.
AIM serves as investment advisor to the Fund from the date set forth in
Annex B pursuant to an advisory agreement (the "Current Advisory Agreement")
executed on the date set forth in Annex B and has been investment advisor to the
Fund since June 30, 1992. On May 14, 1996, the Board of Directors of AEF,
including a majority of the directors who are not interested persons of the
Company or AIM (the "Independent Directors"), voted to continue the Current
Advisory Agreement for an additional year until June 30, 1997.
The Fund is seeking shareholder approval of the New Advisory Agreement
because of the technical requirements of the 1940 Act that apply to the merger
(the "Merger") described below under "Merger of AIM Management and INVESCO."
Because the Merger will result in a transfer of more than 25% of the outstanding
voting shares of AIM Management, the direct parent of AIM, an "assignment" of
the Current Advisory Agreement will occur under the 1940 Act. The Current
Advisory Agreement provides that it will terminate automatically upon its
assignment, as required by the 1940 Act. As discussed below, the Merger will not
cause any change in the operation of AIM's business.
At a meeting held on December 10, 1996, the Board of Directors of AEF,
including a majority of the Independent Directors, approved, subject to
shareholder approval, the New Advisory Agreement. A copy of a form of the New
Advisory Agreement is attached hereto as Annex C. In approving the New Advisory
Agreement, the Board of Directors took into account the terms of the Merger.
Except as described below with respect to the licensing of the "AIM" name, the
provisions of the Current Advisory Agreement and the New Advisory Agreement are
substantially identical. A description of such agreements is provided below
under "Terms of the Advisory Agreements." Such description is only a summary and
is qualified by reference to the attached Annex C.
If the conditions to the Merger are not met or waived or if the merger
agreement between AIM Management and INVESCO is terminated, the Merger will not
be consummated, and the Current Advisory Agreement will remain in effect. If the
New Advisory Agreement is approved, and the Merger is thereafter consummated,
the New Advisory Agreement will be executed and become effective on the Closing
Date, as defined below. In the event that the New Advisory Agreement is not
approved and the Merger is consummated, the Board will determine what action to
take, in any event subject to the approval of shareholders of the Fund.
MERGER OF AIM MANAGEMENT AND INVESCO
On November 4, 1996, AIM Management (the parent of AIM) entered into an
agreement and plan of merger (the "Merger Agreement") with INVESCO plc
("INVESCO"). The Merger Agreement provides for the merger of AIM Management into
INVESCO Group Services, Inc. ("IGS"), a
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wholly-owned U.S. subsidiary of INVESCO, or into another wholly-owned U.S.
subsidiary of INVESCO (in either case, "INVESCO Sub").
INVESCO is an English holding company whose shares are publicly traded on
the London Stock Exchange. American Depository Receipts evidencing such shares
are traded on the New York Stock Exchange. INVESCO and its subsidiaries are an
independent investment management group with a major presence in the
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific. INVESCO's North American subsidiaries
manage individualized investment portfolios of equity, fixed income and real
estate securities for institutional clients through five business units. Each
unit utilizes a particular investment style in managing assets, and most of
these units also serve as advisor or sub-advisor to one or more of INVESCO's
U.S. mutual funds. INVESCO's European region serves both institutional and
individual investors through six major business units with facilities in the
United Kingdom, the Channel Islands, Luxembourg and France. INVESCO has also
established relationships with substantial financial organizations in Italy, the
Netherlands, Spain and Portugal. INVESCO's Pacific region manages assets of
clients based in Asia and Australia on a local, regional or global basis. It
also manages investments in the region for INVESCO clients based outside the
region. At September 30, 1996, INVESCO's assets under management were in excess
of $90 billion.
Following the Merger, INVESCO will be renamed AMVESCO, plc ("AMVESCO").
AMVESCO will consist of two major complementary businesses, one comprising
principally its United States institutional and international businesses, and
the other comprising principally its United States retail mutual fund and
defined contribution plan businesses. Each of these businesses will be directed
by a separate management committee. Charles Brady, the Chairman of INVESCO, will
head the management committee for AMVESCO's U.S. institutional and international
businesses. Robert H. Graham, President and Chief Operating Officer of AIM
Management, will become President and Chief Executive Officer of AIM
Management's successor and will head the management committee directing
AMVESCO's United States retail businesses. Charles T. Bauer, currently Chairman
and Chief Executive Officer of AIM Management, will become Vice Chairman of
AMVESCO and Chairman of AIM Management's successor. AIM Management and INVESCO
believe that their businesses are highly complementary and that the expected
benefits resulting from the Merger include broader product range, expanded
distribution capability, increased globalization, greater capacity in defined
contribution plans, and increased financial strength and independence.
AIM has advised the AIM Funds that the Merger is not expected to have a
material effect on the operations of the AIM Funds or on their shareholders. No
material change in investment philosophy, policies or strategies is currently
envisioned. Following the Merger, AIM will continue to be an indirect
wholly-owned subsidiary of the successor to AIM Management. The Merger Agreement
does not, by its terms, contemplate any changes, other than changes in the
ordinary course of business, in the management or operation of AIM relating to
the AIM Funds, the personnel managing the AIM Funds or other services provided
to and business activities of the AIM Funds. The Merger also is not expected to
result in material changes in the business, corporate structure or composition
of the senior management or personnel of AIM. Based on the foregoing, AIM does
not anticipate that the Merger will cause a reduction in the quality of services
provided to the AIM Funds, or have any adverse effect on AIM's ability to
fulfill its respective obligations under the New Advisory Agreements, or to
operate its businesses in a manner consistent with its current practices.
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Under the Merger Agreement, each of INVESCO and INVESCO Sub has covenanted
and agreed that it will comply, and use all reasonable efforts to cause
compliance on behalf of its affiliates, with the provisions of Section 15(f) of
the 1940 Act. Section 15(f) provides, in pertinent part, that an investment
adviser and its affiliates may receive any amount of benefit in connection with
a sale of securities of, or a sale of any other interest in, such investment
adviser that results in an "assignment" of an investment advisory contract as
long as two conditions are met. First, no "unfair burden" may be imposed on the
investment company as a result of the Merger. The term "unfair burden," as
defined in the 1940 Act, includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or predecessor or
successor investment adviser) or any interested person of any such adviser
receives or is entitled to receive any compensation directly or indirectly from
the investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from, or on behalf of the
investment company (other than fees for bona fide principal underwriting
services). No such compensation arrangements are contemplated in connection with
the Merger.
The second condition is that, for a period of three years after the
transaction occurs, at least 75% of the members of the board of directors of the
investment company advised by such adviser are not "interested persons" (as
defined in the 1940 Act) of the new or the old investment adviser. The Board
that you are being asked to elect in Proposal No. 1 meets this 75% requirement.
[BOARDS OF DIRECTORS/TRUSTEES EVALUATION
At meetings with the Boards of Directors/Trustees of the AIM Funds
beginning in September, 1996, representatives of AIM Management began discussing
with the Boards the possibility of a merger between AIM Management and INVESCO.
At a meeting in person held on November 19, 1996, representatives of AIM
Management and INVESCO discussed with the Boards of Directors/Trustees of the
AIM Funds, the specific terms of the Merger Agreement. The Boards of
Directors/Trustees of the AIM Funds then appointed a special committee (the
"Special Committee"), consisting of the Directors/Trustees of the AIM Funds who
are not interested persons of AIM or INVESCO, to review the proposed Merger,
consider its potential impact on the AIM Funds and their shareholders, and make
recommendations to the Boards of Directors/Trustees of the AIM Funds with
respect to the approval of the New Advisory Agreements in view of the proposed
Merger. Directors/Trustees of the AIM Funds who are members of the Special
Committee are Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and
Sklar. The Special Committee met with their legal counsel ("Special Counsel"),
who assisted them in their deliberations concerning approval of the New Advisory
Agreements.
The Special Committee met separately with Special Counsel on November 8,
1996, November 19, 1996 and December 2, 1996 to consider and review the
directors'/trustees' fiduciary obligations and the nature and extent of
additional information to be requested by them to evaluate the New Advisory
Agreements and the potential impact of the Merger on the AIM Funds and their
shareholders. Between November 8, 1996 and December 10, 1996, the Special
Committee and Special Counsel requested and received additional information from
AIM Management, INVESCO and their counsel, and held telephone conferences,
regarding the proposed Merger and its potential impact on the AIM Funds and
their shareholders. On December 10, 1996, the Special Committee and Special
Counsel met separately with representatives of AIM Management and INVESCO to
review various aspects of the
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proposed Merger, and review additional information regarding INVESCO and the
future plans for AIM Management and AIM.
In connection with its review, the Special Committee possessed or obtained
substantial information regarding: the management, the financial position and
the business of INVESCO and its subsidiaries; the history of INVESCO's and its
subsidiaries' business and operations; the performance of the investment
companies and private accounts advised by INVESCO and its subsidiaries; the
impact of the Merger on the AIM Funds and their shareholders; future plans of
AMVESCO with respect to AIM and the AIM Funds; performance and financial
information about each of the AIM Funds; and information about other funds and
their fees and expenses.
The Special Committee also received information regarding the terms of the
Merger and comprehensive financial information, including: INVESCO's plans for
financing the Merger; the impact of the financing on AIM Management and AIM;
INVESCO's plans for the compensation of executives and investment and other
staff of AIM Management and AIM; information concerning employment contracts
with senior management of AIM Management and AIM; and INVESCO's access to
capital markets to meet the capital needs of AIM Management and its
subsidiaries.
In connection with its deliberations, the Special Committee obtained
assurances from INVESCO that: AMVESCO did not intend to change executive
management or staff of AIM Management or AIM (other than appointing Robert H.
Graham Chief Executive officer of the successor to AIM Management), and has
entered into employment agreements with key personnel; AMVESCO will consult with
the Boards of Directors/Trustees of the AIM Funds prior to making material
changes to AIM that could adversely affect the ability of AIM or its
subsidiaries to render services to the AIM Funds; neither AMVESCO nor its
affiliates will impose an "unfair burden" within the meaning of Section 15(f) of
the 1940 Act for a period of two years following the consummation of the Merger;
AMVESCO has not planned any major changes to the operations and capabilities of
AIM or its subsidiaries, except those intended to enhance the capabilities of
those entities to provide better or more efficient services to the AIM Funds.
The Special Committee also evaluated each New Advisory Agreement. The
Special Committee assured itself that each New Advisory Agreement for each AIM
Fund, including the terms relating to the services to be provided and the fees
and expenses payable by such AIM Fund, is on substantially the same terms as the
Current Advisory Agreement for each AIM Fund, except to the extent described
below with respect to the licensing of the "AIM" name.
Based on the Special Committee's review and analysis of the material
provided and the commitments received, the Special Committee unanimously
recommended to the Boards of Directors/Trustees of the AIM Funds that the New
Advisory Agreements be approved.
At the Boards of Directors/Trustees meetings of the AIM Funds held on
December 10 and 11, 1996, the Boards received presentations by INVESCO and AIM.
The Directors/Trustees were supplied with the information given to the Special
Committee in advance of the meeting. The Special Committee discussed with the
Boards of Directors/Trustees the materials it reviewed, the issues it studied
and the reasons for its recommendation. Based upon the foregoing, the Board of
Directors/Trustees of each AIM Fund unanimously approved the New Advisory
Agreement related to that AIM Fund and recommended approval by the
shareholders.]
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ADDITIONAL TERMS OF THE MERGER AGREEMENT
AIM Management will merge into INVESCO Sub for consideration valued at
November 4, 1996 at approximately $1.6 billion, plus the amount of AIM
Management net income from September 1, 1996 through the date on which the
Merger is consummated (the "Closing Date"), minus dividends paid during such
period and subject to adjustments for certain balance sheet items and
transaction expenses. The consideration will include 290 million new Ordinary
Shares (including Ordinary Shares issuable in respect of vested and unvested AIM
Management options) of INVESCO valued at November 4, 1996 at approximately $1.1
billion. The balance of the consideration will be paid in cash.
The directors of AIM Management's successor will be Charles T. Bauer,
Robert H. Graham, Gary T. Crum and Michael J. Cemo, all of whom are currently
officers and directors of AIM. Although Charles T. Bauer will remain Chairman of
AIM Management's successor, Robert H. Graham will become President and Chief
Executive Officers of such successor. Mr. Graham currently serves as AIM
Management's President and Chief Operating Officer.
Upon consummation of the Merger, the AIM Management shareholders will own
approximately 45% of INVESCO's total outstanding capital stock on a fully
diluted basis. INVESCO's shareholders approved the Merger at a meeting on
November 27, 1996, and on December 4, 1996 approved changing INVESCO's name upon
consummation of the Merger. The name of AIM will not change.
The closing is presently expected to occur on [February 28, 1997], subject
to the satisfaction of conditions to closing that include, among other things:
(a) INVESCO having consummated one or more financings and having received net
proceeds of not less than $500 million; (b) the respective aggregate annualized
asset management fees of INVESCO and AIM Management (based on assets under
management, excluding the effects of market movements) in respect of which
consents to the Merger have been obtained being equal to or greater than 87.5%
of all such fees at October 31, 1996; (c) INVESCO and AIM Management having
received certain consents from regulators, lenders and/or other third parties;
(d) AIM Management not having received from the holder or holders of more than
2% of the outstanding AIM Management shares notices that they intend to exercise
dissenters' rights; (e) a Voting Agreement, Standstill Agreement, Transfer
Restriction Agreements, Transfer Administration Agreement, the Registration
Rights Agreement, Indemnification Agreement and employment agreements with
certain AIM Management employees having been executed and delivered; (f) AIM
Management having received an opinion from its U.S. counsel that the Merger will
be treated as a tax-free reorganization; and (g) shareholder resolution to
appoint to INVESCO's Board of Directors six AIM Management designees and a Board
resolution to appoint the seventh AIM Management designee having been passed and
not revoked.
The Merger Agreement may be terminated at any time prior to the Closing
Date (a) by written agreement of INVESCO and AIM Management, (b) by written
notice by AIM Management or INVESCO to the other after June 1, 1997 or (c) under
other circumstances set forth in the Merger Agreement. In certain circumstances
occurring on or before September 30, 1997, a termination fee will be payable by
the party in respect of which such circumstances have occurred.
In connection with the Merger, the following agreements, each to be
effective upon the closing of the Merger, have been or will be executed:
Employment Agreements. Following the Merger, the current officers of
AIM Management will be the officers of the successor to AIM Management and
the directors of the successor to AIM
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Management will be four of the current directors of AIM Management. Senior
management and key employees of AIM Management have entered into employment
agreements which will commence when the Merger is consummated and will
continue for initial terms ranging from one year to four years. All of the
employment agreements contain covenants not to compete extending for at
least one year after termination of employment. Approximately thirty
current employees of AIM Management have entered into such employment
agreements with INVESCO.
Voting Agreement. Certain AIM Management shareholders and their
spouses, the current directors of INVESCO and proposed directors of INVESCO
have agreed to vote as directors and as shareholders to ensure that: (a)
the INVESCO Board will have fifteen members, consisting of four executive
directors and three non-executive directors designated by INVESCO's current
senior management, four executive directors and three non-executive
directors designated by AIM Management's current senior management and a
Chairman; (b) the initial Chairman will be Charles W. Brady (INVESCO's
current Chairman) and the initial Vice Chairman will be Charles T. Bauer
(AIM Management's current Chairman); (c) the parties will vote at any
INVESCO shareholder meeting on resolutions (other than those in respect of
the election of directors) supported by two-thirds of the Board in the same
proportion as votes are cast by unaffiliated shareholders. The Voting
Agreement will terminate on the earlier of the fourth anniversary of the
Closing Date and the date on which a resolution proposed by an
INVESCO-designated Board member is approved by the INVESCO Board despite
being voted against by each AIM Management-designated Board member present
at such Board meeting.
Standstill Agreement and Transfer Restriction Agreements. Certain AIM
Management shareholders and their spouses and certain other significant
shareholders of INVESCO have agreed under certain circumstances for a
maximum of five years not to engage in a number of specified activities
that might result in a change of the ownership or control positions of
INVESCO existing as of the Closing Date. AIM Management shareholders and
INVESCO's current chairman will be restricted in their ability to transfer
their shares of INVESCO for a period of up to five years.
TERMS OF THE ADVISORY AGREEMENTS
Although the Current Advisory Agreement has not terminated and the New
Advisory Agreement has not become effective, such Agreements (collectively, the
"Advisory Agreements") are described below as if they were both in effect.
Under the Advisory Agreements, AIM furnishes investment information and
advice and makes recommendations with respect to the purchase and sale of
investments based upon the Fund's investment policies. AIM has sole
responsibility for the investment decisions of the Fund, subject to the control
of the Board of Directors. The Advisory Agreements provide that, subject to the
approval of the Board of Directors and the shareholders of the Fund, AIM may
delegate certain of its duties to a sub-advisor, provided that AIM shall
continue to supervise the performance of any such sub-advisor.
The Advisory Agreements provide that all of the ordinary business expenses
incurred in the operations of the Fund and the offering of each of its shares
shall be paid by the Fund. These expenses include brokerage commissions, taxes,
legal, accounting, auditing or governmental fees, custodian, transfer agent and
shareholder service agent costs.
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The New Advisory Agreement also provides that the Company shall be entitled
to use the name "AIM" with respect to the Fund only so long as AIM serves as
investment manager or advisor to such Fund. Although the Current Advisory
Agreement presently has a similar provision, the provision in the New Advisory
Agreement will read as follows:
License Agreement. The Company shall have the non-exclusive right to use
the name "AIM" to designate any current or future series of shares only
so long as A I M Advisors, Inc. serves as investment manager or advisor
to the Company with respect to such series of shares.
The Advisory Agreements provide for a monthly fee to AIM computed at an
annual rate of 0.80% of the first $150 million of net assets and 0.625% of the
excess over $150 million. The aggregate advisory fee paid by the Fund to AIM in
its most recently completed fiscal year was $16,492,564.
The Advisory Agreements may be terminated with respect to the Fund on 60
days' written notice without penalty by (i) the Fund, (ii) the action of the
shareholders of the Fund, (iii) the Board of Directors of the Company, or (iv)
AIM. Each Advisory Agreement will terminate automatically in the event of any
assignment, as defined by the 1940 Act. The Advisory Agreements continue from
year to year with respect to the Fund so long as their continuance is
specifically approved at least annually either (i) by the Board of Directors of
the Company or (ii) by the vote of a majority of the Fund's outstanding voting
securities, as defined by the 1940 Act, provided that in either event the
continuance is also approved by the vote of a majority of the Directors of the
Company who are not interested persons of the Company or of AIM, cast in person
at a meeting called for the purpose of voting on such approval.
The Advisory Agreements provide that, upon the request of the Company's
Board of Directors, AIM may perform certain additional services on behalf of the
Fund. The Board of Directors has approved, and AEF has entered into, a Master
Administrative Services Agreement with AIM, pursuant to which AIM has agreed to
provide or arrange for the provision of certain accounting and other
administrative services to the Fund, including the services of a principal
financial officer of the Fund and related staff. As compensation to AIM for its
services under the Master Administrative Services Agreement, the Fund reimburses
AIM for expenses incurred by AIM or its affiliates in connection with such
services.
ADDITIONAL SERVICES PROVIDED BY AIM AND ITS AFFILIATES
As noted above, AIM provides administrative services to the Fund. In
addition, A I M Distributors, Inc. ("AIM Distributors"), a wholly-owned
subsidiary of AIM, serves as the principal underwriter for the Fund. Shares of
the Fund are generally sold with an initial sales charge ("Class A Shares").
Such sales charges are paid by investors. The Fund has also adopted a
distribution plan under Rule 12b-1 of the 1940 Act (a "Plan"), pursuant to which
the Fund compensates AIM Distributors from a portion of the Fund's average daily
net assets attributable to its shares in connection with the distribution of its
shares and in connection with the provision of ongoing services to shareholders.
AIM Distributors reallows a portion of the Rule 12b-1 fees that it receives to
the brokers, dealers, agents and other service providers with whom it has
entered into agreements and who offer shares of the Fund for sale or provide
customers or clients certain continuing personal services.
The Fund categorizes the first 0.25% per year of the Rule 12b-1 fees that
it pays to AIM Distributors attributable to the Class A Shares of the Fund as a
service fee for ongoing personal
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services. Any amount it may pay to AIM Distributors in excess of such amount is
characterized as an asset-based sales charge.
The amounts payable by a Fund under the Plan need not be directly related
to the expenses actually incurred by AlM Distributors on behalf of the Fund.
Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Fund will not be obligated to pay
more than that fee, and if AIM Distributors' expenses are less than the fee it
receives, AIM Distributors will retain the full amount of the fee.
A I M Fund Services, Inc. ("AIM Services"), a wholly-owned subsidiary of
AIM, serves as transfer agent to the Fund.
Information with regard to the amount of fees paid by the Fund to AIM and
its affiliates for services provided other than under the Advisory Agreement in
the Fund's most recently completed fiscal year is set forth in Annex D.
The agreements pursuant to which AIM provides administrative services to
the Fund and AIM Distributors serves as the Fund's principal underwriter will
terminate as a result of the Merger. The Board of Directors of the Company has
approved new agreements, which are substantially identical to the existing
administrative services and distribution agreements, to take effect upon
consummation of the Merger. Under the 1940 Act, such agreements do not require
the approval of shareholders before they become effective. The agreement
pursuant to which AIM Services provides transfer agency services will not
terminate as a result of the Merger.
INFORMATION CONCERNING AIM
AIM serves as the investment advisor to the Fund. AIM was organized in 1976
and, together with its affiliates, advises 38 investment company portfolios
constituting the AIM Funds and sub-advises one investment company portfolio. As
of December 3, 1996, the total assets of the AIM Funds were approximately
$ . AIM is a wholly-owned subsidiary of AIM Management. Certain of the
Directors and officers of AIM are also Directors and executive officers of the
Company, and their names, principal occupations and affiliations are shown in
the table under Proposal 1 and under "Executive Officers" in Annex E.
Information regarding the AIM Funds, including their total net assets and the
fees received by AIM from such AIM Funds for its services, is set forth in Annex
F. The address of AIM, all of the Directors of AIM, AIM Distributors, AIM
Services and AIM Management, is 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the approval of
the New Investment Advisory Agreement.
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PROPOSAL 3 --
ELIMINATION OF THE FUNDAMENTAL INVESTMENT POLICY
RESTRICTING INVESTMENTS IN OTHER INVESTMENT COMPANIES AND
AMENDMENT OF CERTAIN RELATED FUNDAMENTAL INVESTMENT POLICIES
The Board of Directors of AEF, with respect to the Aggressive Growth Fund,
has proposed the elimination and modification of certain fundamental investment
policies that restrict the Fund's ability to invest in other investment
companies. The specific changes proposed are described below.
Section 12 of the 1940 Act generally prohibits the Fund from (i) owning
more than 3% of the total outstanding voting stock of any other investment
company; (ii) investing more than 5% of its total assets in the securities of
any one other investment company; and (iii) investing more than 10% of its total
assets (in the aggregate) in the securities of other investment companies.
The Board of Directors may authorize AIM and the Company to seek exemptive
relief from the Securities and Exchange Commission ("SEC") to permit the Fund to
purchase securities of other investment companies in excess of the limitations
imposed by Section 12 of the 1940 Act (exemptive orders granted with respect to
the Fund are referred to herein collectively as the "Exemptive Orders"). The
investment companies in which the Fund may invest pursuant to the Exemptive
Orders are referred to herein collectively as the "Exemptive Order Funds."
The Company and AIM may seek Exemptive Orders because they believe that the
Fund can effectively invest in certain other types of securities through pooled
investment vehicles such as the Exemptive Order Funds. By pooling their
investments in such securities, the Fund may have the ability to invest in a
wider range of issuers, industries and markets, thereby seeking to decrease
volatility and risk while at the same time providing greater liquidity than the
Fund would have available to it investing in such securities by itself. Pooling
investments may also allow the Fund to increase the efficiency of portfolio
management by permitting the Fund's portfolio manager to concentrate on those
investments that constitute the bulk of the Fund's assets and not spend a
disproportionate amount of time on specialized areas. The Company may seek
Exemptive Orders to permit, among other things, investments by the Fund for cash
management purposes in money market funds advised by AIM, implementation of a
master/feeder fund structure or investments in a separate small capitalization
or initial public offering fund.
If the proposed elimination of the Fund's restrictions on investments in
other investment companies is approved, the Fund may invest in securities of an
Exemptive Order Fund only to the extent consistent with the Fund's investment
objectives and policies as set forth from time to time in its registration
statement.
In connection with obtaining Exemptive Orders, AIM may agree to waive fees
applicable to the Fund to the extent that the assets of the Fund are invested in
Exemptive Order Funds and collect fees from the Exemptive Order Funds. Other
expenses incurred by the Exemptive Order Funds (such as audit and custodial
fees) will be borne by them, and thus indirectly by the Fund. AIM believes that
these indirect expenses will be offset by the benefits to the Funds of pooling
their investments.
The Fund currently has fundamental investment restrictions that prohibit it
from purchasing securities issued by other investment companies. In order to
take full advantage of the exemptive relief that may be granted by the SEC and
to invest in shares of the Exemptive Order Funds in excess of the
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percentage limitations imposed by Section 12, the Fund is seeking shareholder
approval to eliminate this investment restriction.
The Fund currently has other fundamental investment restrictions that may
prohibit it from taking full advantage of the Exemptive Orders. These
fundamental restrictions include the following:
Diversification. AIM Aggressive Growth Fund is prohibited from investing
more than 5% of its assets in securities of a single issuer, except that
the Fund may invest up to 25% of all assets without regard to such
restrictions.
From time to time, the Fund may desire to invest more than 25% of its
assets in one or more Exemptive Order Funds.
Additional information regarding the Fund's fundamental investment
restrictions may be obtained without cost by telephoning AIM at 1-800-347-4246
and requesting a copy of the Fund's Statement of Additional Information.
In order to take full advantage of the Exemptive Orders, the Fund seeks
shareholder approval to amend such restrictions by adding the following
exception to each restriction:
..., except that the AIM Aggressive Growth Fund may purchase securities of
other investment companies to the extent permitted by applicable law or
exemptive order.
The elimination of the fundamental investment policy restricting
investments in other investment companies and the amendments to the related
fundamental investment policies would become effective March 1, 1997, if
approved by shareholders at the Annual Meeting. These changes are not related to
the Merger described in Proposal 2. Shareholders are being asked to consider
such amendments at this time because the Company does not regularly hold annual
shareholder meetings. AIM believes that submitting this proposal together with
Proposal 2 may reduce the expenses incurred by the Fund in connection with
soliciting approval of this proposal because the Company will not be required to
hold a separate meeting.
RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR the proposal to
eliminate the fundamental investment policy restricting investments in other
investment companies and to amend a related fundamental investment policy.
PROPOSAL 4 --
RATIFICATION OF SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS
The Board of Directors of AEF, including a majority of the Independent
Directors, has selected KPMG Peat Marwick LLP as independent accountants for the
fiscal year ending in 1997 to examine and verify the accounts and securities of
the Fund, and to report thereon to the Board and its shareholders. This
selection will be submitted for ratification at the Annual Meeting. A
representative of such firm is expected to be present at the meeting.
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RECOMMENDATION OF DIRECTORS
The Board of Directors of AEF recommends that you vote FOR ratification of
the selection of KPMG Peat Marwick LLP as the independent accountants.
GENERAL INFORMATION
EXECUTIVE OFFICERS OF THE COMPANY
Information regarding the executive officers of the Company is set forth in
Annex E.
SECURITY OWNERSHIP OF MANAGEMENT AND 5% HOLDERS
Information regarding ownership of the Fund's shares by Directors and
executive officers and 5% holders of each class of the Fund is set forth in
Annex G.
PROXY SOLICITATION
The Company has engaged the services of Shareholder Communications
Corporation ("SCC") to assist in the solicitation of proxies for the Annual
Meeting. The cost of soliciting proxies will be borne in part by AIM, and in
part by the Fund. It is estimated that the cost of SCC's services will be
approximately [$25,000]. The Company expects to solicit proxies principally by
mail, but the Company or SCC may also solicit proxies by telephone, facsimile or
personal interview. The Fund may also pay persons holding stock in their names,
or those of their nominees, for their expenses in sending proxies and proxy
materials to beneficial owners or principals.
SHAREHOLDER PROPOSALS
As a general matter, the Company does not hold regular annual meetings of
shareholders. Any shareholder who wishes to submit proposals for consideration
at a shareholders' meeting should send such proposal to the Company at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a shareholders' meeting, proposals must be received a
reasonable time before a solicitation is made.
OTHER BUSINESS
The management knows of no business to be presented to the Annual Meeting
other than the matters set forth in this proxy statement.
By order of the Board of Directors,
Charles T. Bauer
Chairman of the Board of Directors
December 20, 1996
18
23
ANNEX A
NUMBER OF SHARES OUTSTANDING ON DECEMBER 3, 1996
FOR EACH SERIES PORTFOLIO OF AEF
AIM EQUITY FUNDS, INC.
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND DECEMBER 3, 1996
- --------------------------------------------------------------------------- ----------------
AIM Aggressive Growth Fund.................................................
AIM Blue Chip Fund.........................................................
AIM Capital Development Fund...............................................
AIM Charter Fund...........................................................
AIM Constellation Fund.....................................................
AIM Weingarten Fund........................................................
-------
TOTAL -- AIM EQUITY FUNDS, INC. ...........................................
=======
19
24
ANNEX B
DATE OF ADVISORY AGREEMENT
DATE SINCE
DATE LAST SUBMITTED AIM HAS SERVED
DATE OF CURRENT TO A VOTE OF AS INVESTMENT
NAME OF COMPANY AND FUND ADVISORY AGREEMENT SHAREHOLDERS* ADVISOR
- ----------------------------------- ----------------------------------- ------------------- ----------------
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund Master Investment Advisory September 28, 1994 June 30, 1992
Agreement, dated October 18, 1993,
as amended by Amendment No. 1,
dated November 14, 1994, as amended
by Amendment No. 2, dated March 12,
1996
- ---------------
* The Current Advisory Agreement dated October 18, 1993 was last submitted to a
vote of shareholders in 1994, to approve a change in the investment advisory
fee.
20
25
ANNEX C
[NAME OF FUND COMPANY]
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this .... day of ........ .., 1997, by and between
[Name of Fund Company], a Maryland Corporation (the "Company"), with respect to
its series of shares shown on the Appendix A attached hereto, as the same may be
amended from time to time, and A I M Advisors, Inc., a Delaware corporation (the
"Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company, consisting of one or more series of investment portfolios;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Company's charter authorizes the Board of Directors of the
Company to classify or reclassify authorized but unissued shares of the Company,
and as of the date of this Agreement, the Company's Board of Directors has
authorized the issuance of [ ] series of shares representing interests in
[ ] investment portfolios (such portfolios and any other portfolios
hereafter added to the Company being referred to individually as a "Fund,"
collectively herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Directors. The Advisor shall give
the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the assets of the Funds or the activities in which such issuers engage,
or with respect to securities which the Advisor considers desirable for
inclusion in the Funds' assets;
21
26
(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Company's
Board of Directors; and
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Company's Board of Directors;
and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.
3. Delegation of Responsibilities. Subject to the approval of the Board of
Directors and the shareholders of the Funds, the Advisor may delegate to a
sub-advisor certain of its duties enumerated in Section 2 hereof, provided that
the Advisor shall continue to supervise the performance of any such sub-advisor.
4. Control by Board of Directors. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Directors of the Company.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time under the Securities Act of 1933
and the 1940 Act;
(c) the provisions of the corporate charter of the Company, as the
same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
6. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Funds, broker-dealer selection, and negotiation
of brokerage commission rates. The Advisor's primary consideration in effecting
a security transaction will be to obtain execution at the most favorable price.
In selecting a broker-dealer to execute each particular transaction, the Advisor
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and the difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Funds on
a continuing basis. Accordingly, the price to the Funds in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Directors may from
time to time determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer that provides
brokerage and research services to the Advisor an amount of
22
27
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
a particular Fund, other Funds of the Company, and to other clients of the
Advisor as to which the Advisor exercises investment discretion. The Advisor is
further authorized to allocate the orders placed by it on behalf of the Funds to
such brokers and dealers who also provide research or statistical material, or
other services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocations regularly to the Board
of Directors of the Company indicating the brokers to whom such allocations have
been made and the basis therefor. In making decisions regarding broker-dealer
relationships, the Advisor may take into consideration the recommendations of
any sub-advisor appointed to provide investment research or advisory services in
connection with the Funds, and may take into consideration any research services
provided to such sub-advisor by broker-dealers.
7. Compensation. The Company shall pay the Advisor as compensation for
services rendered to a Fund hereunder an annual fee, payable monthly, based upon
the average daily net assets of such Fund as the same is set forth in Appendix A
attached hereto. Such compensation shall be paid solely from the assets of such
Fund. The average daily net asset value of the Funds shall be determined in the
manner set forth in the corporate charter and registration statement of the
Company, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board of
Directors, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and the
Company's Board of Directors based on a finding by the Board of Directors that
the provision of such services by the Advisor is in the best interests of the
Company and its shareholders. Payment or assumption by the Advisor of any Fund
expense that the Advisor is not otherwise required to pay or assume under this
Agreement shall not relieve the Advisor of any of its obligations to the Funds
nor obligate the Advisor to pay or assume any similar Fund expense on any
subsequent occasions. Such services may include, but are not limited to:
(a) the services of a principal financial officer of the Company
(including applicable office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and records
of the Company and the Funds, including the review and calculation of daily
net asset value and the preparation of tax returns; and the services
(including applicable office space, facilities and equipment) of any of the
personnel operating under the direction of such principal financial
officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by the
Advisor; changing account designations or changing addresses; assisting in
the purchase or redemption of shares; supervising the operations of the
custodian, transfer agent(s) or dividend disbursing agent(s) for the Funds;
or otherwise providing services to shareholders of the Funds; and
23
28
(c) such other administrative services as may be furnished from time
to time by the Advisor to the Company or the Funds at the request of the
Company's Board of Directors.
9. Expenses of the Funds. All of the ordinary business expenses incurred in
the operations of the Funds and the offering of their shares shall be borne by
the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the
Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
10. Expense Limitation. If, for any fiscal year, the total of all ordinary
business expenses of the Funds, including all investment advisory fees, but
excluding brokerage commissions and fees, taxes, interest and extraordinary
expenses, such as litigation, would exceed the applicable expense limitations
imposed by state securities regulations in any state in which the Funds' shares
are qualified for sale, as such limitations may be raised or lowered from time
to time, the aggregate of all such investment advisory fees shall be reduced by
the amount of such excess. The amount of any such reduction to be borne by the
Advisor shall be deducted from the monthly investment advisory fee otherwise
payable to the Advisor during such fiscal year. If required pursuant to such
state securities regulations, the Advisor will, not later than the last day of
the first month of the next succeeding fiscal year, reimburse the Funds for any
such annual operating expenses (after reduction of all investment advisory fees
in excess of such limitation). For the purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the current fiscal year which shall
have elapsed prior to the date hereof and shall include the portion of the then
current fiscal year which shall have elapsed at the date of termination of this
Agreement. The application of expense limitations shall be applied to each Fund
of the Company separately unless the laws or regulations of any state shall
require that the expense limitations be imposed with respect to the Company as a
whole.
11. Non-Exclusivity. The services of the Advisor to the Company and the
Funds are not to be deemed to be exclusive, and the Advisor shall be free to
render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It is
understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
12. Term and Approval. This Agreement shall become effective with respect
to a Fund if approved by the shareholders of such Fund, and if so approved, this
Agreement shall thereafter continue in force and effect until ,
1999, and may be continued from year to year thereafter, provided that the
continuation of the Agreement is specifically approved at least annually;
24
29
(a) (i) by the Company's Board of Directors or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as defined in
Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such purpose.
13. Termination. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Company's Board of Directors or by vote of a majority of the
outstanding voting securities of the applicable Fund, or by the Advisor, on
sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by the party entitled to receipt thereof. This Agreement
shall automatically terminate in the event of its assignment, the term
"assignment" for purposes of this paragraph having the meaning defined in
Section 2(a)(4) of the 1940 Act.
14. Liability of Advisor and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the 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 Company shall be and that of the Advisor shall be Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046.
16. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Acts. In
addition, where the effect of a requirement of the 1940 Act or the Advisers Act
reflected in any provision of the Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
17. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
25
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
[NAME OF FUND COMPANY]
(a Maryland corporation)
Attest:
By:
- ------------------------------------- --------------------------------------
Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest:
By:
- ------------------------------------- --------------------------------------
Secretary President
(SEAL)
26
31
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
[NAME OF FUND COMPANY]
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fees shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
[FUND]
ANNUAL
NET ASSETS RATE
---------- -------
[Fees will be those set forth in Annex F.]
27
32
ANNEX D
FEES PAID TO AFFILIATES
AIM
(ADMINISTRATIVE AIM AIM
FUND AGREEMENT) DISTRIBUTORS* SERVICES
- ------------------------------------------------- ---------------- ------------- ----------
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund $97,857 $8,635,119 $2,047,282
- ---------------
* Net amount received from sales commissions and Rule 12b-1 fees, not including
amounts paid to brokers, dealers, agents and other service providers.
28
33
ANNEX E
EXECUTIVE OFFICERS
EXECUTIVE OFFICERS OF AEF
Officers of AEF serve at the pleasure of the Board and until their
successors are elected and qualified. Set forth below is certain information
regarding the executive officers of AEF.
BUSINESS EXPERIENCE DURING
NAME AGE POSITION WITH AEF PAST FIVE YEARS
- ---------------------------- --- --------------------- ----------------------------------
Charles T. Bauer 77 Chairman See Director table under Proposal
1.
Robert H. Graham 49 President See Director table under Proposal
1.
John J. Arthur* 52 Senior Vice President Senior Vice President and
and Treasurer Treasurer, A I M Advisors, Inc.
("AIM"); and Vice President and
Treasurer, A I M Management Group
Inc. ("AIM Management"), A I M
Capital Management, Inc. ("AIM
Capital"), A I M Distributors,
Inc. ("AIM Distributors"), A I M
Fund Services, Inc. ("AIM
Services"), A I M Institutional
Fund Services, Inc. ("AIM
Institutional"), and Fund
Management Company ("Fund
Management").
Gary T. Crum 49 Senior Vice President Director and President, AIM
Capital; Director and Senior Vice
President, AIM Management, and
AIM; and Director, AIM
Distributors.
Scott G. Lucas 37 Senior Vice President Director and Senior Vice
President, AIM Capital; and Vice
President, AIM Management and AIM.
Jonathan C. Schoolar 35 Senior Vice President Director and Senior Vice
President, AIM Capital; and Vice
President, AIM.
Carol F. Relihan* 42 Senior Vice President Senior Vice President, General
and Secretary Counsel and Secretary, AIM; Vice
President, General Counsel and
Secretary, AIM Management; Vice
President and General Counsel,
Fund Management; and Vice
President, AIM Capital, AIM
Distributors, AIM Services, and
AIM Institutional.
- ------------------------------
* Mr. Arthur and Ms. Relihan are married to each other.
29
34
BUSINESS EXPERIENCE DURING
NAME AGE POSITION WITH AEF PAST FIVE YEARS
- ---------------------------- --- --------------------- ----------------------------------
Dana R. Sutton 37 Vice President and Vice President and Fund
Assistant Treasurer Controller, AIM; and Assistant
Vice President and Assistant
Treasurer, Fund Management.
Melville B. Cox 53 Vice President Vice President and Chief
Compliance Officer, AIM, AIM
Capital, AIM Distributors, AIM
Services, AIM Institutional and
Fund Management; Formerly, Vice
President, Charles Schwab & Co.,
Inc.; Assistant Secretary, Charles
Schwab Family of Funds and Schwab
Investments; Chief Compliance
Officer, Charles Schwab Investment
Management, Inc.; and Vice
President, Integrated Resources
Life Insurance Co. and Capital
Life Insurance Co.
30
35
ANNEX F
ADVISORY AGREEMENT FEE SCHEDULE
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund 0.80% of the first $150
million.
0.625% of the excess over
$150 million. $ 2,750,563,943 $16,492,564 $ 0
AIM Blue Chip Fund 0.75% of the first $350
million.
0.625% of the excess over
$350 million. $ 128,548,354 $ 256,773** $ 26,433
AIM Capital Development Fund 0.75% of the first $350
million.
0.625% of the excess over
$350 million. $ 273,687,609 $ 280,248*** $ 144,946
AIM Charter Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $150 million.
0.625% of the excess over
$150 million. $ 3,192,471,415 $16,529,891 $ 156,975
AIM Constellation Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $150 million.
0.625% of the excess over
$150 million. $11,548,540,962 $57,614,412 $1,869,383
AIM Weingarten Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $350 million.
0.625% of the excess over
$350 million. $ 5,305,435,087 $29,960,379 $1,458,804
- ---------------
* AIM reimbursed expenses with respect to the following Funds: AIM Municipal
Bond Fund, $13,200; AIM Global Growth Fund, $11,719; AIM Global Income
Fund, $18,300; AIM V.I. Global Utilities Fund, $13,800; Liquid Assets
Portfolio, $116,930; Prime Portfolio, $61,100; Treasury Portfolio,
$113,500; Treasury TaxAdvantage Portfolio, $25,600; and Cash Reserve
Portfolio, $20,000.
** period 06/03/96 through 10/31/96
*** period 06/17/96 through 10/31/96
31
36
ADVISORY AGREEMENT FEE SCHEDULE
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
AIM FUNDS GROUP
AIM Balanced Fund 0.75% of the first $150
million.
0.50% of the excess over
$150 million. $ 164,874,356 $ 666,619 $ 24,176
AIM Global Utilities Fund 0.60% of the first $200
million.
0.50% over $200 million up
to $500 million.
0.40% over $500 million up
to $1 billion.
0.30% of the excess over
$1 billion. $ 241,317,685 $ 1,256,220 0
AIM Growth Fund 0.80% of the first $150
million.
0.625% of excess over $150
million. $ 306,250,064 $ 1,715,406 0
AIM High Yield Fund 0.625% of the first $200
million.
0.55% over $200 million to
$500 million.
0.50% over $500 million to
$1 billion.
0.45% of the excess over
$1 billion. $ 1,444,032,572 $ 5,717,303 0
AIM Income Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 295,583,696 $ 1,176,249 0
AIM Intermediate Government Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 237,617,705 $ 996,681 0
32
37
ADVISORY AGREEMENT FEE SCHEDULE
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
AIM Money Market Fund 0.55% of the first $1
billion.
0.50% of the excess over
$1 billion. $ 584,793,680 $ 2,589,822 0
AIM Municipal Bond Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 306,280,329 $ 1,356,225 0
AIM Value Fund 0.80% of the first $150
million.
0.625% of excess over $150
million. $ 6,269,483,246 $24,829,687 $ 502,799
AIM INTERNATIONAL FUNDS, INC.
AIM Global Aggressive Growth Fund 0.90% of the first $1
billion.
0.85% of the excess over
$1 billion. $ 1,726,533,976 $ 8,751,918 0
AIM Global Growth Fund 0.85% of the first $1
billion.
0.80% of the excess over
$1 billion. $ 236,819,172 $ 1,162,771 0
AIM Global Income Fund 0.70% of the first $1
billion.
0.65% of the excess over
$1 billion. $ 38,713,770 $ 0 $ 182,596
AIM International Equity Fund 0.95% of the first $1
billion.
0.90% of the excess over
$1 billion. $ 1,476,749,468 $10,085,495 $ 299,147
AIM INVESTMENT SECURITIES FUNDS
Limited Maturity Treasury Portfolio 0.20% of the first $500
million.
0.175% of the excess over
$500 million. $ 502,515,805 $ 933,207 0
AIM SUMMIT FUND, INC. 1.00% of the first $10
million.
0.75% over $10 million to
$150 million.
0.625% over $150 million. $ 1,261,008,244 $ 7,360,028**** 0
- ---------------
**** Of the $7,360,028 paid to AIM, $2,442,907 was paid to TradeStreet pursuant
to a sub-advisory agreement.
33
38
ADVISORY AGREEMENT FEE SCHEDULE
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund 0.35%. $ 30,014,343 $ 101,649 0
AIM Tax-Exempt Bond Fund of Connecticut 0.50%. $ 39,355,441 $ 0 $ 198,182
Intermediate Portfolio 0.30% of the first $500
million.
0.25% over $500 million to
$1 billion.
0.20% of the excess over
$1 billion. $ 83,066,447 $ 232,893 0
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 212,152,423 $ 882,870 0
AIM V.I. Diversified Income Fund 0.60% of the first $250
million.
0.55% of the excess over
$250 million. $ 44,630,145 $ 193,008 0
AIM V.I. Global Utilities Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 8,393,967 0 $ 32,703
AIM V.I. Government Securities Fund 0.50% of the first $250
million.
0.45% of the excess over
$250 million. $ 19,545,391 $ 71,080 0
AIM V.I. Growth Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 102,600,112 $ 434,620 0
AIM V.I. Growth and Income Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 38,567,212 $ 46,017 $ 67,802
AIM V.I. International Equity Fund 0.75% of the first $250
million.
0.70% of the excess over
$250 million. $ 82,256,855 $ 457,559 0
34
39
ADVISORY AGREEMENT FEE SCHEDULE
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
RECENTLY RECENTLY COMPLETED
ANNUAL RATE (BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
AIM V.I. Money Market Fund 0.40% of the first $250
million.
0.35% of the excess over
$250 million. $ 65,505,754 $ 168,901 0
AIM V.I. Value Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 257,211,787 $ 1,078,007 0
SHORT-TERM INVESTMENTS CO.
Liquid Assets Portfolio 0.15%. $ 2,086,944,322 $ 125,264 $2,562,094
Prime Portfolio 0.20% of the first $100
million.
0.15% over $100 million up
to $200 million.
0.10% over $200 million up
to $300 million.
0.06% over $300 million up
to $1.5 billion.
0.05% over $1.5 billion. $ 6,151,948,355 $ 3,007,431 0
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio 0.15% of the first $300
million.
0.06% over $300 million up
to $1.5 billion.
0.05% of the excess over
$1.5 billion. $ 3,703,891,140 $ 2,227,788 0
Treasury TaxAdvantage Portfolio 0.20% of the first $250
million.
0.15% over $250 million up
to $500 million.
0.10% of the excess over
$500 million. $ 457,196,150 $ 675,795 $ 116,126
TAX-FREE INVESTMENTS CO.
Cash Reserve Portfolio 0.25% of the first $500
million.
0.20% of the excess over
$500 million. $ 1,044,178,428 $ 1,819,232 $ 690,397
35
40
ANNEX G
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT -- AEF
The following table sets forth certain information regarding the ownership
of the shares of Common Stock of AEF by Directors and executive officers of AEF.
SHARES OWNED
BENEFICIALLY
AS OF DECEMBER 3, PERCENT OF
NAME OF DIRECTOR/ EXECUTIVE OFFICER FUND (CLASS) 1996 CLASS
------------------------------------- ------------ ------------------ ----------------
Charles T. Bauer.....................
Bruce L. Crockett....................
Owen Daly II.........................
Carl Frischling......................
Robert H. Graham.....................
John F. Kroeger......................
Lewis F. Pennock.....................
Ian W. Robinson......................
Louis S. Sklar.......................
All Directors and Executive
Officers...........................
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS -- AEF
To the best knowledge of AEF, the names and addresses of the record holders
of 5% or more of the outstanding shares of AEF as of the Record Date, and the
amount of the outstanding shares held of record owned by such holders are set
forth below. AEF has no knowledge of shares held beneficially.
SHARES OF RECORD
NAME AND ADDRESS OWNED AS OF
FUND (CLASS) OF RECORD OWNERS DECEMBER 3, 1996 PERCENT OF CLASS
--------------------- ---------------- ----------------- ----------------
36
41
APPENDIX 1
AIM AGRESSIVE GROWTH FUND
A SERIES OF AIM EQUITY FUNDS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 7, 1997
The undersigned hereby appoints Charles T. Bauer, Robert H. Graham and Carol F.
Relihan, and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Annual Meeting of Shareholders of the Fund indicated above, a series of
AIM Equity Funds, Inc., on February 7, 1997 at 2 p.m. Central time, and at
any adjournment 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 CHOICES INDICATED, THE SHARES WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES NAMED ON THIS PROXY AND FOR APPROVAL OF THE OTHER PROPOSALS.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
ON THIS PROXY CARD. All joint owners should
sign. When signing as executor, administrator,
attorney, trustee or guardian or as custodian
for a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the partnership
name.
___________________________________________
Signature
___________________________________________
Signature (if held jointly)
Group C
___________________________________________
Date
42
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS.
THE DIRECTORS RECOMMEND VOTING "FOR" ALL PROPOSALS.
TO VOTE, FILL IN BOX COMPLETELY
FOR ALL WITHHOLD AUTHORITY
1. ELECTION OF DIRECTORS -- TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, NOMINEES FOR ALL NOMINEES
STRIKE A LINE THROUGH THE NAME BELOW. / / / /
Nominees: Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Carl Frischling,
Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson
and Louis S. Sklar
FOR AGAINST ABSTAIN
2. Proposal to approve a new Master Investment Advisory Agreement for the Fund. / / / / / /
3. Proposal to eliminate fundamental investment policy restricting investments in / / / / / /
other investment companies and to amend certain related fundamental investment
policies.
4. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent / / / / / /
accountants for the Fund.
5. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.