SUB-ITEM 77M
MERGERS
INVESCO VARIABLE INVESTMENT FUNDS, INC.
AIM V. I. GLOBAL UTILITIES FUND INTO INVESCO VIF-UTILITIES FUND
On December 10, 2003, the Board of Trustees of AIM Variable Insurance Funds
("AVIF") and the Board of Directors of INVESCO Variable Investment Funds, Inc.
("IVIF") approved an Agreement and Plan of Reorganization (the "Agreement"). On
April 2, 2004, at a Special Meeting for shareholders of AIM V.I. Global
Utilities Fund, an investment portfolio of AVIF, shareholders approved the
Agreement that provided for the combination of AIM V.I. Utilities Fund with
INVESCO VIF-Utilities Fund, an investment portfolio of IVIF (the
"Reorganization"). Pursuant to the Agreement, on April 30, 2004, all of the
assets of AIM V.I. Utilities Fund were transferred to INVESCO VIF-Utilities
Fund. INVESCO VIF- Utilities Fund assumed all of the liabilities of AIM V.I.
Utilities Fund and IVIF issued shares of INVESCO VIF-Utilities Fund to AIM V.I.
Utilities Fund's shareholders. The value of each AIM V.I. Utilities Fund
shareholder's account with INVESCO VIF-Utilities Fund immediately after the
Reorganization was the same as the value of such shareholder's account with AIM
V.I. Utilities Fund immediately prior to the Reorganization. The Reorganization
was structured as a tax-free transaction.
For a more detailed discussion on the merger, please see the attached proxy
statement (attached hereto as Attachment A).
ATTACHMENT A
(AIM INVESTMENTS LOGO APPEARS HERE)--Servicemark--
AIM V.I. GLOBAL UTILITIES FUND,
A PORTFOLIO OF AIM VARIABLE INSURANCE FUNDS
00 XXXXXXXX XXXXX, XXXXX 000
XXXXXXX, XXXXX 00000-0000
February 26, 2004
Dear Contract Owner:
As you may be aware, AMVESCAP PLC, the parent company of AIM V.I. Global
Utilities Fund's investment advisor, has undertaken an integration initiative
for its North American mutual fund operations.
Shares of AIM V.I. Global Utilities Fund (the Fund) are sold to and held by
separate accounts of various insurance companies to fund variable annuity or
variable life insurance contracts offered by the insurance companies. The
separate accounts invest in shares of the Fund in accordance with instructions
from variable annuity or variable life contract owners. Except as otherwise
might be provided by applicable law, the separate accounts provide pass-through
voting to contract owners, and you, as a contract owner, have the right to
instruct the separate account on how to vote shares of the Fund held by the
separate account under your contract.
In the first phase of the integration initiative, A I M Distributors, Inc.
became the sole distributor for all retail AMVESCAP PLC mutual funds in the
United States. A I M Distributors, Inc. is now the distributor for all retail
INVESCO Funds and the retail AIM Funds (including the Fund).
AMVESCAP PLC also reviewed all AIM Funds and INVESCO Funds and concluded
that it would be appropriate to reduce the number of smaller and less efficient
funds that compete for limited shareholder assets and to consolidate certain
funds having similar investment objectives and strategies. The Fund is one of
the funds that AMVESCAP PLC recommended, and its Board of Trustees approved, be
consolidated with another fund. The attached proxy statement/prospectus seeks
your approval of this consolidation.
Finally, the independent trustees of the Board believe that your interests
would best be served if the AIM Funds and the INVESCO Funds had a unified board
of directors/trustees. The attached proxy statement/ prospectus seeks your vote
in favor of the persons nominated to serve as trustees.
Your vote is important. Please take a moment after reviewing the enclosed
materials to sign and return your proxy card or voting instruction card in the
enclosed postage paid return envelope. If you attend the meeting, you may vote
in person, with proper authorization from your life insurance company. If you
expect to attend the meeting in person, or have questions, please notify us by
calling (000) 000-0000. If we do not hear from you after a reasonable amount of
time, you may receive a telephone call from us reminding you to vote.
Sincerely,
-s- Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Chairman and President
AIM V.I. GLOBAL UTILITIES FUND,
A PORTFOLIO OF
AIM VARIABLE INSURANCE FUNDS
00 XXXXXXXX XXXXX, XXXXX 000
XXXXXXX, XXXXX 00000-0000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 2, 2004
We cordially invite you to attend our Special Meeting of Shareholders to:
1. Approve an Agreement and Plan of Reorganization, and in connection
therewith, the sale of all of the Fund's assets and the termination of the
Fund as a designated series of AIM Variable Insurance Funds ("Trust"), (the
"Agreement") under the agreement:
- all of the assets of AIM V.I. Global Utilities Fund (the "Fund"), an
investment portfolio of Trust, will be transferred to INVESCO
VIF-Utilities Fund ("Buying Fund"), an investment portfolio of
INVESCO Variable Investment Funds, Inc. ("Buyer"); and
- Buying Fund will assume the liabilities of the Fund and Buyer will
issue shares of each class of Buying Fund to shareholders of the
corresponding class of shares of the Fund.
2. Elect 16 trustees to the Board of Trustees of Trust, each of whom
will serve until his or her successor is elected and qualified.
3. Transact any other business, not currently contemplated, that may
properly come before the Special Meeting, in the discretion of the proxies
or their substitutes.
We are holding the Special Meeting at 00 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000-1173 on April 2, 2004, at 3:00 p.m., Central Time.
Shares of the Fund are sold to and held by separate accounts of various
insurance companies to fund variable annuity or variable life insurance
contracts offered by the insurance companies. The separate accounts invest in
shares of the Fund in accordance with instructions from variable annuity or
variable life contract owners. Except as otherwise might be provided by
applicable law, the separate accounts provide pass-through voting to contract
owners, and you, as a contract owner, have the right to instruct the separate
account on how to vote shares of the Fund held by the separate account under
your contract.
The Board is sending this Notice of Special Meeting of Shareholders,
Combined Proxy Statement and Prospectus, and proxy solicitation materials to (i)
all separate accounts, which are the shareholders who owned shares of common
stock in the Fund at the close of business on January 9, 2004 (the record date),
and (ii) all contract owners who had their variable annuity or variable life
contract values allocated to the Fund as of the close of business on January 9,
2004 and who are entitled to instruct the corresponding separate account on how
to vote.
WE REQUEST THAT YOU EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
THE ACCOMPANYING PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
TRUST. YOUR VOTE IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM AT THE
SPECIAL MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS EXERCISED BY
EXECUTING AND SUBMITTING A REVISED PROXY, BY GIVING WRITTEN NOTICE OF REVOCATION
TO THE PRESIDENT OF TRUST OR BY VOTING IN PERSON AT THE SPECIAL MEETING.
-s- Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Chairman and President
February 26, 2004
AIM V.I. GLOBAL UTILITIES FUND, INVESCO VIF-UTILITIES FUND,
A PORTFOLIO OF A PORTFOLIO OF
AIM VARIABLE INSURANCE FUNDS INVESCO VARIABLE INVESTMENT FUNDS,
00 XXXXXXXX XXXXX, XXXXX 000 INC.
HOUSTON, TEXAS 77046-0000 00 XXXXXXXX XXXXX, XXXXX 000
(000) 000-0000 HOUSTON, TEXAS 77046-1173
(000) 000-0000
COMBINED PROXY STATEMENT AND PROSPECTUS
FEBRUARY 26, 2004
This document is a combined Proxy Statement and Prospectus ("Proxy
Statement/Prospectus"). We are sending you this Proxy Statement/Prospectus in
connection with the Special Meeting of Shareholders (the "Special Meeting") of
AIM V.I. Global Utilities Fund. The Special Meeting will be held on April 2,
2004. We intend to mail this Proxy Statement/Prospectus, the enclosed Notice of
Special Meeting of Shareholders and the enclosed proxy card or voting
instruction card on or about February 26, 2004 to all shareholders entitled to
vote.
Each series of INVESCO Variable Investment Funds, Inc. and AIM Variable
Insurance Funds are used solely as an investment vehicle for variable annuity
and variable life insurance contracts issued by certain life insurance
companies. You cannot purchase shares of INVESCO Variable Investment Funds, Inc.
and AIM Variable Insurance Funds directly. As a contract owner of a variable
annuity or variable life insurance contract that offers one or more series of
INVESCO Variable Investment Funds, Inc. and AIM Variable Insurance Funds as an
investment option, however, you may allocate your contract values to a separate
account of the insurance company that invests in a series of INVESCO Variable
Investment Funds, Inc. and AIM Variable Insurance Funds.
In accordance with current law, the life insurance company separate
accounts, which are the shareholders of record of the AIM Variable Insurance
Funds, in effect, pass along their voting rights to the contract owners.
Essentially, each life insurance company seeks instructions as to how its
contract owners wish the life insurance company to vote the shares of the AIM
Variable Insurance Funds (i) technically owned by the life insurance company,
but (ii) beneficially owned by the contract owners. The life insurance companies
communicate directly with contract owners about the procedures that the life
insurance companies follow in seeking instructions and voting shares under the
particular separate accounts. Each share of an investment portfolio of the AIM
Variable Insurance Funds that a contract owner beneficially owns entitles that
contract owner to one vote on each proposal set forth in this Proxy
Statement/Prospectus (a fractional share has a fractional vote).
All references in this Proxy Statement/Prospectus to "shareholder" or
"shareholders" shall mean the "contract owner/separate account" or the "contract
owners/separate accounts," respectively. All references in this Proxy
Statement/Prospectus to "you" or "your" shall mean the "contract owner/separate
account." All references in this Proxy Statement/Prospectus to "proxy card"
shall mean the "proxy card" or "voting instruction card" you have received from
the Board of Trustees of AIM Variable Insurance Funds (the "Board") or from your
applicable life insurance company.
At the Special Meeting, we are asking shareholders of AIM V.I. Global
Utilities Fund (your Fund) to vote on three Proposals. The first Proposal to be
voted on is an
Agreement and Plan of Reorganization (the "Agreement") which
provides for the combination of your Fund, an investment portfolio of AIM
Variable Insurance Funds ("Trust"), with INVESCO VIF-Utilities Fund ("Buying
Fund"), an investment portfolio of INVESCO Variable Investment Funds, Inc.
("Buyer" or "Company") (the "Reorganization") and, in connection therewith, the
sale of all of your Fund's assets and the termination of your Fund as a
designated series of Trust.
Under the Agreement, all of the assets of your Fund will be transferred to
Buying Fund, Buying Fund will assume the liabilities of your Fund and Buyer will
issue shares of each class of Buying Fund to shareholders of the corresponding
class of shares of your Fund, as set forth on Exhibit A.
The value of your account with Buying Fund immediately after the
Reorganization will be the same as the value of your account with your Fund
immediately prior to the Reorganization. The Reorganization has been structured
as a tax-free transaction. No sales charges will be imposed in connection with
the Reorganization.
The Board has approved the Agreement and the Reorganization as being in the
best interests of your Fund.
Trust and Buyer are both registered open-end management investment
companies that issue their shares in separate series. Your Fund is a series of
Trust and Buying Fund is a series of Buyer. A I M Advisors, Inc. ("AIM") serves
as the investment advisor to your Fund and INVESCO Funds Group, Inc. ("INVESCO")
serves as the investment advisor to Buying Fund. Both AIM and INVESCO are wholly
owned subsidiaries of AMVESCAP PLC ("AMVESCAP"), an independent global
investment management company.
The investment objective of Buying Fund is similar to that of your Fund.
See "Comparison of Investment Objectives and Principal Strategies."
This Proxy Statement/Prospectus sets forth the information that you should
know before voting on the Agreement and the other Proposal described below. It
is both the Proxy Statement of your Fund and the Prospectus of Buying Fund. You
should read and retain this Proxy Statement/Prospectus for future reference.
The following documents are on file with the Securities and Exchange
Commission (the "SEC"):
- Prospectus of your Fund dated May 1, 2003, as supplemented June 12, 2003,
August 18, 2003, August 20, 2003, November 20, 2003, December 12, 2003,
December 16, 2003 and January 16, 2004 (the "Selling Fund Prospectus")
(this document is also incorporated by reference into this Proxy
Statement/Prospectus);
- Statement of Additional Information relating to the Selling Fund dated
May 1, 2003, as revised September 1, 2003 and as supplemented October 21,
2003;
- Prospectus of Buying Fund dated April 30, 2003, as supplemented October
21, 2003, November 20, 2003, December 16, 2003 and January 16, 2004 (the
"Buying Fund Prospectus") (this document, a copy of which is attached as
Appendix II, is also incorporated by reference into this Proxy
Statement/Prospectus);
- Statement of Additional Information relating to the Buying Fund dated
April 30, 2003; and
- Statement of Additional Information relating to the Reorganization, dated
February 26, 2004 (this document is also incorporated by reference into
this Proxy Statement/Prospectus).
The SEC maintains a website at xxx.xxx.xxx that contains the Prospectuses
and Statements of Additional Information described above, material incorporated
by reference, and other information about Trust and Buyer.
Copies of the Selling Fund Prospectus and the related Statement of
Additional Information are available without charge by writing to A I M
Distributors, Inc., 00 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000, or
by calling (000) 000-0000. Copies of the Buying Fund Prospectus and related
Statement of Additional Information are available without charge by writing to
INVESCO Distributors, Inc., 00 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000-0000, or by calling (000) 000-0000.
The remaining Proposal to be voted on is the election of 16 trustees to the
Board of Trustees of Trust. The Board has approved the nomination of the persons
set forth in this Proxy Statement/Prospectus for election as trustees of Trust.
Both Proposals are being submitted to you to implement an integration
initiative undertaken by AMVESCAP with respect to its North American mutual fund
operations, which includes your Fund.
Trust has previously sent to shareholders the most recent annual report for
your Fund, including financial statements, and the most recent semiannual report
succeeding the annual report, if any. The financial
2
statements should be read in conjunction with the disclosures, included in this
Proxy Statement/Prospectus under the heading "Certain Civil Proceedings and
Lawsuits." If you have not received such report(s) or would like to receive an
additional copy, please contact A I M Distributors, Inc., 00 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000, or call (000) 000-0000. Such report(s)
will be furnished free of charge.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
TABLE OF CONTENTS
PAGE
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INTRODUCTION................................................ 1
PROPOSAL 1 -- APPROVAL OF THE AGREEMENT TO COMBINE YOUR FUND
AND BUYING FUND........................................... 2
SUMMARY..................................................... 2
The Reorganization........................................ 2
Comparison Fee Table and Expense Example.................. 3
Fee Table................................................. 3
Expense Example........................................... 4
Comparison of Performance of Your Fund and Buying Fund.... 5
AIM V.I. Global Utilities Fund............................ 6
INVESCO VIF-Utilities Fund................................ 7
Comparison of Investment Objectives and Principal
Strategies............................................. 7
Comparison of Principal Service Providers................. 9
Comparison of Multiple Class Structures................... 9
Comparison of Sales Charges............................... 10
Comparison of Distribution and Xxxxxxxx and Redemption
Procedures............................................. 10
The Board's Recommendation on Proposal 1.................. 10
RISK FACTORS................................................ 10
Risks Associated with Buying Fund......................... 10
Investment Style Risk..................................... 10
Sector Risk............................................... 11
Potential Conflicts....................................... 11
Market Risk............................................... 11
Foreign Securities Risks.................................. 11
Liquidity Risk............................................ 11
Counterparty Risk......................................... 11
Lack of Timely Information Risk........................... 12
Portfolio Turnover Risk................................... 12
General Risks............................................. 12
Comparison of Risks of Buying Fund and Your Fund.......... 12
INFORMATION ABOUT BUYING FUND............................... 12
Description of Buying Fund Shares......................... 12
Management's Discussion of Fund Performance............... 13
Financial Highlights...................................... 13
Pending Shareholder Proposals for Buying Fund............. 13
ADDITIONAL INFORMATION ABOUT THE AGREEMENT.................. 13
Terms of the Reorganization............................... 13
The Reorganization........................................ 13
Board Considerations...................................... 14
Other Terms............................................... 15
Federal Income Tax Consequences........................... 15
Accounting Treatment...................................... 16
PAGE
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RIGHTS OF SHAREHOLDERS...................................... 16
General................................................... 16
Liability of Shareholders................................. 17
Election of Directors/Trustees; Terms..................... 17
Removal of Directors/Trustees............................. 17
Meetings of Shareholders.................................. 17
Liability of Directors/Trustees and Officers;
Indemnification........................................ 18
Dissolution and Termination............................... 19
Voting Rights of Shareholders............................. 19
Dissenters' Rights........................................ 19
Amendments to Organization Documents...................... 19
CAPITALIZATION.............................................. 20
INTERESTS OF CERTAIN PERSONS................................ 20
LEGAL MATTERS............................................... 20
ADDITIONAL INFORMATION ABOUT BUYING FUND AND YOUR FUND...... 20
CERTAIN CIVIL PROCEEDINGS AND LAWSUITS...................... 21
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION................................................ 24
PROPOSAL 2 -- ELECTION OF TRUSTEES.......................... 24
Background................................................ 24
Structure of the Board of Trustees........................ 24
Nominees for Trustees..................................... 24
The Board's Recommendation on Proposal 2.................. 28
Committees of the Board................................... 28
Audit Committee........................................... 28
Governance Committee...................................... 28
Investments Committee..................................... 30
Valuation Committee....................................... 30
Special Committee Relating to Market Timing Issues........ 30
Board and Committee Meeting Attendance.................... 30
Shareholder Communications with the Board................. 30
Trustee's Compensation.................................... 30
Retirement Plan for Trustees.............................. 31
Deferred Compensation Agreements.......................... 32
Officers of Trust......................................... 32
Security Ownership of Management.......................... 32
Trustee Ownership of Your Fund's Shares................... 32
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING............ 32
Proxy Statement/Prospectus................................ 32
Time and Place of Special Meeting......................... 33
Voting in Person.......................................... 33
Voting by Proxy........................................... 33
Quorum Requirement and Adjournment........................ 33
Vote Necessary to Approve Each Proposal................... 34
Proxy Solicitation........................................ 34
ii
PAGE
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Other Matters............................................. 34
Shareholder Proposals..................................... 34
Ownership of Shares....................................... 34
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 35
Fees Billed by TWB Related to Trust....................... 35
Fees Billed by TWB Related to AIM and AIM Affiliates...... 36
EXHIBIT A Classes of Shares of Your Fund and Corresponding Classes of
Shares of Buying Fund....................................... A-1
EXHIBIT B Comparison of Principal Service Providers................... B-1
EXHIBIT C Financial Highlights of Buying Fund......................... C-1
EXHIBIT D Officers of Trust........................................... D-1
EXHIBIT E Security Ownership of Management............................ E-1
EXHIBIT F Shares Outstanding of Each Class of Your Fund on Record
Date........................................................ F-1
EXHIBIT G Ownership of Shares of Your Fund............................ G-1
EXHIBIT H Ownership of Shares of Buying Fund.......................... H-1
APPENDIX I
Agreement and Plan of Reorganization for AIM V.I. Global
Utilities Fund.............................................. APPENDIX I
APPENDIX II Prospectus of Buying Fund................................... APPENDIX II
APPENDIX III Discussion of Performance of Buying Fund.................... APPENDIX III
APPENDIX IV Governance Committee Charter................................ APPENDIX IV
APPENDIX V Pre-Approval of Audit and Non-Audit Services Policies and
Procedures.................................................. APPENDIX V
THE AIM FAMILY OF FUNDS, AIM AND DESIGN, AIM, AIM FUNDS, AIM FUNDS AND
DESIGN, AIM INVESTOR, AIM LIFETIME AMERICA, AIM LINK, AIM INSTITUTIONAL FUNDS,
XXXXXXXXXXXXXX.XXX, LA FAMILIA AIM DE FONDOS, LA FAMILIA AIM DE FONDOS AND
DESIGN, INVIERTA CON DISCIPLINA AND INVEST WITH DISCIPLINE ARE REGISTERED
SERVICE MARKS AND AIM BANK CONNECTION, AIM INTERNET CONNECT, AIM PRIVATE ASSET
MANAGEMENT, AIM PRIVATE ASSET MANAGEMENT AND DESIGN, AIM STYLIZED AND/OR DESIGN,
AIM ALTERNATIVE ASSETS AND DESIGN, AIM INVESTMENTS, AIM INVESTMENTS AND DESIGN,
XXXXX.XXX, THE AIM COLLEGE SAVINGS PLAN, AIM SOLO 401(k) AND YOUR GOALS. OUR
SOLUTIONS. ARE SERVICE MARKS OF A I M MANAGEMENT GROUP INC. AIM TRIMARK IS A
SERVICE MARK OF A I M MANAGEMENT GROUP INC. AND AIM FUNDS MANAGEMENT INC.
INVESCO, THE OPEN CIRCLE DESIGN, INVESCO FUNDS, INVESCO FUNDS GROUP,
INVESCO -- YOUR GLOBAL INVESTMENT PARTNER AND YOU SHOULD KNOW WHAT INVESCO KNOWS
ARE REGISTERED SERVICE MARKS OF AMVESCAP PLC.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation other than those contained in this
Proxy Statement/Prospectus, and you should not rely on such other information or
representations.
iii
INTRODUCTION
Your Fund is one of 99 portfolios advised by AIM and Buying Fund is one of
13 portfolios advised by INVESCO. Proposals 1 and 2 that you are being asked to
vote on relate to or result from an integration initiative announced on March
27, 2003, by AMVESCAP, the parent company of AIM and INVESCO, with respect to
its North American mutual fund operations. The primary component of AMVESCAP's
integration initiative that you are being asked to vote on in this Proxy
Statement/Prospectus is the:
- Rationalizing and streamlining of the various AIM Funds and INVESCO
Funds. In that regard, AMVESCAP has undertaken an extensive review of
these funds and concluded that it would be appropriate to reduce the
number of smaller and less efficient funds that compete for limited
shareholder assets and to consolidate certain funds having similar
investment objectives and strategies. Reducing both the number of AIM
Funds and INVESCO Funds will allow AIM and INVESCO to concentrate on
managing their core products. The Reorganization of Selling Fund into
Buying Fund is one of a number of fund reorganizations proposed by
AMVESCAP as a result of this review process. AMVESCAP's belief is that
the Reorganization will allow Buying Fund the best available
opportunities for investment management, growth prospects and potential
economies of scale. PROPOSAL 1 RELATES TO THIS COMPONENT OF AMVESCAP'S
INTEGRATION INITIATIVE.
The following additional series of actions are also being taken in
connection with AMVESCAP's integration initiative. However, you are not being
asked to vote on these items.
- Using a single distributor for all AMVESCAP mutual funds in the United
States. To that end, A I M Distributors, Inc., the distributor for the
retail mutual funds advised by AIM (the "AIM Funds"), replaced INVESCO
Distributors, Inc. as the distributor for the retail mutual funds advised
by INVESCO (the "INVESCO Funds") effective July 1, 2003.
- Integrating back office support and creating a single platform for back
office support of AMVESCAP's mutual fund operations in the United States,
including such support services as transfer agency and information
technology.
- Rationalizing the contractual arrangements for the provision of
investment advisory and administrative services to the AIM Funds and the
INVESCO Funds. The idea of this component is to have AIM replace INVESCO
as the AMVESCAP entity primarily responsible for the investment advisory,
administrative, accounting and legal and compliance services for the
INVESCO Funds. In connection with this item, each INVESCO Fund (currently
advised by INVESCO), including Buying Fund, is seeking shareholder
approval to enter into a new investment advisory agreement with AIM.
These changes will simplify AMVESCAP's mutual fund operations in the
United States so that there will be a uniform arrangement for investment
management for both the AIM Funds and the INVESCO Funds. (Buying Fund and
other INVESCO Fund shareholders will be voting on certain aspects of this
item through other proxy documents.)
- Simplifying the organizational structure of the AIM Funds and the INVESCO
Funds so that they are all organized as
Delaware statutory trusts, using
as few entities as practicable. To implement this component, each AIM
Fund and each INVESCO Fund that currently is organized as a Maryland
corporation is seeking shareholder approval to redomesticate as a new
Delaware statutory trust, which also should provide these Funds with
greater flexibility in conducting their business operations. In addition,
certain series portfolios of AIM Funds with few portfolios are seeking
shareholder approval to be restructured as new series portfolios of
existing AIM Funds that are organized as
Delaware statutory trusts.
(Buying Fund and other INVESCO Fund shareholders will be voting on
certain aspects of this item through other proxy documents.)
In considering the integration initiative proposed by AMVESCAP, the
directors/trustees of the AIM Funds and the directors of the INVESCO Funds who
are not "interested persons" (as defined in the Investment Company Act of 1940
(the "1940 Act")) of the Funds or their advisors determined that the
shareholders of both the AIM Funds and the INVESCO Funds would benefit if one
set of directors/trustees was responsible for overseeing the operation of both
the AIM Funds and the INVESCO Funds and the
services provided by AIM, INVESCO and their affiliates. Accordingly, these
directors/trustees agreed to combine the separate boards and create a unified
board of directors/trustees. PROPOSAL 2 RELATES TO THE ELECTION OF TRUSTEES OF
YOUR FUND.
YOU ARE BEING ASKED TO APPROVE PROPOSAL 2 SO THAT, IN THE EVENT THAT
PROPOSAL 1 IS NOT APPROVED, YOUR FUND WILL STILL BE ABLE TO TAKE ADVANTAGE OF
THESE OTHER BENEFITS OF AMVESCAP'S INTEGRATION. WE WILL BE UNABLE TO DETERMINE
WHETHER PROPOSAL 2 SHOULD GO FORWARD UNTIL WE HAVE DETERMINED WHETHER PROPOSAL 1
HAS BEEN APPROVED. THEREFORE, EVEN IF YOU VOTE IN FAVOR OF PROPOSAL 1, IT IS
STILL IMPORTANT THAT YOU VOTE ON PROPOSAL 2. FOR INFORMATION ABOUT THE SPECIAL
MEETING AND VOTING ON PROPOSALS 1 AND 2, SEE "INFORMATION ABOUT THE SPECIAL
MEETING AND VOTING." FOR A DESCRIPTION OF THE VOTE NECESSARY TO APPROVE EACH OF
PROPOSALS 1 AND 2, SEE "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING -- VOTE
NECESSARY TO APPROVE EACH PROPOSAL."
PROPOSAL 1 --
APPROVAL OF THE AGREEMENT
TO COMBINE YOUR FUND AND BUYING FUND
SUMMARY
The Board, including the independent trustees, has determined that the
Reorganization is in the best interests of your Fund and that the interests of
the shareholders of your Fund will not be diluted as a result of the
Reorganization. The Board believes that a larger combined fund should be more
viable and have greater market presence and should have greater investment
leverage in that portfolio managers should have broader investment opportunities
and lower trading costs. The Board also believes that a larger combined fund
should result in greater operating efficiencies by providing economies of scale
to the combined fund in that certain fixed costs, such as legal, accounting,
shareholder services and director/trustee expenses, will be spread over the
greater assets of the combined fund. For additional information concerning the
factors the Board considered in approving the Agreement, see "Additional
Information About the Agreement -- Board Considerations."
The following summary discusses some of the key features of the
Reorganization and highlights certain differences between your Fund and Buying
Fund. This summary is not complete and does not contain all of the information
that you should consider before voting on whether to approve the Agreement. For
more complete information, please read this entire Proxy Statement/Prospectus.
THE REORGANIZATION
The Reorganization will result in the combination of your Fund with Buying
Fund. Your Fund is a series of Trust, a
Delaware statutory trust. Buying Fund is
a series of Buyer, a Maryland corporation. The Board of Directors of Buyer is
soliciting the proxies of the shareholders of Xxxxx's series portfolios to vote
on an
agreement and plan of reorganization to redomesticate Buyer as a
Delaware
statutory trust in order to provide Buyer with greater flexibility in conducting
its business operations. If approved by Xxxxx's shareholders, the consummation
of the redomestication of Buyer as a
Delaware statutory trust will occur after
the consummation of the Reorganization.
If shareholders of your Fund approve the Agreement and other closing
conditions are satisfied, then:
1. all of the assets of your Fund will be transferred to Buying Fund;
2. Buying Fund will assume the liabilities of your Fund; and
3. Buyer will issue shares of each class of Buying Fund to
shareholders of the corresponding class of shares of your Fund, (as shown
on Exhibit A, to this Proxy Statement/Prospectus).
For a description of certain of the closing conditions that must be
satisfied, see "Additional Information About the Agreement -- Other Terms."
2
The shares of Buying Fund issued in the Reorganization will have an
aggregate net asset value equal to the net value of the assets of your Fund
transferred to Buying Fund. The value of your account with Buying Fund
immediately after the Reorganization will be the same as the value of your
account with your Fund immediately prior to the Reorganization. A copy of the
Agreement is attached as Appendix I to this Proxy Statement/Prospectus. See
"Additional Information About the Agreement."
Trust and Xxxxx will receive an opinion of Xxxxxxx Xxxxx Xxxxxxx &
Xxxxxxxxx, LLP to the effect that the Reorganization will constitute a tax-free
reorganization for Federal income tax purposes. Thus, shareholders will not have
to pay additional Federal income tax as a result of the Reorganization. See
"Additional Information About the Agreement -- Federal Income Tax Consequences."
No sales charges will be imposed in connection with the Reorganization.
COMPARISON FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table compares the shareholder fees and annual operating expenses,
expressed as a percentage of net assets ("Expense Ratios"), of Series I and
Series II shares of your Fund and Buying Fund. Series II shares of Buying Fund
were not available as of December 31, 2003 and will not be offered for sale
prior to the reorganization of your Fund into Buying Fund. Pro Forma Combined
Expense Ratios of Buying Fund giving effect to the reorganization of your Fund
into Buying Fund are also provided. The table does not reflect fees associated
when a separate account invests in the Funds or any costs associated with
ownership of a variable annuity or variable life insurance contract for which
the Funds are investment options, and if it did, expenses would be higher.
YOUR FUND BUYING FUND
(12/31/03) (12/31/03)
----------------------------------- -------------------------------------
SERIES I SERIES II SERIES I SERIES II
SHARES SHARES SHARES SHARES(1)
-------------- -------------- -------------- --------------
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge (Load)
Imposed on Purchase (as a
percentage of offering
price)........................ N/A N/A N/A N/A
Maximum Deferred Sales Charge
(as a percentage of original
purchase price or redemption
proceeds, as applicable)...... N/A N/A N/A N/A
ANNUAL FUND OPERATING
EXPENSES(2) (expenses that are
deducted from fund assets)
Management fees................ 0.65% 0.65% 0.60% 0.60%
Distribution and/or Service
(12b-1) Fees.................. None 0.25% None 0.25%
Other Expenses................. 0.71% 0.71% 0.57%(3) 0.57%(3)(4)
Total Annual Fund Operating
Expenses...................... 1.36% 1.61% 1.17% 1.42%
Fee Waiver..................... 0.06%(5) 0.16%(6) --(7) --(7)
Net Expense.................... 1.30% 1.45% 1.17% 1.42%
BUYING FUND
PRO FORMA COMBINED
-------------------------------------
SERIES I SERIES II
SHARES SHARES(1)
-------------- --------------
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge (Load)
Imposed on Purchase (as a
percentage of offering
price)........................ N/A N/A
Maximum Deferred Sales Charge
(as a percentage of original
purchase price or redemption
proceeds, as applicable)...... N/A N/A
ANNUAL FUND OPERATING
EXPENSES(2) (expenses that are
deducted from fund assets)
Management fees................ 0.60% 0.60%
Distribution and/or Service
(12b-1) Fees.................. None 0.25%
Other Expenses................. 0. 55%(3) 0.55%(3)(4)
Total Annual Fund Operating
Expenses...................... 1.15% 1.40%
Fee Waiver..................... --(8) --(8)
Net Expense.................... 1.15% 1.40%
---------------
"N/A" in the table above means "not applicable."
(1) As of December 31, 2003, Buying Fund offered only one series of shares,
which are referred to in this Proxy Statement/Prospectus as Series I shares.
The numbers for Series II shares reflect Buying Fund's December 31, 2003
amounts, plus a 12b-1 fee of 0.25%.
(2) Except as otherwise noted, figures in the table are for the year ended
December 31, 2003 and are expressed as a percentage of fund average net
assets. This information was prepared before the completion of the fund
audit and is subject to change. There is no guarantee that actual expenses
will be the same as those shown in the table.
(3) Buying Fund has adopted new forms of administrative services and transfer
agency agreements which will be effective May 1, 2004. These new forms of
agreements are the same as those currently in place for Selling Fund. As a
result, Buying Fund's Other Expenses have been restated to reflect the
changes in fees in Buying Fund new agreements. Had Buying Fund not adopted
these new forms of administrative services and transfer agency agreements,
Buying Fund's Other Expenses would have been 0.48% for
3
Series I Shares of Buying Fund, 0.48% for Series II Shares of Buying Fund,
0.49% for Series I Shares of Buying Fund, Pro Forma Combined and 0.49% for
Series II Shares of Buying Fund, Pro Forma Combined. Because Buying Fund's
board of directors has already approved the adoption of these new forms of
agreements to go effective May 1, 2004, your vote on the items described in
this Proxy Statement/Prospectus will have no impact on these changes.
(4) Other Expenses for Series II shares are based on estimated average net
assets for the current fiscal year.
(5) The Fund's advisor has contractually agreed to waive fees and/or reimburse
expenses of Series I shares to the extent necessary to limit Total Annual
Fund Operating Expenses (excluding certain items discussed below) to 1.30%.
In determining the advisor's obligation to waive fees and/or reimburse
expenses, the following expenses are not taken into account, and could cause
the Total Annual Fund Operating Expenses to exceed the 1.30% cap: (i)
interest; (ii) taxes; (iii) extraordinary items (these are expenses that are
not anticipated to arise from the Fund's day-to-day operations), as defined
in the Financial Accounting Standards Board's Generally Accepted Accounting
Principles or as approved by the Fund's board of trustees; (iv) expenses
related to a merger or reorganization, as approved by the Fund's board of
trustees (though the expenses of the reorganization currently under
consideration are being paid by the Fund's advisor); and (v) expenses that
the Fund has incurred but did not actually pay because of an expense offset
arrangement. Currently, the only expense offset arrangements from which the
Fund benefits are in the form of credits that the Fund receives from banks
where the Fund or its transfer agent has deposit accounts in which it holds
uninvested cash. Those credits are used to pay certain expenses incurred by
the Fund. The expense limitation agreement is in effect through December 31,
2004.
(6) The Fund's advisor and/or distributor have contractually agreed to waive
fees and/or reimburse expenses of Series II shares to the extent necessary
to limit Total Annual Fund Operating Expenses (excluding certain items
discussed below) to 1.45%. In determining the advisor's and distributor's
obligation to waive fees and/or reimburse expenses, the following expenses
are not taken into account, and could cause the Total Annual Fund Operating
Expenses to exceed the 1.45% cap; (i) interest; (ii) taxes; ((iii)
extraordinary items (these are expenses that are not anticipated to arise
from the Fund's day-to-day operations), as defined in the Financial
Accounting Standards Board's Generally Accepted Accounting Principles or as
approved by the Fund's board of trustees; (iv) expenses related to a merger
or reorganization, as approved by the Fund's board of trustees (though the
expenses of the reorganization currently under consideration are being paid
by the Fund's advisor); and (v) expenses that the Fund has incurred but did
not actually pay because of an expense offset arrangement. Currently, the
only expense offset arrangements from which the Fund benefits are in the
form of credits that the Fund receives from banks where the Fund or its
transfer agent has deposit accounts in which it holds uninvested cash. Those
credits are used to pay certain expenses incurred by the Fund. The expense
limitation agreement is in effect through December 31, 2004.
(7) Effective June 1, 2002, and ending immediately prior to the consummation of
the merger between Selling Fund and Buying Fund which is expected to be on
April 30, 2004, the Fund's advisor is entitled to reimbursement from the
Fund for fees and expenses paid for by the Fund's advisor pursuant to
expense limitation commitments between the Fund's advisor and Buying Fund if
such reimbursement does not cause the Fund to exceed its then current
expense limitations and the reimbursement is made within three years after
the Fund's advisor incurred the expense.
(8) Beginning after the consummation of the merger between Selling Fund and
Buying Fund which is expected to be on April 30, 2004, Buying Fund's advisor
will be entitled to receive reimbursement from Buying Fund for fees and
expenses paid for by Buying Fund's advisor, as long as such fees and
expenses were paid for by Buying Fund's advisor on or after April 30, 2004,
pursuant to expense limitation commitments between Buying Fund's advisor and
Buying Fund if such reimbursement does not cause Buying Fund to exceed its
then-current expense limitations and the reimbursement is made within three
years after Buying Fund's advisor incurred the expense.
4
EXPENSE EXAMPLE
This Example is intended to help you compare the costs of investing in
different classes of your Fund and Buying Fund with the cost of investing in
other mutual funds. Pro Forma Combined costs of investing in different classes
of Buying Fund giving effect to the reorganization of your Fund into Buying Fund
are also provided. All costs are based upon the information set forth in the Fee
Table above. This Example does not reflect fees associated when a separate
account invests in the Funds or any costs associated with the ownership of a
variable annuity contract or variable life insurance contract for which the
Funds are investment options, and if it did, expenses would be higher.
The Example assumes that you invest $10,000 for the time periods indicated
and shows the expenses that you would pay both if you redeem all of your shares
at the end of those periods and if you do not redeem your shares. The Example
also assumes that your investment has a 5% return each year and that the
operating expenses remain the same. The Example reflects fee waivers and/or
expense reimbursements that are contractual, if any, but does not reflect
voluntary fee waivers and/or expense reimbursements. To the extent fees are
waived and/or expenses are reimbursed on a voluntary basis, your expenses will
be lower. Although your actual returns and costs may be higher or lower, based
on these assumptions your costs would be:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- ------
YOUR FUND
Series I............................................... $132 $425 $739 $1,630
Series II.............................................. $148 $492 $861 $1,898
BUYING FUND
Series I............................................... $119 $372 $644 $1,420
Series II.............................................. $145 $449 $776 $1,702
BUYING FUND -- PRO FORMA COMBINED
Series I............................................... $117 $365 $633 $1,398
Series II.............................................. $143 $443 $766 $1,680
THE EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR FUND'S
AND BUYING FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN
THE EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE SEC
APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF AND
DOES NOT REPRESENT YOUR FUND'S OR BUYING FUND'S PROJECTED OR ACTUAL PERFORMANCE.
THE ACTUAL EXPENSES ATTRIBUTABLE TO EACH CLASS OF A FUND'S SHARES WILL
DEPEND UPON, AMONG OTHER THINGS, THE LEVEL OF AVERAGE NET ASSETS AND THE EXTENT
TO WHICH A FUND INCURS VARIABLE EXPENSES, SUCH AS TRANSFER AGENCY COSTS.
COMPARISON OF PERFORMANCE OF YOUR FUND AND BUYING FUND
For more information regarding the total return of your Fund, see the
"Financial Highlights" section of the Selling Fund Prospectus, which has been
made a part of this Proxy Statement/Prospectus by reference. The financial
statements should be read in conjunction with the disclosures, included in this
Proxy Statement/ Prospectus under the heading "Certain Civil Proceedings and
Lawsuits." For more information regarding the total return of Buying Fund, see
"Information About Buying Fund -- Financial Highlights." Past performance cannot
guarantee comparable future results.
5
AIM V.I. GLOBAL UTILITIES FUND
The bar chart and table shown below provide an indication of the risks of
investing in your Fund. Your Fund's past performance is not necessarily an
indication of its future performance. All performance shown assumes the
reinvestment of dividends and capital gains. The bar chart and performance table
shown does not reflect charges at the separate account level; if they did, the
performance shown would be lower.
(AIM VI GLOBAL UTILITIES SERIES I BAR CHART)
1995................................................................... 26.74%
1996................................................................... 12.07%
1997................................................................... 21.63%
1998................................................................... 16.49%
1999................................................................... 33.56%
2000................................................................... -2.28%
2001................................................................... -27.93%
2002................................................................... -25.53%
2003................................................................... -19.03%
During the periods shown in the bar chart, the highest quarterly return was
25.88% (quarter ended December 31, 1999), and the lowest quarterly return was
(20.19)% (quarter ended September 30, 2002).
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
------ ------- --------- ---------
AIM V.I. Global Utilities Series I........ 19.03% (3.57)% 5.18% 5/04/1994
AIM V.I. Global Utilities Series II....... 18.94% (3.76)% 4.94% 5/04/1994
Standard & Poor's 500 Index(1)............ 29.67% (0.57)% 11.76% 4/30/1994
Lipper Utility Fund Index(2).............. 21.57% (1.67)% 6.41% 4/30/1994
---------------
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used
as a general measure of U.S. stock market performance. In addition, the
Lipper Utility Fund Index (which may or may not include the fund) is
included for comparison to a peer-group.
(2) The Lipper Utility Fund Index measurers the performance of the 30 largest
utility funds charted by Lipper Inc., an independent mutual funds
performance monitor.
6
INVESCO VIF-UTILITIES FUND
The bar chart and table shown below provide an indication of the risks of
investing in Buying Fund. Buying Fund's past performance is not necessarily an
indication of its future performance. All performance shown assumes the
reinvestment of dividends and capital gains. The bar chart and performance table
shown does not reflect charges at the separate account level; if they did, the
performance shown would be lower.
(INVESCO VIF UTILITIES FUND BAR CHART)
1995................................................................... 9.08%
1996................................................................... 12.76%
1997................................................................... 23.41%
1998................................................................... 25.48%
1999................................................................... 19.13%
2000................................................................... 5.28%
2001................................................................... -32.41%
2002................................................................... -20.32%
2003................................................................... 17.47%
During the periods shown in the bar chart, the highest quarterly return was
17.18% (quarter ended December 31, 1998), and the lowest quarterly return was
(21.60)% (quarter ended September 30, 2001).
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
------ ------- --------- ----------
INVESCO VIF -- Utilities Fund(1).......... 17.47% (4.52)% 4.69%(2) 12/30/1994
Standard & Poor's 500 Index(3)............ 28.67% (0.57)% 12.20%(2) 12/30/1994
Custom Utilities Index(4)................. 24.22% (1.24)% 7.53%(2) 12/30/1994
Lipper Utility Fund Index(5).............. 21.57% (1.67)% 7.40%(2) 12/30/1994
---------------
(1) Total return figures include reinvested dividends and capital gain
distributions and the effect of the Fund's expenses.
(2) The Fund commenced investment operations on January 3, 1995. Index
comparisons begin on December 31, 1994.
(3) The Standard & Poor's 500 Index is an unmanaged index considered
representative of the performance of the broad U.S. stock market. Please
keep in mind that the index does not pay brokerage, management or
administrative expenses, all of which are paid by the fund and are reflected
in its annual return.
(4) The Custom Utilities Index is an index created by A I M Advisors, Inc.
(5) The Lipper Utility Fund Index measures the performance of the 30 largest
utility funds charted by Lipper Inc., an independent mutual funds
performance monitor.
COMPARISON OF INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES
Your Fund and Buying Fund pursue similar investment objectives and invest
in similar types of securities. As a result, the Reorganization is not expected
to cause significant portfolio turnover or transaction expenses from the sale of
securities that are incompatible with the investment objective of Buying Fund.
The chart below shows the similarities and differences in your Fund's and Buying
Fund's investment objectives and strategies.
The investment objective or goal of Buying Fund is classified as
fundamental, which means that the Board of Directors of Buyer cannot change it
without shareholder approval. The investment objective of your Fund is not
classified as fundamental, which means that the Board of Trustees can change it
without shareholder approval.
A description of the fundamental and non-fundamental restrictions and
policies applicable to your Fund and Buying Fund can be found in each Fund's
Statement of Additional Information. While your Fund and Buying Fund have
slightly different approaches to disclosing and characterizing these
restrictions and policies,
7
in substance your Fund and Buying Fund operate under the same general
restrictions and are subject to the same general policies, although your Fund is
a non-diversified fund and Buying Fund is a diversified fund (as the terms
"non-diversified" and "diversified" are defined under the 1940 Act).
As a non-diversified fund, your Fund may, with respect to 50% of its
assets, invest more than 5% of its assets in the securities of any one issuer.
In contrast, as a diversified fund, Buying Fund is not permitted, with respect
to 75% of its total assets, to purchase the securities of any one issuer if, as
a result of such purchase, either
(i) more than 5% of Buying Fund's total assets would be invested in the
securities of that one issuer, or
(ii) Buying Fund would hold more than 10% of the outstanding voting
securities of that one issuer.
The percentage limitations above do not apply to Buying Fund if the
securities in question are issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities, or are securities of other investment
companies. Generally speaking, a non-diversified fund may have a higher
concentration of securities from a fewer number of issuers.
The chart below provides a summary for comparison purposes of the
investment objectives and principal investment strategies of your Fund and
Buying Fund. You can find more detailed information about the investment
objectives, strategies and other investment policies of your Fund and Buying
Fund in the Selling Fund Prospectus and the Buying Fund Prospectus,
respectively.
AIM V.I. GLOBAL UTILITIES FUND INVESCO VIF -- UTILITIES FUND
(YOUR FUND) (BUYING FUND)
------------------------------ -----------------------------
INVESTMENT OBJECTIVE
- high total return - capital growth and income
INVESTMENT STRATEGIES
- invests at least 80% of its net assets, - invests at least 80% of its net assets in
plus any borrowings for investment the equity securities and equity-related
purposes, in securities of domestic and instruments of companies engaged in the
foreign public utility companies utilities-related industries
- invests primarily in marketable equity - considers a company to be in the utilities
securities, including convertible sector if it meets at least one of the
securities and debt securities, but its following tests:
investments may include synthetic -- at least 50% of its gross income or its
instruments such as warrants, futures, net sales must come from activities in
options, exchange-traded funds and American -- at least 50% of its assets must be
Depositary Receipts; devoted to producing revenues from the
utilities sector; or
-- based on other available information, it
is determined that its primary business
is within the utilities sector
- utilities-related sector companies
includes, but are not limited to, companies
that produce, generate, transmit, or
distribute natural gas or electricity, as
well as companies that provide
telecommunications services, including
local, long distance and wireless
- may invest in non-utility securities, but - INVESCO seeks to keep the portfolio divided
generally will invest in securities of among the electric utilities, natural gas,
companies that derive revenues from and telecommunications industries; weightings
utility-related activities such as within the various industry segments are
providing services, equipment or fuel continually monitored, and INVESCO adjusts
sources to utilities the portfolio weightings depending on the
prevailing economic conditions.
8
AIM V.I. GLOBAL UTILITIES FUND INVESCO VIF -- UTILITIES FUND
(YOUR FUND) (BUYING FUND)
------------------------------ -----------------------------
- such companies may include those that
provide maintenance service to electric,
telephone or natural gas utilities;
companies that provide energy sources such
As coal or uranium; fuel services and
equipment companies; companies that provide
pollution control for water utilities; and
companies that build pipelines or turbines
which help produce electricity
- may invest up to 80% of its total assets in - may invest up to 25% of its assets in
foreign securities, including securities of securities of non-U.S. issuers (securities
issuers located in developing countries of Canadian issuers and American Depositary
Receipts are not subject to this 25%
limitation)
- invests in the securities of companies - no corresponding strategy
located in at least four different
countries, including the U.S., and may
invest a significant amount of its assets
in the securities of U.S. issuers
- may invest up to 25% of its total assets in - may purchase convertible securities
convertible securities including convertible debt obligations and
convertible preferred stock, although not a
principal investment strategy
- may invest up to 25% of its total assets in - may invest in debt securities, although not
non-convertible bonds a principal investment strategy
- may invest up to 10% of its total assets in - may invest in junk bonds which INVESCO
lower-quality debt securities (i.e. "junk believes are not highly speculative and
bonds") which are rated at least CCC by S&P or Caa
by Xxxxx'x, although not a principal
investment strategy
- non-diversified
- focuses on securities that have favorable - diversified
prospects for high total return
- uses a research-orientated bottom-up
investment approach, focusing on company
fundamentals and growth prospects when
selecting securities, and generally
emphasizes companies that INVESCO believes
are strongly managed and will generate
above-average long-term capital
appreciation
- invests primarily in equity securities that
INVESCO believes will rise in price faster
than other securities, as well as in
options and other investments whose values
are based upon the values of equity
securities
COMPARISON OF PRINCIPAL SERVICE PROVIDERS
A comparison of principal services providers can be found at Exhibit B.
COMPARISON OF MULTIPLE CLASS STRUCTURES
A comparison of the share classes of your Fund that are available to
investors and the corresponding share classes of Buying Fund that shareholders
of your Fund will receive in the Reorganization can be found as Exhibit A.
Series II shares of Buying Fund are not currently available and will not be
offered for sale prior to the Reorganization. A registration statement
registering the Series II shares of Buying Fund is expected to be filed with the
SEC on or about February 13, 2004 and will become effective prior to the
Reorganization. For information regarding the features of each of the share
classes of your Fund and Buying Fund, see the Selling Fund Prospectus and the
Buying Fund Prospectus, respectively.
9
COMPARISON OF SALES CHARGES
No sales charges are applicable to shares of Buying Fund received by
holders of your Fund's shares in connection with the Reorganization. In
addition, no sales charges are applicable to Series I shares of either your Fund
or Buying Fund or to Series II shares of your Fund. (No sales charges will be
applicable to Series II shares of Buying Fund.) There may be, however, sales and
additional other expenses, such as insurance charges and surrender charges,
associated with your variable annuity or variable life contract that uses the
Buying Fund, and/or the Selling Fund, as an underlying investment vehicle.
COMPARISON OF DISTRIBUTION AND PURCHASE AND REDEMPTION PROCEDURES
Shares of your Fund are distributed by A I M Distributors, Inc. ("AIM
Distributors"), a registered broker-dealer and wholly owned subsidiary of AIM.
Shares of Buying Fund are distributed by INVESCO Distributors, Inc., a
registered broker-dealer and indirect wholly owned subsidiary of AMVESCAP. If
shareholders of Buyer do not approve the redomestication of Buyer's series
portfolios as new series portfolios of Trust, AIM Distributors will replace
INVESCO Distributors, Inc. as distributor of Buying Fund effective April 30,
2004.
Your Fund has adopted a distribution plan that allows the payment of
distribution and service fees for the sale and distribution of its Series II
shares. Your Fund has engaged AIM Distributors to provide such services either
directly or through third parties. The Fee Tables on page 3 include comparative
information about the distribution and service fees payable by the Series II
shares of your Fund and Buying Fund. The Series II shares of Buying Fund will
have the same distribution and/or service (Rule 12b-1) fees as the Series II
shares of your Fund.
The purchase and redemption procedures of your Fund and Buying Fund are
substantially the same. For information regarding the purchase and redemption
procedures of your Fund and Buying Fund, see the Selling Fund Prospectus and the
Buying Fund Prospectus, respectively.
THE BOARD'S RECOMMENDATION ON PROPOSAL 1
Your Board, including the independent trustees, unanimously recommends that
you vote "FOR" this Proposal.
RISK FACTORS
RISKS ASSOCIATED WITH BUYING FUND
The following is a discussion of the principal risks associated with Buying
Fund.
Buying Fund is generally subject to risks that affect the utilities sector.
Governmental regulation, difficulties in obtaining adequate financing and
investment return, environmental issues, prices of fuel for generation of
electricity, availability of natural gas, risks associated with power marketing
and trading, and risks associated with nuclear power facilities may adversely
affect the market value of Buying Fund's holdings. The recent trend towards
deregulation in the utilities industries presents special risks. Some companies
may be faced with increased competition and may become less profitable. Buying
Fund is also subject to the following specific risks:
INVESTMENT STYLE RISK
Growth investing may be more volatile than other investment styles because
growth stocks are more sensitive to investor perceptions of an issuing company's
growth potential. Growth-oriented funds typically will underperform
value-oriented funds when investor sentiment favors the value investing style.
10
SECTOR RISK
Buying Fund is concentrated in a comparatively narrow segment of the
economy. This means Buying Fund's investment concentration in the utilities
sector is higher than most mutual funds and the broad securities market.
Consequently, Buying Fund tends to be more volatile than other mutual funds, and
the value of its portfolio investments and consequently the value of an
investment in Buying Fund tend to go up and down more rapidly.
POTENTIAL CONFLICTS
Although it is unlikely, there potentially may be differing interests
involving Buying Fund among owners of variable annuity and variable life
insurance contracts issued by different insurance companies, or even the same
insurance company. The Board of Directors of Buyer will monitor events for any
potential conflicts. In the event that the Board of Directors of Buyer
determines that a potential conflict exists, the relevant insurance company(ies)
will, at their expense and to the extent reasonably practical (as determined by
a majority of the disinterested directors of Buyer) take whatever steps are
necessary to remedy or eliminate the conflict.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of Buying
Fund's investment. Certain stocks selected for Buying Fund's portfolio may
decline in value more than the overall stock market. In general, the securities
of small companies have more volatility than those of mid-size or large
companies.
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including
currency, political, regulatory, and diplomatic risks. Buying Fund may invest up
to 25% of its assets in securities of non-U.S. issuers. Securities of Canadian
issuers and American Depository Receipts are not subject to this 25% limitation.
Foreign securities risks also includes the following:
Currency Risk. A change in the exchange rate between U.S. Dollars and
a foreign currency may reduce the value of Buying Fund's investment in a
security valued in the foreign currency, or based on that currency value.
Political Risk. Political actions, events, or instability may result
in unfavorable changes in the value of a security.
Regulatory Risk. Government regulations may affect the value of a
security. In foreign countries, securities markets that are less regulated
than those in the U.S. may permit trading practices that are not allowed in
the U.S.
Diplomatic Risk. A change in the diplomatic relations between the
U.S. and a foreign country could affect the value or liquidity of
investments.
LIQUIDITY RISK
Buying Fund's portfolio is liquid if Buying Fund is able to sell the
securities it owns at a fair price within a reasonable time. Liquidity is
generally related to the market trading volume for a particular security.
Investments in smaller companies or in foreign companies or companies in
emerging markets are subject to a variety of risks, including potential lack of
liquidity. The principal risk of investing in illiquid securities is that Buying
Fund may be unable to dispose of them at the time desired or at a reasonable
price.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and certain
derivatives transactions. (Generally, repurchase agreements are agreements under
which a fund acquires ownership of a security from an entity such as a bank that
agrees to repurchase the security at a mutually agreed upon price and time.) The
11
risk is that the other party in the transaction, the entity from whom the
security is initially purchased, will not fulfill its contractual obligation to
complete the transaction with Buying Fund.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable,
incomplete, or inaccurate. This risk is more common to securities issued by
foreign companies and companies in emerging markets than it is to the securities
of U.S.-based companies.
PORTFOLIO TURNOVER RISK
Buying Fund's investments may be bought and sold relatively frequently. A
high turnover rate may lower Buying Fund's performance because it results in
higher brokerage commissions.
GENERAL RISKS
Not Insured. Mutual funds are not insured by the FDIC or any other
government agency, unlike bank deposits such as CDs or savings accounts.
No Guarantee. No mutual fund can guarantee that it will meet its
investment objectives.
Possible Loss of Investment. A mutual fund cannot guarantee its
performance, nor assure you that the market value of your investment will
increase. You may lose the money you invest, and Buying Fund will not reimburse
you for any of these losses.
Volatility. The price of your mutual fund shares will increase or decrease
with changes in the value of Buying Fund's underlying investments.
COMPARISON OF RISKS OF BUYING FUND AND YOUR FUND
The risks associated with an investment in your Fund are similar to those
described above for Buying Fund because of the similarities in their investment
objectives and strategies. Set forth below is a discussion of certain risks that
differ between Buying Fund and your Fund. You can find more detailed
descriptions of specific risks associated with your Fund in the Selling Fund
Prospectus.
Your Fund is a non-diversified fund and Buying Fund is a diversified fund.
This means that your Fund may invest in fewer issuers than Buying Fund. As a
result, your Fund's performance is affected to a greater extent by the
performance of any individual security it holds than is the performance of
Buying Fund. Further, your Fund may be subject to greater investment and credit
risk than the more broadly invested Buying Fund. However, since Buying Fund
seeks to keep its portfolio divided among three industries, Buying Fund may be
subject to greater industry sector risk than your Fund.
Your Fund has a greater ability to invest in foreign securities compared to
Buying Fund, which can only invest up to 25% of its total assets in foreign
securities. Because your Fund has no such restrictions, it may be subject to
greater foreign securities exposure than Buying Fund.
Your Fund may invest up to 25% of its total assets in debt securities,
including up to 10% of its total assets in lower quality debt-securities such as
junk bonds, which are particularly vulnerable to credit risk and interest rate
fluctuations. Interest rate increases can cause the price of a debt security to
decrease. Buying Fund may invest in debt securities including junk bonds, but it
is not a principal investment strategy of Buying Fund. As a result, your Fund's
potentially greater exposure to junk bonds may give it greater exposure to
credit risks.
INFORMATION ABOUT BUYING FUND
DESCRIPTION OF BUYING FUND SHARES
Shares of Buying Fund are redeemable at their net asset value by the
shareholder or by Buyer in certain circumstances. Each share of Buying Fund
represents an equal proportionate interest in Buying Fund with
12
each other share and is entitled to such dividends and distributions out of the
income belonging to Buying Fund as are declared by the Board of Directors of
Buying Fund. Each share of Buying Fund generally has the same voting, dividend,
liquidation and other rights; however, each class of shares of Buying Fund is
subject to different class-specific expenses. When issued, share of Buying Fund
are fully paid and nonassessable, which means that shareholders of Buying Fund
cannot be assessed additional funds to cover any liabilities of Buying Fund.
Shares of Buying Fund are freely transferable. Shares of Buying Fund have no
preemptive rights (rights of current shareholders to maintain a proportionate
share of ownership in Buying Fund by purchasing additional shares of Buying
Fund), subscription rights (rights of current shareholders to purchase
additional shares of Buying Fund in an amount proportionate to their current
holdings) or conversion rights (rights of current shareholders to exchange
Buying Fund's shares for another security of Buying Fund at a predetermined
conversion rate during a stated conversion period).
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Buying Fund taken from its annual report
to shareholders for the fiscal year ended December 31, 2002 is set forth in
Appendix III to this Proxy Statement/Prospectus.
FINANCIAL HIGHLIGHTS
For more information about Buying Fund's financial performance, see the
Financial Highlights of Buying Fund at Exhibit C, which is more current than and
should be read in lieu of the "Financial Highlights" section of the Buying Fund
Prospectus that is attached to this Proxy Statement/Prospectus as Appendix II.
The financial statements should be read in conjunction with disclosures,
included in the Proxy Statement/ Prospectus under the heading "Certain Civil
Proceedings and Lawsuits."
PENDING SHAREHOLDER PROPOSALS FOR BUYING FUND
As previously discussed, the Board of Directors of Buyer is soliciting the
shareholders of Buying Fund to vote on a new investment advisory agreement
between AIM and Buying Fund, a new sub-advisory agreement between AIM and
INVESCO Institutional (N.A.), Inc., an affiliate of INVESCO, for Buying Fund,
and an
agreement and plan of reorganization to redomesticate Buyer as a
Delaware
statutory trust.
ADDITIONAL INFORMATION ABOUT THE AGREEMENT
TERMS OF THE REORGANIZATION
The terms and conditions under which the Reorganization may be consummated
are set forth in the Agreement. Significant provisions of the Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Agreement, a copy of which is attached as Appendix I to this
Proxy Statement/Prospectus.
THE REORGANIZATION
The consummation of the Reorganization (the "Closing") is expected to occur
on April 30, 2004, at 8:00 a.m., Eastern Time (the "Effective Time"). The
Closing will be based on values calculated as of the close of regular trading on
the New York Stock Exchange on April 29, 2004 (the "Valuation Date").
At the Effective Time, all of the assets of your Fund will be delivered to
Xxxxx's custodian for Buying Fund's account in exchange for Buying Fund's
assumption of the liabilities of your Fund. Buyer shall deliver to the
shareholders of your Fund a number of shares of the corresponding class of
Buying Fund having an aggregate net asset value equal to the value of the net
assets of your Fund. Upon delivery of your Fund's assets, Buying Fund will
receive good and marketable title to such assets free and clear of all liens.
In order for your Fund to continue to qualify as a "regulated investment
company" for tax purposes and to eliminate any tax liability of your Fund
arising from undistributed investment company taxable income or
13
net capital gain, Trust will declare one or more dividends on or before the
Valuation Date. Such dividend will be payable to the shareholders of your Fund.
Such dividend, together with all previous such dividends, shall have the
effect of distributing:
- all of your Fund's investment company taxable income (determined without
regard to any deductions for dividends paid) for the taxable year ended
December 31, 2003 and for the short taxable year beginning on January 1,
2004 and ending on the Closing; and
- all of your Fund's net capital gain recognized in its taxable year ended
December 31, 2003 and in such short taxable year (after reduction for any
capital loss carryover).
Buying Fund will proceed with the Reorganization if the shareholders of
your Fund approve the Agreement.
BOARD CONSIDERATIONS
AMVESCAP initially proposed that the Board consider the Reorganization at
an in-person meeting of the Board held on November 6, 2003, at which preliminary
discussions of the Reorganization took place. The Board determined that the
Reorganization is in the best interests of your Fund and will not dilute the
interests of your Fund's shareholders, and approved the Agreement and the
Reorganization, at an in-person meeting of the Board held on December 9-10,
2003.
Over the course of the two Board meetings, the Board received from AIM and
INVESCO written materials that contained information concerning your Fund and
Buying Fund, including comparative total return and fee and expense information,
a comparison of investment objectives and strategies of your Fund and Buying
Fund and pro forma expense ratios for Buying Fund. AIM and INVESCO also provided
the Board with written materials concerning the structure of the proposed
Reorganization and the Federal tax consequences of the Reorganization.
In evaluating the Reorganization, the Board considered a number of factors,
including:
- The investment objective and principal investment strategies of your Fund
and Buying Fund, noting that the objective and strategies of Buying Fund
generally were similar to those of your Fund.
- The comparative expenses of your Fund and Buying Fund and the pro forma
expenses of Buying Fund after giving effect to the Reorganization, noting
that, both before and after contractual expense limitations, the expenses
of Buying Fund and the pro forma expenses of Buying Fund were less than
those of your Fund as of June 30, 2003.
- The comparative performance of your Fund and Buying Fund, noting that
Buying Fund generally had superior performance to your Fund.
- The comparative sizes of your Fund and Buying Fund, noting that Buying
Fund was larger.
- The consequences of the Reorganization for Federal income tax purposes,
including the treatment of capital loss carryforwards, if any, available
to offset future capital gains of both your Fund and Buying Fund. In that
regard, the Board noted that tax issues, including the treatment of
capital loss carryforwards, are of less consequence to variable fund
shareholders because their shares are held in tax-deferred accounts and
they are not taxed on fund distributions.
- Any fees and expenses that will be borne directly or indirectly by your
Fund or Buying Fund in connection with the Reorganization
The Board noted that AMVESCAP or one of its subsidiaries, on behalf of AIM,
will bear the costs and expenses incurred in connection with the Reorganization.
The Board also noted that no sales charges or other charges would be
imposed on any of the shares of Buying Fund issued to the shareholders of your
Fund in connection with the Reorganization.
14
Based on the foregoing and the information presented at the two Board
meetings discussed above, the Board determined that the Reorganization is in the
best interests of your Fund and will not dilute the interests of your Fund's
shareholders. Therefore, the Board recommends the approval of the Agreement by
the shareholders of your Fund at the Special Meeting.
AMVESCAP initially proposed that the Board of Directors of Buyer consider
the Reorganization at an in-person meeting of the Board of Directors held on
November 6, 2003, at which preliminary discussions of the Reorganization took
place. The Board of Directors of Buyer determined that the Reorganization is in
the best interests of Buying Fund and will not dilute the interests of Buying
Fund shareholders, and approved the Agreement and the Reorganization, at an
in-person meeting of the Board of Directors held on December 9-10, 2003.
OTHER TERMS
If any amendment is made to the Agreement which would have a material
adverse effect on shareholders, such change will be submitted to the affected
shareholders for their approval. However, the Agreement may be amended without
shareholder approval by mutual agreement of the parties.
Trust and Buyer have made representations and warranties in the Agreement
that are customary in matters such as the Reorganization. The obligations of
Trust and Buyer pursuant to the Agreement are subject to various conditions,
including the following mutual conditions:
- the assets of your Fund to be acquired by Buying Fund shall constitute at
least 90% of the fair market value of the net assets and at least 70% of
the fair market value of the gross assets held by your Fund immediately
prior to the Reorganization;
- Buyer's Registration Statement on Form N-14 under the Securities Act of
1933 (the "1933 Act") shall have been filed with the SEC and such
Registration Statement shall have become effective, and no stop-order
suspending the effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall have been initiated
or threatened by the SEC (and not withdrawn or terminated);
- the shareholders of your Fund shall have approved the Agreement; and
- Trust and Buyer shall have received an opinion from Xxxxxxx Xxxxx Xxxxxxx
& Xxxxxxxxx, LLP that the consummation of the transactions contemplated
by the Agreement will not result in the recognition of gain or loss for
Federal income tax purposes for your Fund, Buying Fund or their
shareholders.
The Board of Trustees of Trust and the Board of Directors of Buyer may
waive without shareholder approval any default by Trust or Buyer or any failure
by Trust or Buyer to satisfy any of the above conditions as long as such a
waiver is mutual and will not have a material adverse effect on the benefits
intended under the Agreement for the shareholders of your Fund. The Agreement
may be terminated and the Reorganization may be abandoned at any time by mutual
agreement of the parties, or by either party if the shareholders of your Fund do
not approve the Agreement or if the Closing does not occur on or before June 30,
2004.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
consequences of the Reorganization and is based upon the current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the existing U.S.
Treasury regulations thereunder, current administrative rulings of the Internal
Revenue Service ("IRS") and published judicial decisions, all of which are
subject to change.
The principal Federal income tax consequences that are expected to result
from the Reorganization, under currently applicable law, are as follows:
- no gain or loss will be recognized by your Fund upon the transfer of its
assets to Buying Fund solely in exchange for shares of Buying Fund and
Buying Fund's assumption of the liabilities of your Fund or on the
distribution of those shares to your Fund's shareholders;
15
- no gain or loss will be recognized by Buying Fund on its receipt of
assets of your Fund in exchange for shares of Buying Fund issued directly
to your Fund's shareholders;
- no gain or loss will be recognized by any shareholder of your Fund upon
the exchange of shares of your Fund for shares of Buying Fund;
- the tax basis of the shares of Buying Fund to be received by a
shareholder of your Fund will be the same as the shareholder's tax basis
of the shares of your Fund surrendered in exchange therefor;
- the holding period of the shares of Buying Fund to be received by a
shareholder of your Fund will include the period for which such
shareholder held the shares of your Fund exchanged therefor, provided
that such shares of your Fund are capital assets in the hands of such
shareholder as of the Closing; and
- Buying Fund will thereafter succeed to and take into account any capital
loss carryover and certain other tax attributes of your Fund in
determining its taxable income, subject to all relevant conditions and
limitations on the use of such tax benefits.
Neither Trust nor Xxxxx has requested or will request an advance ruling
from the IRS as to the Federal tax consequences of the Reorganization. As a
condition to Closing, Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP will render a
favorable opinion to Trust and Buyer as to the foregoing Federal income tax
consequences of the Reorganization, which opinion will be conditioned upon,
among other things, the accuracy, as of the Effective Time, of certain
representations of Trust and Buyer upon which Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx,
LLP will rely in rendering its opinion. The conclusions reached in that opinion
could be jeopardized if the representations of Trust or Buyer are incorrect in
any material respect.
THE FOREGOING DESCRIPTION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATION IS MADE WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES
OF ANY SHAREHOLDER OF YOUR FUND. YOUR FUND'S SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM OF THE
REORGANIZATION, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
For financial statement purposes, the Reorganization will be accounted for
as a combination of the funds and not as a purchase of the assets of your Fund
at their current fair market values. Accordingly, the book cost of the assets of
your Fund will be recorded on the financial statements of the Buying Fund using
the same book cost of such assets as has been used by your Fund.
RIGHTS OF SHAREHOLDERS
GENERAL
Buyer is a Maryland corporation. Trust is a
Delaware statutory trust. There
is much that is similar between Maryland corporations and
Delaware statutory
trusts. For example, the responsibilities, powers and fiduciary duties of the
directors of Buyer are substantially similar to those of the trustees of Trust.
There are, however, certain differences between the two forms of
organization. The operations of Buyer, as a Maryland corporation, are governed
by its Articles of Incorporation, and any restatements, amendments and
supplements thereto (the "Articles of Incorporation"), and applicable Maryland
law. The operations of Trust, as a
Delaware statutory trust, are governed by its
Amended and Restated Agreement and Declaration of Trust, as amended (the
"Declaration of Trust"), and applicable Delaware law.
As discussed above under "Summary -- The Reorganization," if approved by
Buyer's shareholders, Buyer will be redomesticated as a Delaware statutory trust
after the consummation of the Reorganization. If
16
such redomestication occurs, the discussion below of the liabilities of
shareholders of a Maryland corporation will be inapplicable to Buyer.
LIABILITY OF SHAREHOLDERS
Shareholders of a Maryland corporation generally do not have personal
liability for the corporation's obligations, except that a shareholder may be
liable to the extent that he or she receives any distribution which exceeds the
amount which he or she could properly receive under Maryland law or where such
liability is necessary to prevent fraud.
Under Delaware law, shareholders of a Delaware statutory trust are entitled
to the same limitations of liability extended to shareholders of private
for-profit corporations. However, there is a remote possibility that
shareholders of a Delaware statutory trust might be held personally liable for
the trust's obligations. This might occur if the courts of another state that
does not recognize the limited liability granted to shareholders by Delaware law
were to apply the laws of such other state to a controversy involving the
trust's obligations.
The Declaration of Trust provides that shareholders of the Trust are not
subject to any personal liability for acts or obligations of the Trust. The
Declaration of Trust requires that every written agreement, obligation or other
undertaking made by the Trust contain a provision to the effect that
shareholders are not personally liable thereunder. In addition, the Declaration
of Trust provides for indemnification out of the trust's property for any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder.
Therefore, the risk of any shareholder incurring financial loss beyond his
or her investment due to shareholder liability is limited to circumstances in
which the Trust itself is unable to meet its obligations and the express
disclaimer of shareholder liabilities is determined not to be effective. Given
the nature of the assets and operations of the Trust, the possibility of the
Trust being unable to meet its obligations is considered remote. Even if a claim
were brought against the Trust and a court determined that shareholders were
personally liable, it would likely not impose a material obligation on a
shareholder.
ELECTION OF DIRECTORS/TRUSTEES; TERMS
The shareholders of Buyer have elected a majority of the directors of
Buyer. Each director serves until a successor is elected, subject to his or her
earlier death, resignation or removal in the manner provided by law (see below).
In the case of a vacancy on the Board of Directors (other than a vacancy created
by removal by the shareholders), a majority of the directors may appoint a
successor to fill such vacancy. The right of the Board of Directors to appoint
directors to fill vacancies without shareholder approval is subject to the
provisions of the 1940 Act.
The shareholders of Trust have elected a majority of the trustees of Trust.
Such trustees serve for the life of Trust, subject to their earlier death,
incapacitation, resignation, retirement or removal (see below). In the case of
any vacancy on the Board of Trustees, a majority of the trustees may appoint a
successor to fill such vacancy. The right of the Board of Trustees to appoint
trustees to fill vacancies without shareholder approval is subject to the
provisions of the 1940 Act.
REMOVAL OF DIRECTORS/TRUSTEES
A director of Buyer may be removed by the affirmative vote of a majority of
the holders of a majority of the outstanding shares of Buyer.
A trustee of Trust may be removed at any time by a written instrument
signed by at least two-thirds of the trustees or by vote of two-thirds of the
outstanding shares of Trust.
MEETINGS OF SHAREHOLDERS
Buyer is not required to hold annual meetings of shareholders and does not
intend to do so unless required by the 1940 Act. The bylaws of Buyer provide
that a special meeting of shareholders may be called by the president or, in his
or her absence, the vice-president or by a majority of the Board of Directors or
holders of
17
shares entitled to cast at least 10% of the votes entitled to be cast at the
special meeting. Requests for special meetings must, among other things, state
the purpose of such meeting and the matters to be voted upon. No special meeting
need be called to consider any matter previously voted upon at a special meeting
called by the shareholders during the preceding twelve months, unless requested
by a majority of all shares entitled to vote at such meeting.
Trust is not required to hold annual meetings of shareholders unless
required by the 1940 Act and does not intend to do so. The bylaws of Trust
provide that any trustee may call a special meeting of shareholders and the
trustees shall call a special meeting of the shareholders solely for the purpose
of removing one or more trustees upon written request of the holders of not less
than 10% of the outstanding shares of Trust. Special meetings may be called for
the purpose of electing trustees or for any other action requiring shareholder
approval, or for any matter deemed by the trustees to be necessary or desirable.
LIABILITY OF DIRECTORS/TRUSTEES AND OFFICERS; INDEMNIFICATION
The Articles of Incorporation eliminate director and officer liability to
the fullest extent permitted under Maryland law.
Under Maryland law:
- a corporation is permitted to eliminate liability of its directors and
officers to the corporation or its stockholders, except for liability
arising from receipt of an improper benefit or profit and from active and
deliberate dishonesty;
- indemnification of a corporation's directors and officers is mandatory if
a director or officer has been successful on the merits or otherwise in
the defense of certain proceedings; and
- indemnification of a corporation's directors and officers for other
matters is permitted unless it is established that the act or omission
giving rise to the proceeding was committed in bad faith, a result of
active and deliberate dishonesty, or one in which a director or officer
actually received an improper benefit.
The Declaration of Trust provides:
- that the trustees and officers of Trust are not liable for any act or
omission or any conduct whatsoever in their capacity as trustees, except
for liability to the trust or shareholders due to willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of the office of trustee; and
- for the indemnification of Trust's trustees and officers to the extent
that such trustees and officers act in good faith and reasonably believe
that their conduct is in the best interests of Trust, except with respect
to any matter in which it has been determined that such trustee acted
with willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
Under Delaware law:
- trustees of a statutory trust are not liable to the trust or its
shareholders for acting in good faith reliance on the provisions of its
governing instrument and that the trustee's liabilities may be expanded
or restricted by such instrument; and
- a statutory trust is permitted to indemnify and hold harmless any trustee
or other person against any and all claims and demands.
Generally speaking, and for practical purposes, the impact of the change
from Maryland law to Delaware law on liability of directors/trustees and
officers will be minimized because the 1940 Act applies a certain level of
liability to the directors/trustees and officers of a mutual fund by prohibiting
the governing documents of the Fund from eliminating liability of
directors/trustees and officers for willful misfeasance bad faith, gross
negligences or reckless disregard of duty.
18
DISSOLUTION AND TERMINATION
Maryland law provides that Buyer may be dissolved by the vote of a majority
of the Board of Directors and two-thirds of the shares entitled to vote on the
dissolution; however the Articles of Incorporation reduce the required
shareholder vote from two-thirds to a majority of the shares entitled to vote on
the dissolution.
Pursuant to the Declaration of Trust, Trust or any series or class of
shares of beneficial interest in Trust may be terminated by: (1) a majority
shareholder vote of Trust or the affected series or class, respectively; or (2)
if there are fewer than 100 shareholders of record of Trust or of such
terminating series or class, a majority of the trustees pursuant to written
notice to the shareholders of Trust or the affected series or class.
VOTING RIGHTS OF SHAREHOLDERS
Shareholders of a Maryland corporation such as Buyer are entitled to vote
on, among other things, those matters which effect fundamental changes in the
corporate structure (such as a merger, consolidation or sale of substantially
all of the assets of the corporation) as provided by Maryland law.
The Declaration of Trust grants shareholders power to vote only with
respect to the following: (i) election of trustees, provided that a meeting of
shareholders has been called for that purpose; (ii) removal of trustees,
provided that a meeting of shareholders has been called for that purpose; (iii)
termination of Trust or a series or class of its shares of beneficial interest,
provided that a meeting of shareholders has been called for that purpose; (iv)
sale of all or substantially all of the assets of Trust or one of its investment
portfolios; (v) merger or consolidation of Trust or any of its investment
portfolios, with certain exceptions; (vi) approval of any amendments to
shareholders' voting rights under the Declaration of Trust; and (vii) approval
of such additional matters as may be required by law or as the trustees, in
their sole discretion, shall determine.
Generally speaking, and for practical purposes, the impact of the change to
Delaware law from Maryland law on shareholder voting rights will be minimized
because the 1940 Act requires that shareholders vote on certain fundamental
matters.
DISSENTERS' RIGHTS
Under Maryland law, shareholders may not demand the fair value of their
shares from the successor company in a transaction involving the transfer of the
corporation's assets and are, therefore, bound by the terms of the transaction
if the stock is that of an open-end investment company registered with the SEC
under the 1940 Act and the value placed on the stock in the transaction is its
net asset value.
Neither Delaware law nor the Declaration of Trust confers upon shareholders
rights of appraisal or dissenters' rights.
AMENDMENTS TO ORGANIZATION DOCUMENTS
Consistent with Maryland law, Xxxxx reserves the right to amend, alter,
change or repeal any provision contained in the Articles of Incorporation in the
manner prescribed by statute, including any amendment that alters the contract
rights, as expressly set forth in the Articles of Incorporation, of any
outstanding stock, and all rights conferred on shareholders are granted subject
to this reservation. The Board of Directors of Buyer may approve amendments to
the Articles of Incorporation to classify or reclassify unissued shares of a
class of stock without shareholder approval. Other amendments to the Articles of
Incorporation may be adopted if approved by the affirmative vote of a majority
of all the votes entitled to be cast on the matter. The directors have the power
to alter, amend or repeal the bylaws of Buyer or adopt new bylaws at any time.
Consistent with Delaware law, the Board of Trustees of Trust may, without
shareholder approval, amend the Declaration of Trust at any time, except to
eliminate any voting rights pertaining to the shares of Trust, without approval
of the majority of the shares of Trust. The trustees have the power to alter,
amend or repeal the bylaws of Trust or adopt new bylaws at any time.
19
CAPITALIZATION
The following table sets forth, as of June 30, 2003, (i) the capitalization
of each class of shares of your Fund, (ii) the capitalization of each class of
shares of Buying Fund, and (iii) the pro forma capitalization of each class of
shares of Buying Fund as adjusted to give effect to the transactions
contemplated by the Agreement.
PRO FORMA
YOUR FUND BUYING FUND BUYING FUND
SERIES I SHARES SERIES I SHARES SERIES I SHARES
--------------- --------------- ---------------
Net Assets.................................. $21,077,182 $44,364,519 $65,441,701
Shares Outstanding.......................... 1,981,639 3,634,313 5,361,147
Net Asset Value Per Share................... $ 10.64 $ 12.21 $ 12.21
PRO FORMA
YOUR FUND BUYING FUND BUYING FUND
SERIES II SHARES SERIES II SHARES(1) SERIES II SHARES
---------------- ------------------- ----------------
Net Assets.............................. $178,410 $ 0 $178,410
Shares Outstanding...................... 16,793 0 14,606
Net Asset Value Per Share............... $ 10.62 $12.21 $ 12.21
---------------
(1) There were no shareholders of Series II Shares of Buying Fund as of June 30,
2003.
INTERESTS OF CERTAIN PERSONS
If the Reorganization is consummated and if the shareholders of Buying Fund
do not approve a proposed new investment advisory agreement with AIM, INVESCO,
as the current investment advisor of Buying Fund, will gain approximately $21
million in additional assets under management (based on your Fund's net assets
as of June 30, 2003), upon which INVESCO will receive advisory fees. INVESCO's
advisory fees applicable to Buying Fund are set forth in the Fee Tables on page
3.
LEGAL MATTERS
Certain legal matters concerning the tax consequences of the Reorganization
will be passed upon by Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000-0000.
ADDITIONAL INFORMATION ABOUT BUYING FUND AND YOUR FUND
For more information with respect to your Fund concerning the following
topics, please refer to the following sections of the Selling Fund Prospectus,
which has been made a part of this Proxy Statement/ Prospectus by reference: (i)
see "Performance Information" for more information about the performance of your
Fund; (ii) see "Fund Management" for more information about the management of
your Fund; (iii) see "Other Information" for more information about your Fund's
policy with respect to dividends and distributions; and (iv) see "Other
Information" for more information about the pricing, purchase, redemption and
repurchase of shares of your Fund, tax consequences to shareholders of various
transactions in shares of your Fund, distribution arrangements and the multiple
class structure of your Fund.
For more information with respect to Buying Fund concerning the following
topics, please refer to the following sections of the Buying Fund Prospectus,
which has been made a part of this Proxy Statement/ Prospectus by reference and
which is attached to this Proxy Statement/Prospectus as Appendix II: (i) see
"Fund Performance" for more information about the performance of Buying Fund;
(ii) see "Fund Management" and "Portfolio Managers" for more information about
the management of Buying Fund; (iii) see "Share Price" for more information
about the pricing of shares of Buying Fund; (iv) see "Taxes" for more
information about tax consequences to shareholders of various transactions in
shares of Buying Fund;
20
and (v) see "Dividends And Capital Gain Distributions" for more information
about Buying Fund's policy with respect to dividends and distributions.
CERTAIN CIVIL PROCEEDINGS AND LAWSUITS
The mutual fund industry as a whole is currently subject to a wide range of
inquiries and litigation related to issues of "market timing" and "late
trading." Both AIM and INVESCO are the subject of a number of such inquiries, as
described below.
REGULATORY ACTIONS AND INQUIRIES CONCERNING INVESCO
On December 2, 2003 each of the SEC and the Office of the Attorney General
of the State of New York ("NYAG") filed civil proceedings against INVESCO and
Xxxxxxx X. Xxxxxxxxxx, in his capacity as the chief executive officer of
INVESCO. Xx. Xxxxxxxxxx currently holds the positions of Chief Operating Officer
and Senior Vice President of A I M Management Group Inc., the parent of AIM, and
the position of Senior Vice President of AIM. In addition, on December 2, 2003,
the State of Colorado filed civil proceedings against INVESCO. Neither your Fund
nor any of the other AIM or INVESCO Funds has been named as a defendant in any
of these proceedings.
The SEC complaint, filed in the United States District Court for the
District of Colorado [Civil Action No. 03-N-2421 (PAC)], alleges that INVESCO
failed to disclose in the INVESCO Funds' prospectuses and to the INVESCO Funds'
independent directors that INVESCO had entered into certain arrangements
permitting market timing of the INVESCO Funds. The SEC alleges violations of
Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 under that Act, Section 206(1) and 206(2) of
the Investment Advisers Act of 1940, and Sections 34(b) and 36(a) of the 1940
Act. The SEC is seeking injunctions, including permanent injunctions from
serving as an investment advisor, officer or director of an investment company;
an accounting of all market timing as well as certain fees and compensation
received; disgorgement; civil monetary penalties; and other relief.
The NYAG complaint, filed in the Supreme Court of the State of New York
(New York County), is also based on the circumstances described above. The NYAG
complaint alleges violation of Article 23-A (the Xxxxxx Act) and Section 349 of
the General Business Law of the State of New York and Section 63(12) of the
State of New York's Executive Law. The NYAG is seeking injunctions, including
permanent injunctions from directly or indirectly selling or distributing shares
of mutual funds; disgorgement of all profits obtained, including fees collected,
and payment of all restitution and damages caused, directly or indirectly from
the alleged illegal activities; civil monetary penalties; and other relief.
The Colorado complaint, filed in the Colorado District Court, in the City
and County of Denver, Colorado, is also based on the circumstances described
above. The Colorado complaint alleges violations of Section 6-1-105(1) of the
Colorado Consumer Protection Act. The State of Colorado is seeking injunctions;
restitution, disgorgement and other equitable relief; civil monetary penalties;
and other relief.
No relief is being sought against your Fund or any of the other AIM or
INVESCO Funds in any of these complaints.
In addition, INVESCO has received inquiries in the form of subpoenas or
other oral or written requests for information from various regulators
concerning market timing activity, late trading, fair value pricing and related
issues concerning the INVESCO Funds. These regulators include the Florida
Department of Financial Services, the Commissioner of Securities for the State
of Georgia, the Office of the State Auditor for the State of West Virginia, the
Office of the Secretary of State for West Virginia and the Colorado Securities
Division. INVESCO has also received more limited inquiries concerning related
matters from the United States Department of Labor, NASD Inc., and the SEC.
21
REGULATORY INQUIRIES CONCERNING AIM
AIM has also received inquiries in the form of subpoenas or other oral or
written requests for information from various regulators concerning market
timing activity, late trading, fair value pricing, and related issues concerning
the AIM Funds. AIM has received requests for information and documents
concerning these and related matters from the SEC and the Massachusetts
Secretary of the Commonwealth. In addition, AIM has received subpoenas
concerning these and related matters from the NYAG, the United States Attorney's
Office for the District of Massachusetts, the Commissioner of Securities for the
State of Georgia, the Office of the State Auditor for the State of West
Virginia, and the Office of the Secretary of State for West Virginia. AIM has
also received more limited inquiries from the SEC and NASD, Inc. concerning
specific funds, entities and/or individuals, none of which directly bears upon
your Fund.
RESPONSE OF THE INDEPENDENT DIRECTORS/TRUSTEES
The independent directors/trustees (the "independent trustees") of the AIM
and INVESCO Funds have retained their own independent counsel to conduct an
investigation on behalf of the independent trustees into the frequent trading
arrangements and related issues raised by the regulators. The independent
trustees have created a special committee, consisting of four independent
trustees, to oversee the investigation and to formulate recommendations for
further board action. As part of the investigation by the independent trustees,
their independent counsel has been reviewing the examination of INVESCO and AIM
currently being conducted by management's outside counsel.
RESPONSE OF AMVESCAP
AMVESCAP is seeking to resolve both the pending regulatory complaints
against INVESCO alleging market timing and the ongoing market timing
investigations with respect to INVESCO and AIM. AMVESCAP recently found, in its
ongoing review of these matters, that shareholders were not always effectively
protected from the potential adverse impact of market timing and illegal late
trading through intermediaries. These findings were based, in part, on an
extensive economic analysis by outside experts who have been retained by
AMVESCAP to examine the impact of these activities. In light of these findings,
AMVESCAP has publicly stated that any AIM or INVESCO Fund, or any shareholders
thereof, harmed by these activities will receive full restitution. AMVESCAP has
informed regulators of these findings. In addition, AMVESCAP has retained
separate outside counsel to undertake a comprehensive review of AIM's and
INVESCO's policies, procedures and practices, with the objective that they rank
among the most effective in the fund industry.
There can be no assurance that AMVESCAP will be able to reach a
satisfactory settlement with the regulators, or that any such settlement will
not include terms which would have the effect of barring either or both of
INVESCO and AIM, or any other investment advisor directly or indirectly owned by
AMVESCAP, from serving as an investment advisor to any investment company
registered under the Investment Company Act of 1940 (a "registered investment
company"), including your Fund. Your Fund has been informed by AIM that, if AIM
is so barred, AIM will seek exemptive relief from the SEC to permit it to
continue to serve as your Fund's investment advisor. There can be no assurance
that such exemptive relief will be granted. Any settlement with the regulators
could also include terms which would bar Xx. Xxxxxxxxxx from serving as an
officer or director of any registered investment company.
PRIVATE ACTIONS
In addition to the complaints described above, multiple lawsuits, including
purported class action and shareholder derivative suits, have been filed against
various parties (including, depending on the lawsuit, certain INVESCO Funds,
certain AIM Funds, INVESCO, AIM, A I M Management Group Inc., the parent of AIM,
AMVESCAP, certain related entities and certain of their officers, including Xx.
Xxxxxxxxxx). The allegations in the majority of the lawsuits are substantially
similar to the allegations in the regulatory complaints against INVESCO
described above. Such lawsuits allege a variety of theories of recovery,
including but not limited to: (i) violation of various provisions of the Federal
and state securities laws;
22
(ii) violation of various provisions of the Employee Retirement Income Security
Act ("ERISA"); (iii) breach of fiduciary duty; and (iv) breach of contract. The
lawsuits have been filed in both Federal and state courts and seek such remedies
as compensatory damages; restitution; rescission; accounting for wrongfully
gotten gains, profits and compensation; injunctive relief; disgorgement;
equitable relief; various corrective measures under ERISA; rescission of certain
Funds' advisory agreements with AIM; declaration that the advisory agreement is
unenforceable or void; refund of advisory fees; interest; and attorneys' and
experts' fees. The following list identifies such lawsuits that have been served
as of February 23, 2004:
- XXX XXXXXX, DERIVATIVELY ON BEHALF OF NATIONS INTERNATIONAL EQUITY
FUND, V. INVESCO GLOBAL ASSET MANAGEMENT, ET AL., in the Superior
Court Division, State of North Carolina (Civil Action No.
03-CVS-19622, filed on November 14, 2003.
- XXXX XXXXXXX X. INVESCO FUNDS GROUP, INC., ET AL., in the District
Court, City and County of Denver, Colorado (Case Number 03-CV-9268),
filed on December 5, 2003.
- X. XXXXX XXXXXX, DERIVATIVELY ON BEHALF OF INVESCO FUNDS GROUP,
INC. V. AMVESCAP PLC, INVESCO, INC., ET AL., in the United States
District Court, District of Colorado (Civil Action No. 03-MK-2406),
filed on November 28, 2003.
- XXXXXX XXXXXXXX AND XXXXXX XXXXXXXX X. INVESCO ADVANTAGE HEALTH
SCIENCES FUND, ET AL., in the United States District Court, Southern
District of New York (Civil Action No. 03-CV-9634), filed on
December 4, 2003.
- XXXXXXX XXXXX X. INVESCO FUNDS GROUP, INC., ET AL., in the United
States District Court, District of Colorado (Civil Action No.
03-F-2441), filed on December 2, 2003.
- XXXXXX X. XXXXXXX, ET AL., V. INVESCO ADVANTAGE HEALTH SCIENCES
FUND, ET AL., in the United States District Court, District of
Colorado (Civil Action No. 03-N-2559), filed on December 17, 2003.
- XXX X. XXXXXXX AND XXXXXX X. XXXXXXX V. INVESCO FUNDS GROUP, INC.
AND A I M ADVISORS, INC., in the United States District Court,
District of Colorado (Civil Action No. 03-MK-2612), filed on
December 24, 2003.
- XXXX XXXXXXX, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. INVESCO FUNDS GROUP, INC., ET AL., in the United States
District Court, Southern District of New York (Civil Action No.
04-CV-00492), filed on January 21, 2004.
- XXXX X. XXXXXX XXXX AND XXXXXXX X. XXXXXX, ON BEHALF OF THEMSELVES
AND ALL OTHERS SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC., ET
AL., in the United States District Court, District of Colorado
(Civil Action No. 04-CV-812), filed on February 5, 2004.
INVESCO has removed certain of the state court proceedings to Federal
District Court. The Judicial Panel on Multidistrict Litigation recently has
ordered that efficiency will be achieved if all actions alleging market timing
throughout the mutual fund industry are transferred to the District of Maryland
for coordinated pretrial discovery. AIM and INVESCO have informed the AIM and
INVESCO Funds that they anticipate that the Panel will issue orders to transfer
actions pending against them, including the cases identified above, to the
multidistrict litigation as well.
More detailed information regarding each of the cases identified above is
provided in your Fund's statement of additional information. Additional lawsuits
or regulatory actions arising out of these circumstances and presenting similar
allegations and requests for relief may be served or filed against your Fund,
INVESCO, AIM, AMVESCAP and related entities and individuals in the future.
Information about any similar additional lawsuits will be provided in the
statement of additional information.
23
As a result of these developments, investors in the AIM and INVESCO Funds
might react by redeeming their investments. This might require the Funds to sell
investments to provide for sufficient liquidity and could also have an adverse
effect on the investment performance of the Funds.
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual and semiannual reports
which Trust and Buyer have filed with the SEC pursuant to the requirements of
the 1933 Act and the 1940 Act, to which reference is hereby made. The SEC file
number of Trust's registration statement containing the Selling Fund Prospectus
and related Statement of Additional Information is Registration No. 033-57340.
Such Selling Fund Prospectus is incorporated herein by reference. The SEC file
number for Buyer's registration statement containing the Buying Fund Prospectus
and related Statement of Additional Information is Registration No. 033-70154.
Such Buying Fund Prospectus is incorporated herein by reference.
Trust and Buyer are subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act and in accordance therewith
file reports and other information with the SEC. Reports, proxy material,
registration statements and other information filed by Trust and Buyer
(including the Registration Statement of Buyer relating to Buying Fund on Form
N-14 of which this Proxy Statement/Prospectus is a part) may be inspected
without charge and copied at the public reference facilities maintained by the
SEC at Room 1014, Judiciary Plaza, 000 Xxxxx Xxxxxx, XX, Xxxxxxxxxx, XX 00000,
and at the following regional office of the SEC: 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000. Copies of such material may also be obtained from
the Public Reference Section of the SEC at 000 Xxxxx Xxxxxx, XX, Xxxxxxxxxx, XX
00000, at the prescribed rates. The SEC maintains a website at xxx.xxx.xxx that
contains information regarding Trust and Buyer and other registrants that file
electronically with the SEC.
PROPOSAL 2 --
ELECTION OF TRUSTEES
BACKGROUND
In considering the integration initiative proposed by AMVESCAP, the
independent directors/trustees of the AIM Funds and the independent directors of
the INVESCO Funds determined that the shareholders of all the AIM Funds and the
INVESCO Funds would benefit if a unified board of directors/trustees was
responsible for overseeing the operation of both the AIM Funds and the INVESCO
Funds and the services provided by AIM, INVESCO and their affiliates.
Accordingly, the Boards of Directors/Trustees of the AIM Funds and the Boards of
Directors of the INVESCO Funds agreed to combine the separate boards and create
a unified board of directors/trustees.
You are being asked to approve Proposal 2 so that, in the event that
Proposal 1 is not approved, your Fund will still be able to benefit from having
a combined board of trustees.
STRUCTURE OF THE BOARD OF TRUSTEES
The Board currently consists of 12 persons. Ten of the current trustees are
"independent," meaning they are not "interested persons" of Trust within the
meaning of Section 2(a)(19) of the 1940 Act. Two of the current trustees are
"interested persons" because of their business and financial relationships with
Trust and AIM, its investment advisor, and/or AIM's parent, AMVESCAP.
NOMINEES FOR TRUSTEES
Trust's Governance Committee (which consists solely of independent
trustees) has approved the nomination of each of the 12 current trustees, as set
forth below, to serve as trustee until his or her successor is
24
elected and qualified. In addition, the Governance Committee has approved the
nomination of four new nominees, as set forth below, to serve as trustee until
his successor is elected and qualified. These four new nominees were nominated
to effect the proposed combination of the Boards of Directors/Trustees of the
AIM Funds and the Boards of Directors of the INVESCO Funds.
Each nominee who is a current trustee serves as a director or trustee of
the 19 registered investment companies, consisting of a total of 99 portfolios,
that make up the AIM Funds. The business address of each nominee who is a
current trustee is 00 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000.
Each new nominee serves as a director of Company, consisting of a total of
13 portfolios. Each new nominee also serves as a director or trustee of 17 of
the 19 AIM Funds, consisting of a total of 78 portfolios. The business address
of each new nominee is 00 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000.
Each new nominee was recommended to Trust's Governance Committee by the
independent trustees of Trust.
If elected, each nominee who is a current trustee would oversee a total of
20 registered investment companies currently comprising 112 portfolios and each
new nominee would oversee a total of 18 registered investment companies
currently comprising 91 portfolios.
NOMINEES WHO CURRENTLY ARE INDEPENDENT TRUSTEES
TRUSTEE PRINCIPAL OCCUPATION(S)
NAME AND YEAR OF BIRTH SINCE DURING PAST 5 YEARS OTHER DIRECTORSHIP(S) HELD
---------------------- ------- ----------------------- --------------------------
Xxxxx X. Xxxxxx -- 1939 2001 Of Counsel, law firm of Badgley Funds, Inc.
Trustee Xxxxx & XxXxxxxx (registered investment
company)
Formerly: Partner, law firm
of Xxxxx & XxXxxxxx
Xxxxx X. Xxxxxxxx -- 1944 1993 Chairman, Xxxxxxxx ACE Limited (insurance
Trustee Technology Associates company); and Captaris,
(technology consulting Inc. (unified messaging
company) provider)
Xxxxxx X. Xxxxxx -- 1941 2000 Director of a number of Cortland Trust, Inc.
Trustee public and private business (Chairman) (registered
corporations, including the investment company);
Boss Group Ltd. (private Annuity and Life Re
investment and management) (Holdings), Ltd. (insurance
and Magellan Insurance company)
Company
Formerly: Director,
President and Chief
Executive Officer, Volvo
Group North America, Inc.;
Senior Vice President, AB
Volvo; and director of
various affiliated Volvo
companies
Xxxxxx X. Xxxx, Xx. -- 1935 1998 Retired None
Trustee
Formerly: Chairman,
Mercantile Mortgage Corp.;
President and Chief
Operating Officer,
Mercantile-Safe Deposit &
Trust Co.; and President,
Mercantile Bankshares Corp.
25
TRUSTEE PRINCIPAL OCCUPATION(S)
NAME AND YEAR OF BIRTH SINCE DURING PAST 5 YEARS OTHER DIRECTORSHIP(S) HELD
---------------------- ------- ----------------------- --------------------------
Xxxx X. Xxxxxx -- 1952 1997 Chief Executive Officer, Administaff, Discovery
Trustee Twenty First Century Group, Global Education Fund
Inc. (government affairs (non-profit)
company) and Xxxxxx Xxxxxx
LP (sustainable forestry
company)
Xxxx Xxxxxxxxxx -- 1937 1993 Partner, law firm of Xxxxxx Xxxxxxxx Trust, Inc.
Trustee Xxxxx Xxxxxxxx and Xxxxxxx (registered investment
LLP company)
Xxxxx Xxxxxx-Xxxxx -- 1950 1998 Formerly: Chief Executive None
Trustee Officer, YWCA of the USA
Xxxxx X. Xxxxxxx -- 1942 1993 Partner, law firm of None
Trustee Xxxxxxx & Xxxxxx
Xxxx X. Xxxxxxx -- 1935 2001 Retired None
Trustee
Xxxxx X. Xxxxx -- 1939 1993 Executive Vice President, None
Trustee Development and Operations
Xxxxx Interests Limited
Partnership (real estate
development company)
NOMINEES WHO CURRENTLY ARE INTERESTED PERSONS
NAME AND YEAR OF BIRTH TRUSTEE PRINCIPAL OCCUPATION(S)
AND POSITION(S) HELD WITH TRUST SINCE DURING PAST 5 YEARS OTHER DIRECTORSHIP(S) HELD
------------------------------- ------- ----------------------- --------------------------
Xxxxxx X. Xxxxxx(1) -- 1946............ 1993 Director and Chairman, A I M None
Chairman and President Management Group Inc. (financial
services holding company); and
Director and Vice Chairman,
AMVESCAP PLC and Chairman of
AMVESCAP PLC -- AIM Division
(parent of AIM and a global
investment management firm)
Formerly: President and Chief
Executive Officer, A I M Management
Group Inc.; Director, Chairman and
President, A I M Advisors, Inc.
(registered investment advisor);
Director and Chairman, A I M
Capital Management, Inc.
(registered investment advisor),
A I M Distributors, Inc.
(registered broker dealer), AIM
Investment Services, Inc.,
(registered transfer agent), and
Fund Management Company (registered
broker dealer); and Chief Executive
Officer, AMVESCAP PLC -- Managed
Products
26
NAME AND YEAR OF BIRTH TRUSTEE PRINCIPAL OCCUPATION(S)
AND POSITION(S) HELD WITH TRUST SINCE DURING PAST 5 YEARS OTHER DIRECTORSHIP(S) HELD
------------------------------- ------- ----------------------- --------------------------
Xxxx X. Xxxxxxxxxx(2) -- 1951.......... 2003 Director, President and Chief None
Executive Vice President Executive Officer, A I M Management
Group Inc. (financial services
holding company); Director,
Chairman and President, A I M
Advisors, Inc. (registered
investment advisor); Director,
A I M Capital Management, Inc.
(registered investment advisor) and
A I M Distributors, Inc.
(registered broker dealer);
Director and Chairman, AIM
Investment Services, Inc.
(registered transfer agent), and
Fund Management Company (registered
broker dealer); and Chief Executive
Officer, AMVESCAP PLC -- AIM
Division (parent of AIM and a
global investment management firm)
Formerly: Director, Chairman,
President and Chief Executive
Officer, INVESCO Funds Group, Inc.
and INVESCO Distributors, Inc.;
Chief Executive Officer, AMVESCAP
PLC -- Managed Products; Chairman
and Chief Executive Officer of
NationsBanc Advisors, Inc.; and
Chairman of NationsBanc
Investments, Inc.
---------------
(1) Xx. Xxxxxx is considered an interested person of Trust because he is a
director of AMVESCAP PLC, parent of the advisor to, and principal
underwriter of, Trust.
(2) Xx. Xxxxxxxxxx is considered an interested person of Trust because he is an
officer and a director of the advisor to, and a director of the principal
underwriter of, Trust.
NEW NOMINEES WHO WILL BE INDEPENDENT TRUSTEES
PRINCIPAL OCCUPATION(S)
NAME AND YEAR OF BIRTH DURING PAST 5 YEARS OTHER DIRECTORSHIP(S) HELD
---------------------- ----------------------- --------------------------
Xxx X. Xxxxx -- 1936.......... Retired None
Formerly: President and Chief
Executive Officer, AMC Cancer
Research Center; and Chairman
and Chief Executive Officer,
First Columbia Financial
Corporation
Xxxxx X. Xxxxx -- 1942......... Co-President and Founder, None
Green, Xxxxxxx & Bunch Ltd.,
(investment banking firm), and
Director, Policy Studies, and
Xxx Xxxxxx Insurance
Corporation;
Xxxxxx X. Xxxxx -- 1933........ Chairman, Lawsuit Resolution General Chemical Group, Inc.
Services (San Diego,
California)
Formerly: Associate Justice of
the California Court of Appeals
Xxxxx Xxxx, Ph.D. -- 1942...... Retired None
27
THE BOARD'S RECOMMENDATION ON PROPOSAL 2
Your Board, including the independent trustees, unanimously recommends that
you vote "FOR" these 16 nominees.
COMMITTEES OF THE BOARD
The Board has five standing committees: an Audit Committee, an Investments
Committee, a Valuation Committee, a Governance Committee and a Special Committee
Related to Market Timing Issues. These committees will remain as part of the
proposed combined Board.
AUDIT COMMITTEE
The Audit Committee is comprised entirely of trustees who are not
"interested persons" of Trust as defined in Section 2(a)(19) of the 1940 Act.
The current members of Trust's Committee are Messrs. Xxxx (Chair), Xxxxxxx, Xx.
Xxxxxx-Xxxxx and Xxxx Xxxxxxx (Vice Chair). The Audit Committee is responsible
for: (i) the appointment, compensation and oversight of any independent auditors
employed by your Fund (including monitoring the independence, qualifications and
performance of such auditors and resolution of disagreements between your Fund's
management and the auditors regarding financial reporting) for the purpose of
preparing or issuing an audit report or performing other audit, review or attest
services; (ii) overseeing the financial reporting process of your Fund; (iii)
monitoring the process and the resulting financial statements prepared by
management to promote accuracy and integrity of the financial statements and
asset valuation; (iv) to assist the Board's oversight of your Fund's compliance
with legal and regulatory requirements that relate to your Fund's accounting and
financial reporting, internal control over financial reporting and independent
audits; (v) to the extent required by Section 10A of the Securities Exchange Act
of 1934, to pre-approve all permissible non-audit services that are provided to
your Fund by its independent auditors; (vi) to pre-approve, in accordance with
Item 2.01(c)(7)(ii) of Regulation S-X, certain non-audit services provided by
your Fund's independent auditors to your Fund's investment advisor and certain
other affiliated entities; and (vii) to the extent required by Regulation 14A,
to prepare an audit committee report for inclusion in your Fund's annual proxy
statement. The financial statements should be read in conjunction with the
disclosures, included in this Proxy Statement/Prospectus under the heading
"Certain Civil Proceedings and Lawsuits."
GOVERNANCE COMMITTEE
The Governance Committee is comprised entirely of trustees who are not
"interested persons" of Trust as defined in Section 2(a)(19) of the 1940 Act.
The current members of Trust's Governance Committee are Messrs. Xxxxxx, Xxxxxxxx
(Chair), Xxxxxx, Fields (Vice Chair) and Xxxxx. The Governance Committee is
responsible for: (i) nominating persons who are not interested persons of Trust
for election or appointment: (a) as additions to the Board, (b) to fill
vacancies which, from time to time, may occur in the Board and (c) for election
by shareholders of Trust at meetings called for the election of trustees; (ii)
nominating persons for appointment as members of each committee of the Board,
including, without limitation, the Audit Committee, the Governance Committee,
the Investments Committee and the Valuation Committee, and to nominate persons
for appointment as chair and vice chair of each such committee; (iii) reviewing
from time to time the compensation payable to the trustees and making
recommendations to the Board regarding compensation; (iv) reviewing and
evaluating from time to time the functioning of the Board and the various
committees of the Board; (v) selecting independent legal counsel to the
independent trustees and approving the compensation paid to independent legal
counsel; and (vi) approving the compensation paid to independent counsel and
other advisers, if any, to the Audit Committee of Trust.
After a determination by the Governance Committee that a person should be
nominated as an additional trustee who is not an "interested person" of Trust as
defined in Section 2(a)(19) of the 1940 Act (a "dis-interested trustee"), or as
soon as practical after a vacancy occurs or it appears that a vacancy is about
to occur for a dis-interested trustee position on the Board, the Governance
Committee will nominate a person for appointment by a majority of the
dis-interested trustees to add to the Board or to fill the vacancy. Prior to a
28
meeting of the shareholders of your Fund called for the purpose of electing
dis-interested trustees, the Governance Committee will nominate one or more
persons for election as dis-interested trustees at such meeting.
Evaluation by the Governance Committee of a person as a potential nominee
to serve as a dis-interested trustee, including a person nominated by a
shareholder, should result in the following findings by the Governance
Committee: (i) upon advice of independent legal counsel to the dis-interested
trustees, that the person will qualify as a dis-interested trustee and that the
person is otherwise qualified under applicable laws and regulations to serve as
a trustee of Trust; (ii) that the person is willing to serve, and willing and
able to commit the time necessary for the performance of the duties of a
dis-interested trustee; (iii) with respect to potential nominees to serve as
dis-interested trustee members of the Audit Committee of Trust, upon advice of
independent legal counsel to the dis-interested trustees, that the person: (a)
is free of any material relationship with your Fund (other than as a shareholder
of your Fund), either directly or as a partner, shareholder or officer of an
organization that has a relationship with your Fund, (b) meets the requirements
regarding the financial literacy or financial expertise of audit committee
members, as set forth from time to time in the New York Stock Exchange listing
standards and in any rules promulgated by the SEC that are applicable to
investment companies whose shares are listed for trading on a national
securities exchange, and (c) meets the director independence requirements for
serving on audit committees as set forth from time to time in the New York Stock
Exchange listing standards (currently, Section 303A.06), and as set forth in
rules promulgated by the SEC under the Securities Exchange Act of 1934, as
amended, that are applicable to investment companies whose shares are listed for
trading on a national securities exchange (currently, Rule 10A-3(b)(1)(iii));
(iv) that the person can make a positive contribution to the Board and your
Fund, with consideration being given to the person's business experience,
education and such other factors as the Governance Committee may consider
relevant; (v) that the person is of good character and high integrity; and (vi)
that the person has desirable personality traits including independence,
leadership and the ability to work with the other members of the Board.
Consistent with the 1940 Act, the Governance Committee can consider
recommendations from management in its evaluation process.
The Governance Committee will consider nominees recommended by a
shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Governance Committee or the Board, as applicable, shall make the
final determination of persons to be nominated. The Governance Committee will
evaluate nominees recommended by a shareholder to serve as trustees in the same
manner as they evaluate nominees identified by the Governance Committee.
Notice procedures set forth in Trust's bylaws require that any shareholder
of your Fund desiring to nominate a trustee for election at a shareholder
meeting must submit to the President of Trust the nomination in writing not
later than the close of business on the later of the 90th day prior to such
shareholder meeting or the tenth day following the day on which public
announcement is made of the meeting and not earlier than the close of business
on the 120th day prior to the meeting. The notice must set forth: (i) as to each
person whom the shareholder proposes to nominate for election or reelection as a
trustee all information relating to such person that is required to be disclosed
in solicitations of proxies for election of trustees in an election contest, or
is otherwise required, in each case pursuant to Regulation 14A of the Securities
Exchange Act of 1934 (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a trustee if elected); and
(ii) as to the shareholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination is made: (a) the name and address of such
shareholder, as they appear on Trust's books, and of such beneficial owner; and
(b) the number of shares of each series portfolio of Trust which are owned of
record or beneficially by such shareholder and such beneficial owner.
A current copy of the Governance Committee's Charter is set forth in
Appendix IV.
29
INVESTMENTS COMMITTEE
The current members of Trust's Investments Committee are Messrs. Xxxxxx
(Vice Chair), Xxxxxxxx, Xxxxxx (Chair), Xxxx, Fields, Xxxxxxxxxx, Xxxxxxx and
Xxxxx, Xx. Xxxxxx-Xxxxx (Vice Chair) and Xxxx Xxxxxxx. The Investments Committee
is responsible for: (i) overseeing AIM's investment-related compliance systems
and procedures to ensure their continued adequacy; and (ii) considering and
acting, on an interim basis between meetings of the full Board, on
investment-related matters requiring Board consideration.
VALUATION COMMITTEE
The current members of Trust's Valuation Committee are Messrs. Xxxx and
Xxxxxxx (Chair) and Xxxx Xxxxxxx (Vice Chair). The Valuation Committee meets on
an ad hoc basis to review matters related to valuation.
SPECIAL COMMITTEE RELATING TO MARKET TIMING ISSUES
The current members of Trust's Special Committee Relating to Market Timing
Issues are Messrs. Xxxxxxxx, Xxxxxx and Xxxx. The purpose of the Special
Committee Relating to Market Timing Issues is to remain informed on matters
relating to alleged excessive short term trading in shares of your Fund and the
other portfolios of Trust ("market timing") and to provide guidance to special
counsel for the independent trustees on market timing issues and related matters
between meetings of the independent trustees. During the fiscal year ended
December 31, 2003, the Special Committee Relating to Market Timing Issues did
not meet.
BOARD AND COMMITTEE MEETING ATTENDANCE
During the fiscal year ended December 31, 2003, the Board met 12 times, the
Audit Committee met 7 times, the Governance Committee met 5 times, the
Investments Committee met 4 times, the Valuation Committee met 1 time, and the
Special Committee Related to Market Timing did not meet. Trustees then serving
attended at least 75% of the meetings of the board or applicable committee
during the most recent fiscal year. Trust is not required to and does not hold
annual meetings of shareholders. Trust's policy regarding Board member
attendance at annual meetings of shareholders, if any, is that trustees are
encouraged but not required to attend such annual meetings.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
The Board provides a process for shareholders to send communications to the
Board. If any shareholder wishes to communicate with the Board or with an
individual trustee, that shareholder should send his, her or its communications
to Xxx X. XxXxxxxx, First Vice President Corporate Communications.
Communications made to Xx. XxXxxxxx may be communicated by telephone, e-mail or
regular mail to the following address: (000) 000-0000,
xxx.xxxxxxxx@xxxxxxxxxxxxxx.xxx, A I M Management Group Inc., 00 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, XX 00000. All shareholder communications received by Xx.
XxXxxxxx shall be promptly forwarded to the individual trustee of the AIM Trust
to whom they were addressed or to the full Board, as applicable. Copies of all
shareholder communications will also be distributed to the Chairs of each of
Trust's Audit Committee, Governance Committee, Investments Committee and
Valuation Committee, to counsel for Trust and to counsel for the independent
trustees of Trust. Counsel for Trust, upon receipt of their copy of a
shareholder communication, shall work with such Chairs and counsel for the
independent trustees to determine whether such shareholder communication should
be distributed to any trustees to whom it was not sent and whether and in what
manner the trustees should respond to such shareholder communication. Responses,
if any, to shareholder communications shall be coordinated by counsel for Trust,
working with the Chairs and counsel for the independent trustees.
TRUSTEE'S COMPENSATION
Each trustee who is not affiliated with AIM is compensated for his or her
services according to a fee schedule which recognizes the fact that such trustee
also serves as a director or trustee of other AIM Funds.
30
Each such trustee receives a fee, allocated among the AIM Funds for which he or
she serves as a director or trustee, which consists of an annual retainer
component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued for
each trustee of Trust who was not affiliated with AIM during the year ended
December 31, 2003. Trustees of Trust who are affiliated with A I M are not
compensated by Trust.
TOTAL
ESTIMATED COMPENSATION
ANNUAL FROM ALL
RETIREMENT BENEFITS UPON AIM FUNDS
AGGREGATE BENEFITS RETIREMENT AND
COMPENSATION ACCRUED BY ALL FROM ALL INVESCO
NAME OF TRUSTEE FROM TRUST(1) AIM FUNDS(2) AIM FUNDS(3) FUNDS(4)
--------------- ------------- -------------- ------------- ------------
Xxxxx X. Xxxxxx................. $20,661 $131,228 $90,000 $159,000
Xxxxx X. Xxxxxxxx............... 20,787 46,000 90,000 160,000
Xxxxxx X. Xxxxxx................ 20,661 57,716 90,000 159,000
Xxxxxx X. Xxxx, Xx. ............ 20,787 94,860 90,000 160,000
Xxxx X. Xxxxxx.................. 20,655 28,036 90,000 159,000
Xxxx Xxxxxxxxxx(5).............. 20,787 40,447 90,000 160,000
Xxxxx Xxxxxx-Xxxxx.............. 20,787 33,142 90,000 160,000
Xxxxx X. Xxxxxxx................ 20,787 49,610 90,000 160,000
Xxxx X. Xxxxxxx................. 20,787 126,050 90,000 160,000
Xxxxx X. Xxxxx.................. 20,787 72,786 90,000 160,000
---------------
(1) Amounts shown are based on the fiscal year ended December 31, 2003. The
total amount of compensation deferred by all trustees of Trust during the
fiscal year ended December 31, 2003, including earnings, was $69,120.
(2) During the fiscal year ended December 31, 2003, the total amount of expenses
allocated to Trust in respect of such retirement benefits was $42,194.
(3) Xxxxxxx shown assume each trustee serves until his or her normal retirement
date of age 65 and has completed 10 years of service.
(4) As of November 25, 2003, the AIM Funds and the INVESCO Funds are considered
to be part of one fund complex. All trustees currently serve as trustees of
19 registered investment companies advised by AIM.
(5) During the fiscal year ended December 31, 2003, Trust paid $57,631 in legal
fees to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP for services rendered by such
firm as counsel to the independent trustees of Trust. Xx. Xxxxxxxxxx is a
partner of such firm.
RETIREMENT PLAN FOR TRUSTEES
The trustees have adopted a retirement plan for the trustees of Trust who
are not affiliated with AIM. The retirement plan includes a retirement policy as
well as retirement benefits for the non-AIM-affiliated trustees.
The retirement policy permits each non-AIM-affiliated trustee to serve
until December 31 of the year in which the trustee turns 72. A majority of the
trustees may extend from time to time the retirement date of a trustee.
Annual retirement benefits are available to each non-AIM-affiliated trustee
of Trust and/or the other AIM Funds (each, a "Covered Fund") who has at least
five years of credited service as a trustee (including service to a predecessor
fund) for a Covered Fund. The retirement benefits will equal 75% of the
trustee's annual retainer paid or accrued by any Covered Fund to such trustee
during the twelve-month period prior to retirement, including the amount of any
retainer deferred under a separate deferred compensation agreement between the
Covered Fund and the trustee. The annual retirement benefits are payable in
quarterly
31
installments for a number of years equal to the lesser of (i) ten or (ii) the
number of such trustee's credited years of service. A death benefit is also
available under the plan that provides a surviving spouse with a quarterly
installment of 50% of a deceased trustee's retirement benefits for the same
length of time that the trustee would have received the benefits based on his or
her service. A trustee must have attained the age of 65 (55 in the event of
death or disability) to receive any retirement benefit. Payment of benefits
under the plan is not secured or funded by Trust.
DEFERRED COMPENSATION AGREEMENTS
Messrs. Xxxx, Xxxxxx, Xxxxxxxxxx and Xxxxx and Xx. Xxxxxx-Xxxxx (for
purposes of this paragraph only, the "Deferring Trustees") have each executed a
Deferred Compensation Agreement (collectively, the "Compensation Agreements").
Pursuant to the Compensation Agreements, the Deferring Trustees have the option
to elect to defer receipt of up to 100% of their compensation payable by Trust,
and such amounts are placed into a deferral account. Currently, the Deferring
Trustees have the option to select various AIM Funds and INVESCO Funds in which
all or part of their deferral accounts shall be deemed to be invested.
Distributions from the Deferring Trustees' deferral accounts will be paid in
cash, generally in equal quarterly installments over a period of up to ten (10)
years (depending on the Compensation Agreement) beginning on the date selected
under the Compensation Agreement. The Board in its sole discretion, may
accelerate or extend the distribution of such deferral accounts after the
Deferring Trustees' retirement benefits commence under the plan. The Board, in
its sole discretion, also may accelerate or extend the distribution of such
deferral accounts after the Deferring Trustees' termination of service as a
trustee of Trust. If a Deferring Trustee dies prior to the distribution of
amounts in his or her deferral account, the balance of the deferral account will
be distributed to his or her designated beneficiary. The Compensation Agreements
are not funded and, with respect to the payments of amounts held in the deferral
accounts, the Deferring Trustees have the status of unsecured creditors of Trust
and of each other AIM Fund and INVESCO Fund from which they are deferring
compensation.
OFFICERS OF TRUST
Information regarding the current officers of Trust can be found in Exhibit
D.
SECURITY OWNERSHIP OF MANAGEMENT
Information regarding the ownership of each class of your Fund's shares by
trustees, nominees, and current executive officers of Trust can be found in
Exhibit E.
TRUSTEE OWNERSHIP OF YOUR FUND'S SHARES
As of December 31, 2003, no trustee or nominee beneficially owned
securities, in any registered investment companies overseen by the trustee
within the AIM Funds or the INVESCO Funds complex.
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
PROXY STATEMENT/PROSPECTUS
We are sending you this Proxy Statement/Prospectus and the enclosed proxy
card because the Board is soliciting your proxy to vote at the Special Meeting
and at any adjournments of the Special Meeting. This Proxy Statement/Prospectus
gives you information about the business to be conducted at the Special Meeting.
However, you do not need to attend the Special Meeting to vote your shares.
Instead, you may simply complete, sign and return the enclosed proxy card.
Trust intends to mail this Proxy Statement/Prospectus, the enclosed Notice
of Special Meeting of Shareholders and the enclosed proxy card on or about
February 26, 2004 to all shareholders entitled to vote. Shareholders of record
as of the close of business on January 9, 2004 (the "Record Date") are entitled
to vote
32
at the Special Meeting. The number of shares outstanding of each class of shares
of your Fund on the Record Date can be found at Exhibit F.
Each share is entitled to one vote for each full share held, and a
fractional vote for a fractional share held.
TIME AND PLACE OF SPECIAL MEETING
We are holding the Special Meeting at 00 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000-1173 on April 2, 2004, at 3:00 p.m., Central Time.
VOTING IN PERSON
If you do attend the Special Meeting and wish to vote in person, you must
bring a letter from the insurance company that issued your variable annuity or
variable life contract, indicating that you are the beneficial owner of the
shares on the Record Date and authorizing you to vote. Please call Trust at
(000) 000-0000 if you plan to attend the Special Meeting.
VOTING BY PROXY
Whether you plan to attend the Special Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Special Meeting and vote.
If you properly fill in and sign your proxy card and send it to us in time
to vote at the Special Meeting, your "proxy" (the individual named on your proxy
card) will vote your shares as you have directed. If you sign your proxy card
but do not make specific choices, your proxy will vote your shares as
recommended by the Board as follows and in accordance with management's
recommendation on other matters:
- FOR the proposal to approve the Agreement.
- FOR the election of all 16 nominees for trustee.
Your proxy will have the authority to vote and act on your behalf at any
adjournment of the Special Meeting.
If you have given voting instructions you may revoke them only through and
in accordance with the procedures of the applicable life insurance company prior
to the date of the Special Meeting. In addition, although merely attending the
Special Meeting will not revoke your proxy, if you are present at the Special
Meeting you may withdraw your proxy and vote in person. Shareholders may also
transact any other business not currently contemplated that may properly come
before the Special Meeting in the discretion of the proxies or their
substitutes.
QUORUM REQUIREMENT AND ADJOURNMENT
A quorum of shareholders is necessary to hold a valid meeting. A quorum
will exist for Proposal 1 if shareholders entitled to vote one-third of the
issued and outstanding shares of your Fund on the Record Date are present at the
Special Meeting in person or by proxy. A quorum will exist for Proposal 2 if
shareholders entitled to vote one-third of the issued and outstanding shares of
Trust on the Record Date are present at the Special Meeting in person or by
proxy.
Abstentions will count as shares present at the Special Meeting for
purposes of establishing a quorum.
If a quorum is not present at the Special Meeting or a quorum is present
but sufficient votes to approve a Proposal are not received, the persons named
as proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the votes cast at the Special Meeting in
person or by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote FOR a Proposal in favor of such an adjournment and
will vote those proxies required to be voted AGAINST such Proposal against such
adjournment. A shareholder vote may be
33
taken on a Proposal in this Proxy Statement/Prospectus prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
VOTE NECESSARY TO APPROVE EACH PROPOSAL
Proposal 1. Approval of Proposal 1 requires the lesser of (a) the
affirmative vote of 67% or more of the voting securities of your Fund present or
represented by proxy at the Special Meeting, if the holders of more than 50% of
the outstanding voting securities of your Fund are present or represented by
proxy, or (b) the affirmative vote of more than 50% of the outstanding voting
securities of your Fund. Abstentions are counted as present but are not
considered votes cast at the Special Meeting. As a result, they have the same
effect as a vote against Proposal 1 because approval of Proposal 1 requires the
affirmative vote of a percentage of the voting securities present or represented
by proxy or a percentage of the outstanding voting securities.
Proposal 2. The affirmative vote of a plurality of votes cast at the
Special Meeting is necessary to elect trustees, meaning that the trustee nominee
with the most affirmative votes for a particular slot is elected for that slot.
Since the election for trustees is uncontested the plurality requirement is not
a factor. In other words, each nominee needs just one vote to be elected
trustee. Abstentions will not count as votes cast and will have no effect on the
outcome of this proposal.
PROXY SOLICITATION
Trust will solicit proxies for the Special Meeting. Trust expects to
solicit proxies principally by mail, but Trust may also solicit proxies by
telephone, facsimile or personal interview. Trust's officers will not receive
any additional or special compensation for any such solicitation. AMVESCAP or
one of its subsidiaries, on behalf of AIM, will bear the costs and expenses
incurred in connection with the Reorganization, including solicitation costs.
OTHER MATTERS
Management does not know of any matters to be presented at the Special
Meeting other than those discussed in this Proxy Statement/Prospectus. If any
other matters properly come before the Special Meeting, the shares represented
by proxies will be voted with respect thereto in accordance with management's
recommendation.
SHAREHOLDER PROPOSALS
As a general matter, your Fund does not hold regular meetings of
shareholders. If you wish to submit a proposal for consideration at a meeting of
shareholders of your Fund, you should send such proposal to Trust at the address
set forth on the first page of this Proxy Statement/Prospectus. To be considered
for presentation at a meeting of shareholders, Trust must receive proposals a
reasonable time before proxy materials are prepared for the meeting. Your
proposal also must comply with applicable law.
For a discussion of procedures that you must follow if you want to propose
an individual for nomination as a trustee, please refer to the section of this
Proxy Statement/Prospectus entitled "Proposal 2 -- Committees of the
Board -- Governance Committee."
OWNERSHIP OF SHARES
A list of the name, address and percent ownership of each person who, as of
January 9, 2004 to the knowledge of Trust owned 5% or more of any class of the
outstanding shares of your Fund can be found at Exhibit G.
A list of the name, address and percent ownership of each person who, as of
January 9, 2004 to the knowledge of Buyer owned 5% or more of any class of the
outstanding shares of Buying Fund can be found at Exhibit H.
34
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Trust has appointed Xxxx, Xxxxxx &
Xxxxx ("TWB") as Trust's independent public accountants for the fiscal year
ending December 31, 2004. The financial statements should be read in conjunction
with the disclosures in this Proxy Statement under the heading "Certain Civil
Proceedings and Lawsuits." A representative of TWB is expected to be available
at the Special Meeting and to have the opportunity to make a statement and
respond to appropriate questions from the shareholders. The Audit Committee has
considered whether the provision of the services below is compatible with
maintaining TWB's independence. The Audit Committee also has considered whether
the provision of non-audit services that were rendered to AIM, and any entity
controlling, controlled by or under common control with AIM that provides
ongoing services to Trust ("AIM Affiliates"), that were not required to be
pre-approved pursuant to SEC regulations is compatible with maintaining TWB's
independence. A copy of the Audit Committee's Pre-Approval of Audit and
Non-Audit Services Policies and Procedures is at Appendix V.
FEES BILLED BY TWB RELATED TO TRUST
TWB billed Trust aggregate fees for services rendered to Trust for the last
two fiscal years as follows:
PERCENTAGE OF FEES PERCENTAGE OF FEES
BILLED APPLICABLE BILLED APPLICABLE
TO NON-AUDIT TO NON-AUDIT
SERVICES PROVIDED SERVICES PROVIDED
FEES BILLED FOR IN 2003 PURSUANT FEES BILLED FOR IN 2002 PURSUANT
SERVICES TO WAIVER OF SERVICES TO WAIVER OF
RENDERED TO PRE-APPROVAL RENDERED TO THE PRE-APPROVAL
TRUST IN 2003 REQUIREMENT(1)(2) TRUST IN 2002 REQUIREMENT(1)(2)
--------------- ------------------- --------------- ------------------
Audit Fees...................... $233,000 N/A $209,200 N/A
Audit-Related Fees.............. $ 0 0% $ 0 N/A
Tax Fees(3)..................... $ 40,000 0% $ 36,000 N/A
All Other Fees.................. $ 0 0% $ 0 N/A
-------- --------
Total Fees...................... $273,000 N/A $245,000 N/A
TWB billed Trust aggregate non-audit fees of $40,000 for the fiscal year ended
2003, and $36,000 for the fiscal year ended 2002, for non-audit services
rendered to Trust.
---------------
(1) Prior to May 6, 2003, the Trust's Audit Committee was not required to
pre-approve non-audit services. Therefore, the percentage of fees shown in
this column only represents fees billed for non-audit services rendered
after May 6, 2003, pursuant to a waiver of the pre-approval requirement.
(2) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Trust at the time
of engagement, (ii) the aggregate amount of all such services provided is no
more than 5% of the aggregate audit and non-audit fees billed to the Trust
during a fiscal year; and (iii) such services are promptly approved by the
Trust's Audit Committee prior to the completion of the audit by the Audit
Committee.
(3) Tax Fees for the fiscal year ended December 31, 2003 includes fees billed
for reviewing tax returns. Tax Fees for the fiscal year ended December 31,
2002 includes fees billed for reviewing tax returns.
35
FEES BILLED BY TWB RELATED TO AIM AND AIM AFFILIATES
TWB billed AIM and AIM Affiliates aggregate fees for pre-approved non-audit
services rendered to AIM and AIM Affiliates for the last two fiscal years as
follows:
PERCENTAGE OF FEES PERCENTAGE OF FEES
FEES BILLED FOR NON- BILLED APPLICABLE FEES BILLED FOR NON- BILLED APPLICABLE
AUDIT SERVICES RENDERED TO NON-AUDIT AUDIT SERVICES RENDERED TO NON-AUDIT
TO AIM AND AIM SERVICES PROVIDED TO AIM AND AIM SERVICES PROVIDED
AFFILIATES IN 2003 THAT IN 2003 PURSUANT AFFILIATES IN 2002 THAT IN 2002 PURSUANT
WERE REQUIRED TO BE TO WAIVER OF WERE REQUIRED TO BE TO WAIVER OF
PRE-APPROVED BY TRUST'S PRE-APPROVAL PRE-APPROVED BY TRUST'S PRE-APPROVAL
AUDIT COMMITTEE(1) REQUIREMENT(2)(3) AUDIT COMMITTEE(1) REQUIREMENT(2)(3)
----------------------- ------------------ ----------------------- ------------------
Audit Related Fees..... $0 0% N/A N/A
Tax Fees............... $0 0% N/A N/A
All Other Fees......... $0 0% N/A N/A
--
Total Fees............. $0 N/A N/A N/A
TWB billed AIM and AIM Affiliates aggregate non-audit fees of $0 for the fiscal
year ended 2003, and $0 for the fiscal year ended 2002, for non-audit services
rendered to AIM and AIM Affiliates.
The Audit Committee also has considered whether the provision of non-audit
services that were rendered to AIM, and any entity controlling, controlled by or
under common control with INVESCO that provides ongoing services to the Trust
("AIM Affiliates"), that were not required to be pre-approved pursuant to SEC
regulations is compatible with maintaining TWB's independence. The Audit
Committee determined that the provision of such services is compatible with TWB
maintaining independence with respect the Trust.
---------------
(1) Prior to May 6, 2003, the Trust's Audit Committee was not required to
pre-approve non-audit services. Therefore, the fees billed for non-audit
services shown in this column only represents fees for pre-approved
non-audit services rendered after May 6, 2003, to AIM and AIM Affiliates.
(2) Prior to May 6, 2003, the Trust's Audit Committee was not required to
pre-approve non-audit services. Therefore, the percentage of fees shown in
this column only represents fees billed for non-audit services rendered
after May 6, 2003, pursuant to a waiver of the pre-approval requirement.
(3) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Trust at the time
of engagement, (ii) the aggregate amount of all such services provided is no
more than 5% of the aggregate audit and non-audit fees billed to the Trust
during a fiscal year; and (iii) such services are promptly approved by the
Trust's Audit Committee prior to the completion of the audit by the Audit
Committee.
36
EXHIBIT A
CLASSES OF SHARES OF YOUR FUND AND
CORRESPONDING CLASSES OF SHARES OF BUYING FUND
CLASSES OF SHARES OF YOUR FUND CORRESPONDING CLASSES OF SHARES OF BUYING FUND
------------------------------ ----------------------------------------------
Series I Shares Series I Shares
Series II Shares Series II Shares*
---------------
* Series II shares will be available upon shareholder approval.
A-1
EXHIBIT B
COMPARISON OF PRINCIPAL SERVICE PROVIDERS
The following is a list of the current principal service providers for your
Fund and Buying Fund.
SERVICE PROVIDERS
----------------------------------------------------------------------
AIM V.I. GLOBAL UTILITIES FUND INVESCO VIF -- UTILITIES FUND
SERVICE (YOUR FUND) (BUYING FUND)
------- ------------------------------------- -------------------------------
Investment Advisor A I M Advisors, Inc. ("AIM") INVESCO Funds Group, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000 ("INVESCO")*
Houston, Texas 77046-0000 00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Distributor A I M Distributors, Inc. INVESCO Distributors, Inc.**
00 Xxxxxxxx Xxxxx, Xxxxx 000 00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000 Xxxxxxx, Xxxxx 00000-1173
Administrator A I M Advisors, Inc. INVESCO Funds Group, Inc.***
00 Xxxxxxxx Xxxxx, Suite 000 00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000 Xxxxxxx, Xxxxx 00000-1173
Custodian State Street Bank and Trust State Street Bank and Trust
Company Company
Transfer Agent and Dividend AIM Investment Services, Inc. AIM Investment Services,
Disbursing Agent Inc.****
Independent Auditors Xxxx, Xxxxxx & Xxxxx PricewaterhouseCoopers LLP
---------------
* If the shareholders of Buying Fund approve a new investment advisory
agreement with AIM, AIM will replace INVESCO as investment advisor for your
Fund effective on or about April 30, 2004.
** If shareholders of Buyer do not approve the redomestication of Buyer's
series portfolios as new series portfolios of Trust, A I M Distributors,
Inc. will replace INVESCO Distributors, Inc. as distributor of Buying Fund
effective April 30, 2004.
*** Pursuant to an Assignment and Assumption Agreement and Consent dated August
12, 2003, INVESCO has assigned to AIM all of its rights under its
administrative service agreement with Company, and AIM has assumed all of
INVESCO's obligations under such agreement. If the shareholders of Buying
Fund approve a new investment advisory agreement with AIM, AIM will replace
INVESCO as administrator for Buying Fund effective on or about April 30,
2004.
**** AIM Investment Services, Inc. replaced INVESCO as transfer agent and
dividend disbursing agent for Buying Fund effective October 1, 2003.
B-1
EXHIBIT C
FINANCIAL HIGHLIGHTS OF BUYING FUND
FINANCIAL HIGHLIGHTS
The financial statements should be read in conjunction with the
disclosures, included in this Proxy Statement/Prospectus under the heading
"Certain Civil Proceedings and Lawsuits." Total returns do not reflect charges
at the separate account level which if included would reduce total returns for
all periods shown.
The financial highlights table is intended to help you understand the
financial performance of the Fund for the past five years. Certain information
reflects the financial results for a single Fund share. The total returns in the
table represent the annual percentages that an investor would have earned (or
lost) on an investment in a share of the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the financial statements, is included in INVESCO Variable Investment Funds,
Inc.'s 2002 Annual Report to Shareholders, which is incorporated by reference
into the Statement of Additional Information. This Report is available without
charge by contacting INVESCO Distributors at the address or telephone number on
the back cover of this document.
UTILITIES FUND (FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31
JUNE 30, -----------------------------------------------
2003 2002 2001 2000 1999 1998
---------------- ------- ------- ------- ------ ------
(UNAUDITED)
PER SHARE DATA
Net Asset Value -- Beginning of
Period.............................. $ 11.16 $ 14.08 $ 21.06 $ 20.97 $17.78 $14.40
======= ======= ======= ======= ====== ======
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income(a).............. 0.08 0.19 0.00 0.17 0.22 0.25
Net Gains or (Losses) on Securities
(Both Realized and Unrealized)...... 0.97 (3.05) (6.83) 0.87 3.17 3.41
------- ------- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS...... 1.05 (2.86) (6.83) 1.04 3.39 3.66
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income.............................. 0.00 0.06 0.07 0.03 0.20 0.24
Distributions from Capital Gains...... 0.00 0.00 0.08 0.92 0.00 0.04
------- ------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS................... 0.00 0.06 0.15 0.95 0.20 0.28
------- ------- ------- ------- ------ ------
Net Asset Value -- End of Period...... $ 12.21 $ 11.16 $ 14.08 $ 21.06 $20.97 $17.78
======= ======= ======= ======= ====== ======
TOTAL RETURN(B)....................... 9.41% (20.32)% (32.41)% 5.28% 19.13% 25.48%
RATIOS
Net Assets -- End of Period ($000
Omitted)............................ $44,365 $31,204 $20,947 $12,300 $9,137 $6,993
Ratio of Expenses to Average Net
Assets(d)(e)........................ 0.54%(c) 1.15% 1.15% 1.22% 1.20% 1.08%
Ratio of Net Investment Income to
Average Net Assets(d)(e)............ 1.44%(c) 2.59% 1.13% 0.94% 1.15% 1.73%
Portfolio Turnover Rate............... 28%(c) 102% 33% 50% 40% 35%
---------------
(a) Net Investment Income aggregated less than $0.01 on a per share basis for
the year ended December 31, 2001.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for periods
less than one year. Total returns do not reflect charges at the separate
account level which if included would reduce total returns for all periods
shown.
(c) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(d) Xxxxx is based on Total Expenses of the Fund, less Expenses reimbursed by
the Fund's advisor, if applicable, which is before any expense offset
arrangements.
(e) Various expenses of the Fund were voluntarily reimbursed by the Fund's
advisor for the years ended December 31, 2002, 2001, 2000, 1999 and 1998.
If such expenses had not been voluntarily reimbursed, ratio of expenses to
average net assets would have been 1.18%, 1.37%, 1.41%, 1.53% and 1.60%,
respectively, and ratio of net investment income to average net assets
would have been 2.56%, 0.91%, 0.75%, 0.82% and 1.21%, respectively.
C-1
EXHIBIT D
OFFICERS OF TRUST
The following table provides information with respect to the current
officers of Trust. Each officer is elected by the Board and serves until his or
her successor is chosen and qualified or until his or her resignation or removal
by the Board. The business address of all officers of Trust is 00 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000.
NAME, YEAR OF BIRTH AND POSITION(S) OFFICER
HELD WITH TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
----------------------------------- ------- -------------------------------------------
Xxxxxx X. Xxxxxx -- 1946
Chairman and President............. 1993 Director and Chairman, A I M Management Group
Inc. (financial services holding company);
and Director and Vice Chairman, AMVESCAP PLC
and Chairman of AMVESCAP PLC -- AIM Division
(parent of AIM and a global investment
management firm)
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors, Inc.
(registered broker dealer), AIM Investment
Services, Inc., (registered transfer agent),
and Fund Management Company (registered
broker dealer); and Chief Executive Officer,
AMVESCAP PLC -- Managed Products
Xxxx X. Xxxxxxxxxx -- 1951
Executive Vice President........... 2003 Director, President and Chief Executive
Officer, A I M Management Group Inc.
(financial services holding company);
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); Director, A I M Capital Management,
Inc. (registered investment advisor) and
A I M Distributors, Inc. (registered broker
dealer); Director and Chairman, AIM
Investment Services, Inc. (registered
transfer agent), and Fund Management Company
(registered broker dealer); and Chief
Executive Officer, AMVESCAP PLC -- AIM
Division (parent of AIM and a global
investment management firm)
Formerly: Director, Chairman, President and
Chief Executive Officer, INVESCO Funds Group,
Inc. and INVESCO Distributors, Inc.; Chief
Executive Officer, AMVESCAP PLC -- Managed
Products; Chairman and Chief Executive
Officer of NationsBanc Advisors, Inc.; and
Chairman of NationsBanc Investments, Inc.
D-1
NAME, YEAR OF BIRTH AND POSITION(S) OFFICER
HELD WITH TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
----------------------------------- ------- -------------------------------------------
Xxxxx X. Xxxxxx -- 1956
Senior Vice President and Chief
Legal Officer 2003 Director, Senior Vice President, Secretary
and General Counsel, A I M Management Group
Inc. (financial services holding company) and
A I M Advisors, Inc.; Vice President, A I M
Capital Management, Inc., A I M Distributors,
Inc. and AIM Investment Services, Inc.; and
Director, Vice President and General Counsel,
Fund Management Company
Formerly: Senior Vice President and General
Counsel, Liberty Financial Companies, Inc.;
and Senior Vice President and General
Counsel, Liberty Funds Group, LLC
Xxxxxx X. Xxxxx -- 1948
Vice President 1993 Managing Director, Chief Fixed Income Officer
and Senior Investment Officer, A I M Capital
Management, Inc.; and Vice President, A I M
Advisors, Inc.
Xxxxxx X. Xxxx -- 1955
Vice President 1993 Managing Director and Director of Money
Market Research and Special Projects, A I M
Capital Management, Inc.; and Vice President,
A I M Advisors, Inc.
Xxxxxxxx X. Xxx -- 1943
Vice President 1993 Vice President and Chief Compliance Officer,
A I M Advisors, Inc. and A I M Capital
Management, Inc.; and Vice President, AIM
Investment Services, Inc.
Xxxxxx X. Xxxxxxx -- 1961
Vice President and Treasurer 2004 Vice President and Fund Treasurer, A I M
Advisors, Inc.; Senior Vice President, AIM
Investment Services, Inc.; and Vice
President, A I M Distributors, Inc.
Xxxxx Xxxx Xxxxxx -- 1960
Vice President 1993 Managing Director and Chief Management
Officer, A I M Capital Management, Inc;
Director and President, Fund Management
Company; and Vice President, A I M Advisors,
Inc.
Xxxxx X. Xxxxxx -- 1940
Vice President 1999 Vice President, A I M Advisors, Inc., and
President, Chief Executive Officer and Chief
Investment Officer, A I M Capital Management,
Inc.
D-2
EXHIBIT E
SECURITY OWNERSHIP OF MANAGEMENT
To the best knowledge of Trust, no trustees, nominees, and current
executive officers of Trust owned shares of beneficial interest of any class of
any Fund of Trust as of January 9, 2004.
E-1
EXHIBIT F
SHARES OUTSTANDING OF EACH CLASS OF YOUR FUND ON RECORD DATE
As of January 9, 2004, there were the following number of shares
outstanding of each class of your Fund:
INVESCO VIF-Utilities Fund.................................. 4,866,603.09
F-1
EXHIBIT G
OWNERSHIP OF SHARES OF YOUR FUND
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person who,
as of January 9, 2004, to the best knowledge of Trust owned 5% or more of any
class of the outstanding shares of your Fund. A shareholder who owns
beneficially 25% or more of the outstanding securities of your Fund is presumed
to "control" your Fund as defined in the 1940 Act. Such control may affect the
voting rights of other shareholders.
AIM V.I. GLOBAL UTILITIES FUND
SERIES I SERIES II SERIES I SERIES II
SHARES SHARES SHARES SHARES
------------ ------------ ---------- ----------
NUMBER OF NUMBER OF PERCENTAGE PERCENTAGE
SHARES OWNED SHARES OWNED OWNED OF OWNED OF
NAME AND ADDRESS OF PRINCIPAL HOLDER OF RECORD OF RECORD RECORD* RECORD*
------------------------------------ ------------ ------------ ---------- ----------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL -- CIGNA
P.O. BOX 94200
PALATINE IL 60094-4200...................... 393,997.06 N/A 20.48% N/A
ALLSTATE LIFE OF NEW YORK
0000 XXXXXXX XX
XXXXXXXXXX XX 00000-7155.................... N/A 7,627.10 N/A 21.50%
ANNUITY INVESTORS LIFE INSURANCE
000 XXXXXX
XXXXXXXXXX, XX 00000........................ N/A 2,251.57 N/A 6.35%
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT
P.O. BOX 94200
PALATINE IL 60094-4200...................... 637,307.03 N/A 33.12%** N/A
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT
P.O. BOX 94200
PALATINE IL 60094-4200...................... 338,653.79 N/A 17.60% N/A
GLENBROOK LIFE & ANNUITY
000 X. XXXXXXXXX XXXXXX
XXX XX0X
XXXXXX XXXXX XX 00000-1533.................. N/A 25,061.34 N/A 70.65%
GUARDIAN INSURANCE & ANNUITY CO
ATTN EQUITY ACCOUNTING
DEPT 3-S-18
3900 XXXXXXX XX
BETHLEHEM PA 18017-9097..................... 282,366.56 N/A 14.68% N/A
---------------
* Buyer has no knowledge of whether all or any portion of the shares owned of
record are also owned beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or
more of the Fund.
G-1
EXHIBIT H
OWNERSHIP OF SHARES OF BUYING FUND
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person who,
as of January 9, 2004, to the best knowledge of Buyer owned 5% or more of any
class of the outstanding shares of Buying Fund. A shareholder who owns
beneficially 25% or more of the outstanding securities of Buying Fund is
presumed to "control" Buying Fund as defined in the 1940 Act. Such control may
affect the voting rights of other shareholders.
INVESCO VIF UTILITIES FUND
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OWNED
PRINCIPAL HOLDER OWNED OF RECORD OF RECORD*
------------------- ---------------- ----------------
ING USA ANNUITY AND LIFE INSURANCE CO....................... 2,109,586.53 43.35%**
1475 DUNWOODY DR
WEST CHESTER PA 19380-1478
XXXXXX INVESTORS LIFE INSURANCE CO.......................... 971,125.41 19.95%
VARIABLE SEPARATE ACCT
1600 MCCONNOR PKWY
SCHAUMBURG IL 60196-6801
SECURITY LIFE SEPARATE ACCOUNT L1........................... 733,880.50 15.08%
UNIT VALUATIONS 2T2
0000 XXXXXXXX XX
XXXX XXXXXXX XX 00000-1478
ALLMERICA FIN LIFE INS & ANNUITY............................ 501,032.75 10.30%
GROUP VEL ACCOUNT
000 XXXXXXX XX
SEPARATE ACCOUNTING
MAIL STATION S310
WORCESTER MA 01653-0002
THE MANUFACTURES LIFE INS CO USA............................ 250,038.35 5.14%
US ANNUITIES
000 XXXXXXXX XX XXX 000
XXXXXX XX 00000-0000
---------------
* Buyer has no knowledge of whether all or any portion of the shares owned of
record are also owned beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or
more of the Fund.
H-1
APPENDIX I
AGREEMENT
AND
PLAN OF REORGANIZATION
FOR
AIM V.I. GLOBAL UTILITIES FUND,
A SEPARATE PORTFOLIO OF
AIM VARIABLE INSURANCE FUNDS
DECEMBER 10, 2003
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS................................................. 1
Section 1.1. Definitions................................................. 1
ARTICLE 2 TRANSFER OF ASSETS.......................................... 4
Section 2.1. Reorganization of Selling Fund.............................. 4
Section 2.2. Computation of Net Asset Value.............................. 4
Section 2.3. Valuation Date.............................................. 4
Section 2.4. Delivery.................................................... 5
Section 2.5. Termination of Series....................................... 5
Section 2.6. Issuance of Buying Fund Shares.............................. 5
Section 2.7. Investment Securities....................................... 5
Section 2.8. Liabilities................................................. 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER.................... 6
Section 3.1. Organization; Authority..................................... 6
Section 3.2. Registration and Regulation of Seller....................... 6
Section 3.3. Financial Statements........................................ 6
Section 3.4. No Material Adverse Changes; Contingent Liabilities......... 6
Section 3.5. Selling Fund Shares; Business Operations.................... 6
Section 3.6. Accountants................................................. 7
Section 3.7. Binding Obligation.......................................... 7
Section 3.8. No Breaches or Defaults..................................... 7
Section 3.9. Authorizations or Consents.................................. 7
Section 3.10. Permits..................................................... 8
Section 3.11. No Actions, Suits or Proceedings............................ 8
Section 3.12. Contracts................................................... 8
Section 3.13. Properties and Assets....................................... 8
Section 3.14. Taxes....................................................... 8
Section 3.15. Benefit and Employment Obligations.......................... 9
Section 3.16. Brokers..................................................... 9
Section 3.17. Voting Requirements......................................... 9
Section 3.18. State Takeover Statutes..................................... 9
Section 3.19. Books and Records........................................... 9
Section 3.20. Prospectus and Statement of Additional Information.......... 9
Section 3.21. No Distribution............................................. 9
Section 3.22. Liabilities of Selling Fund................................. 9
Section 3.23. Value of Shares............................................. 10
Section 3.24. Shareholder Expenses........................................ 10
Section 3.25. Intercompany Indebtedness; Consideration.................... 10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER..................... 10
Section 4.1. Organization; Authority..................................... 10
Section 4.2. Registration and Regulation of Buyer........................ 10
Section 4.3. Financial Statements........................................ 10
Section 4.4. No Material Adverse Changes; Contingent Liabilities......... 10
i
PAGE
----
Section 4.5. Registration of Buying Fund Shares.......................... 11
Section 4.6. Accountants................................................. 11
Section 4.7. Binding Obligation.......................................... 11
Section 4.8. No Breaches or Default...................................... 11
Section 4.9. Authorizations or Consents.................................. 12
Section 4.10. Permits..................................................... 12
Section 4.11. No Actions, Suits or Proceedings............................ 12
Section 4.12. Taxes....................................................... 12
Section 4.13. Brokers..................................................... 13
Section 4.14. Representations Concerning the Reorganization............... 13
Section 4.15. Prospectus and Statement of Additional Information.......... 13
Section 4.16. Value of Shares............................................. 13
Section 4.17. Intercompany Indebtedness; Consideration.................... 14
ARTICLE 5 COVENANTS................................................... 14
Section 5.1. Conduct of Business......................................... 14
Section 5.2. Announcements............................................... 14
Section 5.3. Expenses.................................................... 14
Section 5.4. Further Assurances.......................................... 14
Section 5.5. Notice of Events............................................ 14
Section 5.6. Access to Information....................................... 15
Section 5.7. Consents, Approvals and Filings............................. 15
Section 5.8. Submission of Agreement to Shareholders..................... 15
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION.................. 15
Section 6.1. Conditions Precedent of Buyer............................... 15
Section 6.2. Mutual Conditions........................................... 16
Section 6.3. Conditions Precedent of Seller.............................. 17
ARTICLE 7 TERMINATION OF AGREEMENT.................................... 17
Section 7.1. Termination................................................. 17
Section 7.2. Survival After Termination.................................. 17
ARTICLE 8 MISCELLANEOUS............................................... 17
Section 8.1. Survival of Representations, Warranties and Covenants....... 17
Section 8.2. Governing Law............................................... 18
Section 8.3. Binding Effect, Persons Benefiting, No Assignment........... 18
Section 8.4. Obligations of Buyer and Seller............................. 18
Section 8.5. Amendments.................................................. 18
Section 8.6. Enforcement................................................. 18
Section 8.7. Interpretation.............................................. 18
Section 8.8. Counterparts................................................ 18
Section 8.9. Entire Agreement; Exhibits and Schedules.................... 18
Section 8.10. Notices..................................................... 19
Section 8.11. Representations by Seller Investment Adviser................ 19
Section 8.12. Representations by Buyer Investment Adviser................. 19
Section 8.13.. Successors and Assigns; Assignment.......................... 19
ii
Exhibit A Excluded Liabilities of Selling Fund
Schedule 2.1 Classes of Shares of Selling Fund and Corresponding Classes
of Shares of Buying Fund
Schedule 3.4 Certain Contingent Liabilities of Selling Fund
Schedule 3.5(d) Permitted Redomestications of Funds
Schedule 4.4 Certain Contingent Liabilities of Buying Fund
Schedule 4.5(a) Portfolios of Buyer
Schedule 4.5(b) Classes of Shares of Buying Fund and Number of Shares of
Each Class Buyer is Authorized to Issue
Schedule 5.1 Permitted Combinations of Funds
Schedule 6.2(g) Tax Opinions
iii
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 10, 2003 (this
"Agreement"), by and among AIM Variable Insurance Funds, a Delaware statutory
trust ("Seller"), acting on behalf of AIM V.I. Global Utilities Fund ("Selling
Fund"), a separate series of Seller, INVESCO Variable Investment Funds, Inc., a
Maryland corporation ("Buyer"), acting on behalf of INVESCO VIF -- Utilities
Fund ("Buying Fund"), a separate series of Buyer, A I M Advisors, Inc., a
Delaware corporation, and INVESCO Funds Group, Inc., a Delaware corporation.
WITNESSETH
WHEREAS, Seller is a management investment company registered with the SEC
(as defined below) under the Investment Company Act (as defined below) that
offers separate series of its shares representing interests in its investment
portfolios, including Selling Fund, for sale to separate accounts of life
insurance companies to support investments under variable annuities and variable
life insurance contracts issued by such companies; and
WHEREAS, Buyer is a management investment company registered with the SEC
under the Investment Company Act that offers separate series of its shares
representing interests in investment portfolios, including Buying Fund, for sale
to separate accounts of life insurance companies to support investments under
variable annuities and variable life insurance contracts issued by such
companies; and
WHEREAS, Buyer Investment Adviser (as defined below) provides investment
advisory services to Buyer; and
WHEREAS, Seller Investment Adviser (as defined below) provides investment
advisory services to Seller; and
WHEREAS, Selling Fund desires to provide for its reorganization through the
transfer of all of its assets to Buying Fund in exchange for the assumption by
Buying Fund of all of the Liabilities (as defined below) of Selling Fund and the
issuance by Buyer of shares of Buying Fund in the manner set forth in this
Agreement; and
WHEREAS, this Agreement is intended to be and is adopted by the parties
hereto as a Plan of Reorganization within the meaning of the regulations under
Section 368(a) of the Code (as defined below).
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, Seller, Xxxxx, Buyer
Investment Adviser and Seller Investment Adviser agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. For all purposes in this Agreement, the
following terms shall have the respective meanings set forth in this Section 1.1
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined):
"Advisers Act" means the Investment Advisers Act of 1940, as amended,
and all rules and regulations of the SEC adopted pursuant thereto.
"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
"Agreement" means this
Agreement and Plan of Reorganization, together
with all exhibits and schedules attached hereto and all amendments hereto
and thereof.
1
"Applicable Law" means the applicable laws of the state in which each
of Buyer and Seller has been organized and shall include, as applicable,
the Delaware Statutory Trust Act and the Maryland General Corporation Law.
"Benefit Plan" means any material "employee benefit plan" (as defined
in Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, vacation, retirement, profit sharing, welfare plans or other
plan, arrangement or understanding maintained or contributed to by Seller
on behalf of Selling Fund, or otherwise providing benefits to any current
or former employee, officer or director/trustee of Seller.
"Buyer" means INVESCO Variable Investment Funds, Inc., a Maryland
corporation.
"Buyer Counsel" means Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP.
"Buyer Custodian" means State Street Bank and Trust Company acting in
its capacity as custodian for the assets of Buying Fund.
"Buyer Investment Adviser" means INVESCO Funds Group, Inc.
"Buyer Registration Statement" means the registration statement on
Form N-1A of Buyer, as amended, 1940 Act Registration No. 033-70154.
"Buying Fund" means INVESCO VIF -- Utilities Fund, a separate series
of Buyer.
"Buying Fund Auditors" means PricewaterhouseCoopers LLP.
"Buying Fund Financial Statements" means the audited financial
statements of Buying Fund for the fiscal year ended December 31, 2003.
"Buying Fund Shares" means shares of each class of Buying Fund issued
pursuant to Section 2.6 of this Agreement.
"Closing" means the transfer of the assets of Selling Fund to Buying
Fund, the assumption of all of Selling Fund's Liabilities by Buying Fund
and the issuance of Buying Fund Shares directly to Selling Fund
Shareholders as described in Section 2.1 of this Agreement.
"Closing Date" means April 30, 2004, or such other date as the parties
may mutually agree upon.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted pursuant thereto.
"corresponding" means, when used with respect to a class of shares of
Selling Fund or Buying Fund, the classes of their shares set forth opposite
each other on Schedule 2.1.
"Effective Time" means 8:00 a.m. Eastern Time on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations adopted pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations adopted pursuant thereto.
"Governing Documents" means the organic documents which govern the
business and operations of each of Buyer and Seller and shall include, as
applicable, the Charter, Amended and Restated Agreement and Declaration of
Trust, Amended and Restated Bylaws and Bylaws.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the
SEC) or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the NASD Regulation, Inc., the
Commodity Futures Trading Commission, the National Futures Association, the
Investment Management Regulatory Organization Limited and the Office of
Fair Trading).
2
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto.
"Liabilities" means all of the liabilities of any kind of Selling
Fund, including without limitation all liabilities included in the
calculation of the net asset value per share of each class of Selling Fund
Shares on the Closing Date, but not including the excluded liabilities set
forth on Exhibit A.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in
the condition (financial or otherwise), properties, assets or prospects of
an entity having an adverse monetary effect in an amount equal to or
greater than $50,000.
"NYSE" means the New York Stock Exchange.
"Permits" shall have the meaning set forth in Section 3.10 of this
Agreement.
"Person" means an individual or a corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"Reorganization" means the acquisition of the assets of Selling Fund
by Buying Fund in consideration of the assumption by Buying Fund of all of
the Liabilities of Selling Fund and the issuance by Buyer of Buying Fund
Shares directly to Selling Fund Shareholders as described in this
Agreement, and the termination of Selling Fund's status as a designated
series of shares of Seller.
"Required Shareholder Vote" means the lesser of (a) the affirmative
vote of 67% or more of the voting securities of Selling Fund present or
represented by proxy at the Shareholders Meeting, if the holders of more
than 50% of the outstanding voting securities of Selling Fund are present
or represented by proxy, or (b) the affirmative vote of more than 50% of
the outstanding voting securities of Selling Fund.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted pursuant thereto.
"Seller" means AIM Variable Insurance Funds, a Delaware statutory
trust.
"Seller Custodian" means State Street Bank and Trust Company acting in
its capacity as custodian for the assets of Selling Fund.
"Seller Investment Adviser" means A I M Advisors, Inc.
"Seller Registration Statement" means the registration statement on
Form N-1A of Seller, as amended, 1940 Act Registration No. 033-57340.
"Selling Fund" means AIM V.I. Global Utilities Fund, a separate series
of Seller.
"Selling Fund Auditors" means Xxxx, Xxxxxx & Xxxxx.
"Selling Fund Financial Statements" means the audited financial
statements of Selling Fund for the fiscal year ended December 31, 2003.
"Selling Fund Shareholders" means the holders of record of the
outstanding shares of each class of Selling Fund as of the close of regular
trading on the NYSE on the Valuation Date.
"Selling Fund Shares" means the outstanding shares of each class of
Selling Fund.
"Shareholders Meeting" means a meeting of the shareholders of Selling
Fund convened in accordance with Applicable Law and the Governing Documents
of Seller to consider and vote upon the
3
approval of this Agreement and, in connection therewith, the sale of all of
Selling Fund's assets and the termination of Selling Fund as a designated
series of Seller.
"Tax" means any tax or similar governmental charge, impost or levy
(including income taxes (including alternative minimum tax and estimated
tax), franchise taxes, transfer taxes or fees, sales taxes, use taxes,
gross receipts taxes, value added taxes, employment taxes, excise taxes, ad
valorem taxes, property taxes, withholding taxes, payroll taxes, minimum
taxes, or windfall profit taxes), together with any related penalties,
fines, additions to tax or interest, imposed by the United States or any
state, county, local or foreign government or subdivision or agency
thereof.
"Termination Date" means June 30, 2004, or such later date as the
parties may mutually agree upon.
"Treasury Regulations" means the Federal income tax regulations
adopted pursuant to the Code.
"Valuation Date" shall have the meaning set forth in Section 2.2 of
this Agreement.
ARTICLE 2
TRANSFER OF ASSETS
SECTION 2.1. Reorganization of Selling Fund. At the Effective Time, all
of the assets of Selling Fund shall be delivered to Buyer Custodian for the
account of Buying Fund in exchange for the assumption by Buying Fund of all of
the Liabilities of Selling Fund and delivery by Buyer directly to the holders of
record as of the Effective Time of the issued and outstanding shares of each
class of Selling Fund of a number of shares of each corresponding class of
Buying Fund, as set forth on Schedule 2.1 (including, if applicable, fractional
shares rounded to the nearest thousandth), having an aggregate net asset value
equal to the value of the net assets of Selling Fund so transferred, assigned
and delivered, all determined and adjusted as provided in Section 2.2 below.
Upon delivery of such assets, Buying Fund will receive good and marketable title
to such assets free and clear of all Liens.
SECTION 2.2. Computation of Net Asset Value.
(a) The net asset value per share of each class of Buying Fund Shares, and
the value of the assets and the amount of the Liabilities of Selling Fund,
shall, in each case, be determined as of the close of regular trading on the
NYSE on the business day next preceding the Closing Date (the "Valuation Date").
(b) The net asset value per share of each class of Buying Fund Shares shall
be computed in accordance with the policies and procedures of Buying Fund as
described in the Buyer Registration Statement.
(c) The value of the assets and the amount of the Liabilities of Selling
Fund to be transferred to Buying Fund pursuant to this Agreement shall be
computed in accordance with the policies and procedures of Selling Fund as
described in the Seller Registration Statement.
(d) Subject to Sections 2.2(b) and (c) above, all computations of value
regarding the assets and Liabilities of Selling Fund and the net asset value per
share of each class of Buying Fund Shares to be issued pursuant to this
Agreement shall be made by agreement of Seller and Buyer. The parties agree to
use commercially reasonable efforts to resolve any material pricing differences
between the prices of portfolio securities determined in accordance with their
respective pricing policies and procedures.
SECTION 2.3. Valuation Date. The share transfer books of Selling Fund
will be permanently closed as of the close of business on the Valuation Date and
only requests for the redemption of shares of Selling Fund received in proper
form prior to the close of regular trading on the NYSE on the Valuation Date
shall be accepted by Selling Fund. Redemption requests thereafter received by
Selling Fund shall be deemed to be redemption requests for Buying Fund Shares of
the corresponding class (assuming that the transactions contemplated by this
Agreement have been consummated), to be distributed to Selling Fund Shareholders
under this Agreement.
4
SECTION 2.4. Delivery.
(a) No later than three (3) business days preceding the Closing Date,
Seller shall instruct Seller Custodian to transfer all assets held by Selling
Fund to the account of Buying Fund maintained at Buyer Custodian. Such assets
shall be delivered by Seller to Buyer Custodian on the Closing Date. The assets
so delivered shall be duly endorsed in proper form for transfer in such
condition as to constitute a good delivery thereof, in accordance with the
custom of brokers, and shall be accompanied by all necessary state stock
transfer stamps, if any, or a check for the appropriate purchase price thereof.
Cash held by Selling Fund shall be delivered on the Closing Date and shall be in
the form of currency or wire transfer in Federal funds, payable to the order of
the account of Buying Fund at Buyer Custodian.
(b) If, on the Closing Date, Selling Fund is unable to make delivery in the
manner contemplated by Section 2.4(a) of securities held by Selling Fund for the
reason that any of such securities purchased prior to the Closing Date have not
yet been delivered to Selling Fund or its broker, then Buyer shall waive the
delivery requirements of Section 2.4(a) with respect to said undelivered
securities if Selling Fund has delivered to Buyer Custodian by or on the Closing
Date, and with respect to said undelivered securities, executed copies of an
agreement of assignment and escrow and due bills executed on behalf of said
broker or brokers, together with such other documents as may be required by
Xxxxx or Buyer Custodian, including brokers' confirmation slips.
SECTION 2.5. Termination of Series. Following receipt of the Required
Shareholder Vote and as soon as reasonably practicable after the Closing Date,
the status of Selling Fund as a designated series of Seller shall be terminated;
provided, however, that the termination of Selling Fund as a designated series
of Seller shall not be required if the Reorganization shall not have been
consummated.
SECTION 2.6. Issuance of Buying Fund Shares. At the Effective Time,
Selling Fund Shareholders holding shares of a class of Selling Fund shall be
issued that number of full and fractional shares of the corresponding class of
Buying Fund having a net asset value equal to the net asset value of such shares
of such class of Selling Fund held by Selling Fund Shareholders on the Valuation
Date. All issued and outstanding shares of Selling Fund shall thereupon be
canceled on the books of Seller. Seller shall provide instructions to the
transfer agent of Buyer with respect to the shares of each class of Buying Fund
to be issued to Selling Fund Shareholders. Buyer shall have no obligation to
inquire as to the validity, propriety or correctness of any such instruction,
but shall, in each case, assume that such instruction is valid, proper and
correct. Buyer shall record on its books the ownership of the shares of each
class of Buying Fund by Selling Fund Shareholders and shall forward a
confirmation of such ownership to Selling Fund Shareholders. No redemption or
repurchase of such shares credited to former Selling Fund Shareholders in
respect of Selling Fund Shares represented by unsurrendered share certificates
shall be permitted until such certificates have been surrendered to Buyer for
cancellation, or if such certificates are lost or misplaced, until lost
certificate affidavits have been executed and delivered to Buyer.
SECTION 2.7. Investment Securities. On or prior to the Valuation Date,
Seller shall deliver a list setting forth the securities Selling Fund then owned
together with the respective Federal income tax bases thereof and holding
periods therefor. Seller shall provide to Buyer on or before the Valuation Date
detailed tax basis accounting records for each security to be transferred to it
pursuant to this Agreement. Such records shall be prepared in accordance with
the requirements for specific identification tax lot accounting and clearly
reflect the bases used for determination of gain and loss realized on the sale
of any security transferred to Buying Fund hereunder. Such records shall be made
available by Seller prior to the Valuation Date for inspection by the Treasurer
(or his or her designee) or Buying Fund Auditors upon reasonable request.
SECTION 2.8. Liabilities. Selling Fund shall use reasonable best efforts
to discharge all of its known liabilities, so far as may be possible, prior to
the Closing Date.
5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, on behalf of Selling Fund, represents and warrants to Buyer as
follows:
SECTION 3.1. Organization; Authority. Seller is duly organized, validly
existing and in good standing under Applicable Law, with all requisite corporate
or trust power, as applicable, and authority to enter into this Agreement and
perform its obligations hereunder.
SECTION 3.2. Registration and Regulation of Seller. Seller is duly
registered with the SEC as an investment company under the Investment Company
Act and all Selling Fund Shares which have been or are being offered for sale
have been duly registered under the Securities Act and have been duly
registered, qualified or are exempt from registration or qualification under the
securities laws of each state or other jurisdiction in which such shares have
been or are being offered for sale, and no action has been taken by Seller to
revoke or rescind any such registration or qualification. Selling Fund is in
compliance in all material respects with all applicable laws, rules and
regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws.
Selling Fund is in compliance in all material respects with the investment
policies and restrictions applicable to it set forth in the Seller Registration
Statement. The value of the net assets of Selling Fund is determined using
portfolio valuation methods that comply in all material respects with the
requirements of the Investment Company Act and the policies of Selling Fund and
all purchases and redemptions of Selling Fund Shares have been effected at the
net asset value per share calculated in such manner.
SECTION 3.3. Financial Statements. The books of account and related
records of Selling Fund fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited Selling Fund Financial
Statements previously delivered to Buyer present fairly in all material respects
the financial position of Selling Fund as of the date(s) indicated and the
results of operations and changes in net assets for the period(s) then ended in
accordance with generally accepted accounting principles applied on a consistent
basis for the period(s) then ended.
SECTION 3.4. No Material Adverse Changes; Contingent Liabilities. Since
the date of the most recent financial statements included in the Selling Fund
Financial Statements, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of Selling
Fund or the status of Selling Fund as a regulated investment company under the
Code, other than changes resulting from any change in general conditions in the
financial or securities markets or the performance of any investments made by
Selling Fund or occurring in the ordinary course of business of Selling Fund or
Seller. Except as set forth on Schedule 3.4, there are no contingent liabilities
of Selling Fund not disclosed in the Selling Fund Financial Statements and no
contingent liabilities of Selling Fund have arisen since the date of the most
recent financial statements included in the Selling Fund Financial Statements.
SECTION 3.5. Selling Fund Shares; Business Operations.
(a) Selling Fund Shares have been duly authorized and validly issued and
are fully paid and non-assessable.
(b) During the five-year period ending on the date of the Reorganization,
neither Selling Fund nor any person related to Selling Fund (as defined in
Section 1.368-1(e)(3) of the Treasury Regulations without regard to Section
1.368-1(e)(3)(i)(A)) will have directly or through any transaction, agreement,
or arrangement with any other person, (i) acquired shares of Selling Fund for
consideration other than shares of Selling Fund, except for shares redeemed in
the ordinary course of Selling Fund's business as an open-end investment company
as required by the Investment Company Act, or (ii) made distributions with
respect to Selling Fund's shares, except for (a) distributions necessary to
satisfy the requirements of Sections 852 and 4982 of the Code for qualification
as a regulated investment company and avoidance of excise tax liability and (b)
additional distributions, to the extent such additional distributions do not
exceed 50 percent of the value (without giving effect to such distributions) of
the proprietary interest in Selling Fund on the Effective Date.
6
(c) At the time of its Reorganization, Selling Fund shall not have
outstanding any warrants, options, convertible securities or any other type of
right pursuant to which any Person could acquire Selling Fund Shares, except for
the right of investors to acquire Selling Fund Shares at net asset value in the
normal course of its business as a series of an open-end management investment
company operating under the Investment Company Act.
(d) From the date it commenced operations and ending on the Closing Date,
Selling Fund will have conducted its historic business within the meaning of
Section 1.368-1(d)(2) of the Treasury Regulations in a substantially unchanged
manner. In anticipation of its Reorganization, Selling Fund will not dispose of
assets that, in the aggregate, will result in less than fifty percent (50%) of
its historic business assets (within the meaning of Section 1.368-1(d)(3) of the
Treasury Regulations) being transferred to Buying Fund; provided, however, that
this Section 3.5(d) shall not preclude any of the redomestications of funds set
forth on Schedule 3.5(d).
(e) Seller does not have, and has not had during the six (6) months prior
to the date of this Agreement, any employees, and shall not hire any employees
from and after the date of this Agreement through the Closing Date.
SECTION 3.6. Accountants. Selling Fund Auditors, which have reported upon
the Selling Fund Financial Statements for the fiscal year or period, as
applicable, ended on the date of the most recent financial statements included
in the Selling Fund Financial Statements are independent public accountants as
required by the Securities Act and the Exchange Act.
SECTION 3.7. Binding Obligation. This Agreement has been duly authorized,
executed and delivered by Seller on behalf of Selling Fund and, assuming this
Agreement has been duly executed and delivered by Buyer and approved by the
shareholders of Selling Fund, constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms
from and with respect to the revenues and assets of Selling Fund, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors rights generally, or by
general equity principles (whether applied in a court of law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
SECTION 3.8. No Breaches or Defaults. The execution and delivery of this
Agreement by Seller on behalf of Selling Fund and performance by Seller of its
obligations hereunder has been duly authorized by all necessary corporate or
trust action, as applicable, on the part of Seller, other than approval by the
shareholders of Selling Fund, and (i) do not, and on the Closing Date will not,
result in any violation of the Governing Documents of Seller and (ii) do not,
and on the Closing Date will not, result in a breach of any of the terms or
provisions of, or constitute (with or without the giving of notice or the lapse
of time or both) a default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation or imposition of any Lien upon any
property or assets of Selling Fund (except for such breaches or defaults or
Liens that would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect) under (A) any indenture, mortgage or loan
agreement or any other material agreement or instrument to which Seller is a
party or by which it may be bound and which relates to the assets of Selling
Fund or to which any property of Selling Fund may be subject; (B) any Permit (as
defined below); or (C) any existing applicable law, rule, regulation, judgment,
order or decree of any Governmental Authority having jurisdiction over Seller or
any property of Selling Fund. Seller is not under the jurisdiction of a court in
a proceeding under Title 11 of the United States Code or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
SECTION 3.9. Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date and those that must
be made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by Seller in
connection with the due execution and delivery by Seller of this Agreement and
the consummation by Seller of the transactions contemplated hereby.
7
SECTION 3.10. Permits. Seller has in full force and effect all approvals,
consents, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights of Governmental Authorities (collectively, "Permits")
necessary for it to conduct its business as presently conducted as it relates to
Selling Fund, and there has occurred no default under any Permit, except for the
absence of Permits and for defaults under Permits the absence or default of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the knowledge of Seller there are no
proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 3.11. No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the knowledge
of Seller, has any litigation been overtly threatened in writing or, if probable
of assertion, orally, against Seller before any Governmental Authority which
questions the validity or legality of this Agreement or of the actions
contemplated hereby or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration actions, suits, or
proceedings instituted or pending or, to the knowledge of Seller, threatened in
writing or, if probable of assertion, orally, against Seller affecting any
property, asset, interest or right of Selling Fund, that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
with respect to Selling Fund. There are not in existence on the date hereof any
plea agreements, judgments, injunctions, consents, decrees, exceptions or orders
that were entered by, filed with or issued by any Governmental Authority
relating to Seller's conduct of the business of Selling Fund affecting in any
significant respect the conduct of such business. Seller is not, and has not
been, to the knowledge of Seller, the target of any investigation by the SEC or
any state securities administrator with respect to its conduct of the business
of Selling Fund.
SECTION 3.12. Contracts. Seller is not in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party and which involves or affects the assets of Selling Fund,
by which the assets, business, or operations of Selling Fund may be bound or
affected, or under which it or the assets, business or operations of Selling
Fund receives benefits, and which default could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and, to the
knowledge of Seller there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.
SECTION 3.13. Properties and Assets. Selling Fund has good and marketable
title to all properties and assets reflected in the Selling Fund Financial
Statements as owned by it, free and clear of all Liens, except as described in
the Selling Fund Financial Statements.
SECTION 3.14. Taxes.
(a) Selling Fund has elected to be a regulated investment company under
Subchapter M of the Code and is a fund that is treated as a separate corporation
under Section 851(g) of the Code. Selling Fund has qualified for treatment as a
regulated investment company for each taxable year since inception that has
ended prior to the Closing Date and will have satisfied the requirements of Part
I of Subchapter M of the Code to maintain such qualification for the period
beginning on the first day of its current taxable year and ending on the Closing
Date. Selling Fund has no earnings and profits accumulated in any taxable year
in which the provisions of Subchapter M of the Code did not apply to it. In
order to (i) ensure continued qualification of Selling Fund for treatment as a
"regulated investment company" for tax purposes and (ii) eliminate any tax
liability of Selling Fund arising by reason of undistributed investment company
taxable income or net capital gain, Seller will declare on or prior to the
Valuation Date to the shareholders of Selling Fund a dividend or dividends that,
together with all previous such dividends, shall have the effect of distributing
(A) all of Selling Fund's investment company taxable income (determined without
regard to any deductions for dividends paid) for the taxable year ended December
31, 2003 and for the short taxable year beginning on January 1, 2004 and ending
on the Closing Date and (B) all of Selling Fund's net capital gain recognized in
its taxable year ended December 31, 2003 and in such short taxable year (after
reduction for any capital loss carryover).
8
(b) Selling Fund has timely filed all Returns required to be filed by it
and all Taxes with respect thereto have been paid, except where the failure so
to file or so to pay, would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Adequate provision has been made
in the Selling Fund Financial Statements for all Taxes in respect of all periods
ended on or before the date of such financial statements, except where the
failure to make such provisions would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. No deficiencies for any
Taxes have been proposed, assessed or asserted in writing by any taxing
authority against Selling Fund, and no deficiency has been proposed, assessed or
asserted, in writing, where such deficiency would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No waivers
of the time to assess any such Taxes are outstanding nor are any written
requests for such waivers pending and no Return of Selling Fund is currently
being or has been audited with respect to income taxes or other Taxes by any
Federal, state, local or foreign Tax authority.
(c) Selling Fund is aware of no information that would indicate that (i)
Selling Fund has, or ever had, any shareholder that is not a segregated asset
account within the meaning of Section 1.817-5(f)(2)(i)(A) of the Treasury
Regulations, or any entity referred to in (and holding its shares in compliance
with the terms of) Section 1.817-5(f)(3)(i), (ii) or (iii) of the Treasury
Regulations; (ii) any public investor is participating or has ever participated
in Selling Fund through such a segregated asset account other than through the
purchase of a variable contract within the meaning of Section
1.817-5(f)(2)(i)(B) of the Treasury Regulations; and (iii) Selling Fund
satisfies, and at all times during its existence has satisfied, the percentage
diversification tests contained in Section 1.817-5(b)(1)(i) and (ii) of the
Treasury Regulations.
SECTION 3.15. Benefit and Employment Obligations. As of the Closing Date,
Selling Fund will have no obligation to provide any post-retirement or
post-employment benefit to any Person, including but not limited to under any
Benefit Plan, and will have no obligation to provide unfunded deferred
compensation or other unfunded or self-funded benefits to any Person.
SECTION 3.16. Brokers. No broker, finder or similar intermediary has
acted for or on behalf of Seller in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with Seller or any action taken by it.
SECTION 3.17. Voting Requirements. The Required Shareholder Vote is the
only vote of the holders of any class of shares of Selling Fund necessary to
approve this Agreement and, in connection therewith, the sale of all of Selling
Fund's assets and the termination of Selling Fund as a designated series of
Seller.
SECTION 3.18. State Takeover Statutes. No state takeover statute or
similar statute or regulation applies or purports to apply to this Agreement or
any of the transactions contemplated by this Agreement.
SECTION 3.19. Books and Records. The books and records of Seller relating
to Selling Fund, reflecting, among other things, the purchase and sale of
Selling Fund Shares, the number of issued and outstanding shares owned by each
Selling Fund Shareholder and the state or other jurisdiction in which such
shares were offered and sold, are complete and accurate in all material
respects.
SECTION 3.20. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Selling Fund as
of the date on which they were issued did not contain, and as supplemented by
any supplement thereto dated prior to or on the Closing Date do not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
SECTION 3.21. No Distribution. Buying Fund Shares are not being acquired
for the purpose of any distribution thereof, other than in accordance with the
terms of this Agreement.
SECTION 3.22. Liabilities of Selling Fund. The Liabilities of Selling
Fund that are to be assumed by Buying Fund in connection with the
Reorganization, or to which the assets of Selling Fund to be transferred in the
Reorganization are subject, were incurred by Selling Fund in the ordinary course
of its business. The fair market value of the assets of Selling Fund to be
transferred to Buying Fund in the Reorganization will equal or
9
exceed the sum of the Liabilities to be assumed by Buying Fund, plus the amount
of liabilities, if any, to which such transferred assets will be subject. The
total adjusted basis of the assets of Selling Fund to be transferred to Buying
Fund in the Reorganization will equal or exceed the sum of the Liabilities to be
assumed by Buying Fund, plus the amount of liabilities, if any, to which such
transferred assets will be subject.
SECTION 3.23. Value of Shares. The fair market value of the shares of
each class of Buying Fund received by Selling Fund Shareholders in the
Reorganization will be approximately equal to the fair market value of the
shares of each corresponding class of Selling Fund constructively surrendered in
exchange therefor.
SECTION 3.24. Shareholder Expenses. Selling Fund Shareholders will pay
their own expenses, if any, incurred in connection with the Reorganization.
SECTION 3.25. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between Seller and Buyer that was issued or acquired,
or will be settled, at a discount. No consideration other than Buying Fund
Shares (and Buying Fund's assumption of Selling Fund's Liabilities, including
for this purpose any liabilities to which the assets of Selling Fund are
subject) will be given in exchange for the assets of Selling Fund acquired by
Buying Fund in connection with the Reorganization.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Xxxxx, on behalf of Buying Fund, represents and warrants to Seller as
follows:
SECTION 4.1. Organization; Authority. Buyer is duly organized, validly
existing and in good standing under Applicable Law, with all requisite corporate
or trust power, as applicable, and authority to enter into this Agreement and
perform its obligations hereunder.
SECTION 4.2. Registration and Regulation of Buyer. Buyer is duly
registered with the SEC as an investment company under the Investment Company
Act. Buying Fund is in compliance in all material respects with all applicable
laws, rules and regulations, including, without limitation, the Investment
Company Act, the Securities Act, the Exchange Act and all applicable state
securities laws. Buying Fund is in compliance in all material respects with the
applicable investment policies and restrictions set forth in the Buyer
Registration Statement. The value of the net assets of Buying Fund is determined
using portfolio valuation methods that comply in all material respects with the
requirements of the Investment Company Act and the policies of Buying Fund and
all purchases and redemptions of Buying Fund Shares have been effected at the
net asset value per share calculated in such manner.
SECTION 4.3. Financial Statements. The books of account and related
records of Buying Fund fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited Buying Fund Financial
Statements previously delivered to Seller present fairly in all material
respects the financial position of Buying Fund as of the date(s) indicated and
the results of operations and changes in net assets for the period(s) then ended
in accordance with generally accepted accounting principles applied on a
consistent basis for the period(s) then ended.
SECTION 4.4. No Material Adverse Changes; Contingent Liabilities. Since
the date of the most recent financial statements included in the Buying Fund
Financial Statements, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of Buying Fund
or the status of Buying Fund as a regulated investment company under the Code,
other than changes resulting from any change in general conditions in the
financial or securities markets or the performance of any investments made by
Buying Fund or occurring in the ordinary course of business of Buying Fund or
Buyer. There are no contingent liabilities of Buying Fund not disclosed in the
Buying Fund Financial Statements which are required to be disclosed in
accordance with generally accepted accounting principles. Except as set forth on
Schedule 4.4, no contingent liabilities of Buying Fund have arisen since the
date of the most recent financial statements included in the Buying Fund
Financial Statements which are required to be disclosed in accordance with
generally accepted accounting principles.
10
SECTION 4.5. Registration of Buying Fund Shares.
(a) The shares of Buyer are divided into those portfolios, including Buying
Fund, that are set forth on Schedule 4.5(a).
(b) Buying Fund currently has those classes of shares that are set forth on
Schedule 4.5(b). Under its Governing Documents, Buyer is authorized to issue the
number of shares of each such class that is set forth on Schedule 4.5(b).
(c) Buying Fund Shares to be issued pursuant to Section 2.6 shall on the
Closing Date be duly registered under the Securities Act by a Registration
Statement on Form N-14 of Buyer then in effect.
(d) Buying Fund Shares to be issued pursuant to Section 2.6 are duly
authorized and on the Closing Date will be validly issued and fully paid and
non-assessable and will conform to the description thereof contained in the
Registration Statement on Form N-14 then in effect. At the time of its
Reorganization, Buying Fund shall not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any Person
could acquire shares of Buying Fund, except for the right of investors to
acquire shares of Buying Fund at net asset value in the normal course of its
business as a series of an open-end management investment company operating
under the Investment Company Act.
(e) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus"), which forms a part of Buyer's Registration Statement on
Form N-14, shall be furnished to the shareholders of Selling Fund entitled to
vote at the Shareholders Meeting. The Combined Proxy Statement/Prospectus and
related Statement of Additional Information of Buying Fund, when they become
effective, shall conform to the applicable requirements of the Securities Act
and the Investment Company Act and shall not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading, provided, however, that no
representation or warranty is made with respect to written information provided
by Seller for inclusion in the Combined Proxy Statement/Prospectus.
(f) The shares of Buying Fund which have been or are being offered for sale
(other than the Buying Fund Shares to be issued in connection with the
Reorganization) have been duly registered under the Securities Act by the Buyer
Registration Statement and have been duly registered, qualified or are exempt
from registration or qualification under the securities laws of each state or
other jurisdiction in which such shares have been or are being offered for sale,
and no action has been taken by Buyer to revoke or rescind any such registration
or qualification.
SECTION 4.6. Accountants. Buying Fund Auditors, which have reported upon
the Buying Fund Financial Statements for the fiscal year or period, as
applicable, ended on the date of the most recent financial statements included
in the Buying Fund Financial Statements are independent public accountants as
required by the Securities Act and the Exchange Act.
SECTION 4.7. Binding Obligation. This Agreement has been duly authorized,
executed and delivered by Xxxxx on behalf of Buying Fund and, assuming this
Agreement has been duly executed and delivered by Seller, constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms from and with respect to the revenues and assets of Buying Fund,
except as the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights
generally, or by general equity principles (whether applied in a court or law or
a court of equity and including limitations on the availability of specific
performance or other equitable remedies).
SECTION 4.8. No Breaches or Default. The execution and delivery of this
Agreement by Xxxxx on behalf of Buying Fund and performance by Xxxxx of its
obligations hereunder have been duly authorized by all necessary corporate or
trust action, as applicable, on the part of Buyer and (i) do not, and on the
Closing Date will not, result in any violation of the Governing Documents of
Buyer and (ii) do not, and on the Closing Date will not, result in a breach of
any of the terms or provisions of, or constitute (with or without the giving of
notice or the lapse of time or both) a default under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation or imposition
11
of any Lien upon any property or assets of Buying Fund (except for such breaches
or defaults or Liens that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect) under (A) any indenture,
mortgage or loan agreement or any other material agreement or instrument to
which Buyer is a party or by which it may be bound and which relates to the
assets of Buying Fund or to which any properties of Buying Fund may be subject;
(B) any Permit; or (C) any existing applicable law, rule, regulation, judgment,
order or decree of any Governmental Authority having jurisdiction over Buyer or
any property of Buying Fund. Buyer is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
SECTION 4.9. Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by Buyer in connection with
the due execution and delivery by Buyer of this Agreement and the consummation
by Buyer of the transactions contemplated hereby.
SECTION 4.10. Permits. Buyer has in full force and effect all Permits
necessary for it to conduct its business as presently conducted as it relates to
Buying Fund, and there has occurred no default under any Permit, except for the
absence of Permits and for defaults under Permits the absence or default of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the knowledge of Buyer there are no
proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 4.11. No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the knowledge
of Buyer, has any litigation been overtly threatened in writing or, if probable
of assertion, orally, against Buyer before any Governmental Authority which
questions the validity or legality of this Agreement or of the transactions
contemplated hereby, or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration actions, suits, or
proceedings instituted or pending or, to the knowledge of Buyer, threatened in
writing or, if probable of assertion, orally, against Buyer, affecting any
property, asset, interest or right of Buying Fund, that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
with respect to Buying Fund. There are not in existence on the date hereof any
plea agreements, judgments, injunctions, consents, decrees, exceptions or orders
that were entered by, filed with or issued by any Governmental Authority
relating to Buyer's conduct of the business of Buying Fund affecting in any
significant respect the conduct of such business. Buyer is not, and has not
been, to the knowledge of Buyer, the target of any investigation by the SEC or
any state securities administrator with respect to its conduct of the business
of Buying Fund.
SECTION 4.12. Taxes.
(a) Buying Fund has elected to be a regulated investment company under
Subchapter M of the Code and is a fund that is treated as a separate corporation
under Section 851(g) of the Code. Buying Fund has qualified for treatment as a
regulated investment company for each taxable year since inception that has
ended prior to the Closing Date and will satisfy the requirements of Part I of
Subchapter M of the Code to maintain such qualification for its current taxable
year. Buying Fund has no earnings or profits accumulated in any taxable year in
which the provisions of Subchapter M of the Code did not apply to it.
(b) Buying Fund has timely filed all Returns required to be filed by it and
all Taxes with respect thereto have been paid, except where the failure so to
file or so to pay, would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Adequate provision has been made
in the Buying Fund Financial Statements for all Taxes in respect of all periods
ending on or before the date of such financial statements, except where the
failure to make such provisions would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. No deficiencies for any
Taxes have been proposed, assessed or asserted in writing by any taxing
authority against Buying Fund, and no deficiency has been
12
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of Buying
Fund is currently being or has been audited with respect to income taxes or
other Taxes by any Federal, state, local or foreign Tax authority.
SECTION 4.13. Brokers. No broker, finder or similar intermediary has
acted for or on behalf of Buyer in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with Buyer or any action taken by it.
SECTION 4.14. Representations Concerning the Reorganization.
(a) Buyer has no plan or intention to reacquire any Buying Fund Shares
issued in the Reorganization, except to the extent that Buying Fund is required
by the Investment Company Act to redeem any of its shares presented for
redemption at net asset value in the ordinary course of its business as an
open-end, management investment company.
(b) Buying Fund has no plan or intention to sell or otherwise dispose of
any of the assets of Selling Fund acquired in the Reorganization, other than in
the ordinary course of its business and to the extent necessary to maintain its
status as a "regulated investment company" under the Code; provided, however,
that this Section 4.14(b) shall not preclude any of the redomestications of
funds set forth on Schedule 3.5(d).
(c) Following the Reorganization, Buying Fund will continue an "historic
business" of Selling Fund or use a significant portion of Selling Fund's
"historic business assets" in a business. For purposes of this representation,
the terms "historic business" and "historic business assets" shall have the
meanings ascribed to them in Section 1.368-1(d) of the Treasury Regulations;
provided, however, that this Section 4.14(c) shall not preclude any of the
redomestications of funds set forth on Schedule 3.5(d).
(d) Prior to or in the Reorganization, neither Buying Fund nor any person
related to Buying Fund (for purposes of this paragraph as defined in Section
1.368-1(e)(3) of the Treasury Regulations) will have acquired directly or
through any transaction, agreement or arrangement with any other person, shares
of Selling Fund with consideration other than shares of Buying Fund. There is no
plan or intention by Buying Fund or any person related to Buying Fund to acquire
or redeem any of the Buying Fund Shares issued in the Reorganization either
directly or through any transaction, agreement, or arrangement with any other
person, other than redemptions in the ordinary course of Buying Fund's business
as an open-end investment company as required by the Investment Company Act.
(e) Buying Fund is aware of no information that would indicate that (i)
Buying Fund has, or ever had, any shareholder that is not a segregated asset
account within the meaning of Section 1.817-5(f)(2)(i)(A) of the Treasury
Regulations, or any entity referred to in (and holding its shares in compliance
with the terms of) Section 1.817-5(f)(3)(i), (ii) and (iii) of the Treasury
Regulations; (ii) any public investor is participating or has ever participated
in Buying Fund through such a segregated asset account other than through the
purchase of a variable contract within the meaning of Section
1.817-5(f)(2)(i)(B) of the Treasury Regulations; and (iii) Buying Fund
satisfies, and at all times during its existence has satisfied, the percentage
diversification tests contained in Section 1.817-5(b)(1)(i) and (ii) of the
Treasury Regulations.
SECTION 4.15. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Buying Fund as of
the date on which it was issued does not contain, and as supplemented by any
supplement thereto dated prior to or on the Closing Date does not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
SECTION 4.16. Value of Shares. The fair market value of the shares of
each class of Buying Fund received by Selling Fund Shareholders in the
Reorganization will be approximately equal to the fair market value of the
shares of each corresponding class of Selling Fund constructively surrendered in
exchange therefor.
13
SECTION 4.17. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between Seller and Buyer that was issued or acquired,
or will be settled, at a discount. No consideration other than Buying Fund
Shares (and Buying Fund's assumption of Selling Fund's Liabilities, including
for this purpose any liabilities to which the assets of Selling Fund are
subject) will be given in exchange for the assets of Selling Fund acquired by
Buying Fund in connection with the Reorganization. The fair market value of the
assets of Selling Fund transferred to Buying Fund in the Reorganization will
equal or exceed the sum of the Liabilities assumed by Buying Fund, plus the
amount of liabilities, if any, to which such transferred assets are subject.
ARTICLE 5
COVENANTS
SECTION 5.1. Conduct of Business.
(a) From the date of this Agreement up to and including the Closing Date
(or, if earlier, the date upon which this Agreement is terminated pursuant to
Article 7), Seller shall conduct the business of Selling Fund only in the
ordinary course and substantially in accordance with past practices, and shall
use its reasonable best efforts to preserve intact its business organization and
material assets and maintain the rights, franchises and business and customer
relations necessary to conduct the business operations of Selling Fund in the
ordinary course in all material respects; provided, however, that this Section
5.1(a) shall not preclude any of the redomestications of funds set forth on
Schedule 3.5(d) or any of the combinations of funds set forth on Schedule 5.1.
(b) From the date of this Agreement up to and including the Closing Date
(or, if earlier, the date upon which this Agreement is terminated pursuant to
Article 7), Buyer shall conduct the business of Buying Fund only in the ordinary
course and substantially in accordance with past practices, and shall use its
reasonable best efforts to preserve intact its business organization and
material assets and maintain the rights, franchises and business and customer
relations necessary to conduct the business operations of Buying Fund in the
ordinary course in all material respects; provided, however, that this Section
5.1(b) shall not preclude any of the redomestications of funds set forth on
Schedule 3.5(d) or any of the combinations of funds set forth on Schedule 5.1.
SECTION 5.2. Announcements. Seller and Xxxxx shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement and the transactions contemplated by this
Agreement, and neither Seller nor Buyer shall issue any such press release or
make any public statement without the prior written approval of the other party
to this Agreement, such approval not to be unreasonably withheld, except as may
be required by law.
SECTION 5.3. Expenses. AMVESCAP PLC or one of its subsidiaries, on behalf
of either Buyer Investment Adviser or Seller Investment Adviser, shall bear the
costs and expenses incurred in connection with this Agreement and the
Reorganization and other transactions contemplated hereby; provided that any
such expenses incurred by or on behalf of Buying Fund or Selling Fund shall not
be reimbursed or paid for by another Person unless those expenses are solely and
directly related to the Reorganization.
SECTION 5.4. Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganization, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganization.
SECTION 5.5. Notice of Events. Buyer shall give prompt notice to Seller,
and Seller shall give prompt notice to Buyer, of (a) the occurrence or
non-occurrence of any event which to the knowledge of Buyer or to the knowledge
of Seller, the occurrence or non-occurrence of which would be likely to result
in any of the conditions specified in (i) in the case of Seller, Sections 6.1
and 6.2 or (ii) in the case of Buyer, Sections 6.2
14
and 6.3, not being satisfied so as to permit the consummation of the
Reorganization and (b) any material failure on its part, or on the part of the
other party hereto of which it has knowledge, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.5 shall not limit or otherwise affect the remedies available hereunder
to any party.
SECTION 5.6. Access to Information.
(a) Seller will, during regular business hours and on reasonable prior
notice, allow Buyer and its authorized representatives reasonable access to the
books and records of Seller pertaining to the assets of Selling Fund and to
officers of Seller knowledgeable thereof; provided, however, that any such
access shall not significantly interfere with the business or operations of
Seller.
(b) Buyer will, during regular business hours and on reasonable prior
notice, allow Seller and its authorized representatives reasonable access to the
books and records of Buyer pertaining to the assets of Buying Fund and to
officers of Buyer knowledgeable thereof; provided, however, that any such access
shall not significantly interfere with the business or operations of Buyer.
SECTION 5.7. Consents, Approvals and Filings. Each of Seller and Buyer
shall make all necessary filings, as soon as reasonably practicable, including,
without limitation, those required under the Maryland General Corporation Law,
the Securities Act, the Exchange Act, the Investment Company Act and the
Advisers Act, in order to facilitate prompt consummation of the Reorganization
and the other transactions contemplated by this Agreement. In addition, each of
Seller and Buyer shall use its reasonable best efforts, and shall cooperate
fully with each other (i) to comply as promptly as reasonably practicable with
all requirements of Governmental Authorities applicable to the Reorganization
and the other transactions contemplated herein and (ii) to obtain as promptly as
reasonably practicable all necessary permits, orders or other consents of
Governmental Authorities and consents of all third parties necessary for the
consummation of the Reorganization and the other transactions contemplated
herein. Each of Seller and Buyer shall use reasonable efforts to provide such
information and communications to Governmental Authorities as such Governmental
Authorities may request.
SECTION 5.8. Submission of Agreement to Shareholders. Seller shall take
all action necessary in accordance with applicable law and its Governing
Documents to convene the Shareholders Meeting. Seller shall, through its Board
of Directors/Trustees, recommend to the shareholders of Selling Fund approval of
this Agreement and, in connection therewith, the sale of all of Selling Fund's
assets and the termination of Selling Fund as a designated series of Seller.
Seller shall use its reasonable best efforts to hold a Shareholders Meeting as
soon as practicable after the date hereof.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
SECTION 6.1. Conditions Precedent of Buyer. The obligation of Buyer to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by Xxxxx.
(a) The representations and warranties of Seller on behalf of Selling Fund
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date with the same effect
as though all such representations and warranties had been made as of the
Closing Date.
(b) Seller shall have complied with and satisfied in all material respects
all agreements and conditions relating to Selling Fund set forth herein on its
part to be performed or satisfied at or prior to the Closing Date.
(c) Xxxxx shall have received at the Closing Date (i) a certificate, dated
as of the Closing Date, from an officer of Seller, in such individual's capacity
as an officer of Seller and not as an individual, to the effect that the
conditions specified in Sections 6.1(a) and (b) have been satisfied and (ii) a
certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary of Seller certifying as to the accuracy and
15
completeness of the attached Governing Documents of Seller, and resolutions,
consents and authorizations of or regarding Seller with respect to the execution
and delivery of this Agreement and the transactions contemplated hereby.
(d) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
(e) Buyer shall have received from Seller confirmations or other adequate
evidence as to the tax costs and holding periods of the assets and property of
Selling Fund transferred to Buying Fund in accordance with the terms of this
Agreement.
(f) To the extent applicable, Seller Investment Adviser shall have
terminated or waived, in either case in writing, any rights to reimbursement
from Selling Fund to which it is entitled for fees and expenses absorbed by
Seller Investment Adviser pursuant to voluntary and contractual fee waiver or
expense limitation commitments between Seller Investment Adviser and Selling
Fund.
SECTION 6.2. Mutual Conditions. The obligations of Seller and Buyer to
consummate the Reorganization are subject to the satisfaction, at or prior to
the Closing Date, of all of the following further conditions, any one or more of
which may be waived in writing by Seller and Buyer, but only if and to the
extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date with, and all
consents, approvals, permits and authorizations required to be obtained on or
prior to the Closing Date from Governmental Authorities in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein by Seller and Buyer shall have been made or
obtained, as the case may be; provided, however, that such consents, approvals,
permits and authorizations may be subject to conditions that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) This Agreement, the Reorganization of Selling Fund and related matters
shall have been approved and adopted at the Shareholders Meeting by the
shareholders of Selling Fund on the record date by the Required Shareholder
Vote.
(c) The assets of Selling Fund to be acquired by Buying Fund shall
constitute at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets held by Selling Fund
immediately prior to the Reorganization. For purposes of this Section 6.2(c),
assets used by Selling Fund to pay the expenses it incurs in connection with
this Agreement and the Reorganization and to effect all shareholder redemptions
and distributions (other than regular, normal dividends and regular, normal
redemptions pursuant to the Investment Company Act, and not in excess of the
requirements of Section 852 of the Code, occurring in the ordinary course of
Selling Fund's business as a series of an open-end management investment
company) after the date of this Agreement shall be included as assets of Selling
Fund held immediately prior to the Reorganization.
(d) No temporary restraining order, preliminary or permanent injunction or
other order issued by any Governmental Authority preventing the consummation of
the Reorganization on the Closing Date shall be in effect; provided, however,
that the party or parties invoking this condition shall use reasonable efforts
to have any such order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by Buyer with respect to
Buying Fund Shares to be issued to Selling Fund Shareholders in connection with
the Reorganization shall have become effective under the Securities Act and no
stop order suspending the effectiveness thereof shall have been issued and, to
the best knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the Securities Act.
(f) Each of Buying Fund and Selling Fund will have satisfied the investment
diversification requirements of Section 817(h) of the Code for all taxable
quarters since its inception, including the last short taxable period of Selling
Fund ending on the Closing Date and taxable quarter of Buying Fund that includes
the Closing Date.
16
(g) Seller and Buyer shall have received on or before the Closing Date an
opinion of Buyer Counsel in form and substance reasonably acceptable to Seller
and Buyer, as to the matters set forth on Schedule 6.2(g). In rendering such
opinion, Buyer Counsel may request and rely upon representations contained in
certificates of officers of Seller, Xxxxx and others, and the officers of Seller
and Buyer shall use their best efforts to make available such truthful
certificates.
SECTION 6.3. Conditions Precedent of Seller. The obligation of Seller to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by Seller.
(a) The representations and warranties of Buyer on behalf of Buying Fund
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date with the same effect
as though all such representations and warranties had been made as of the
Closing Date.
(b) Buyer shall have complied with and satisfied in all material respects
all agreements and conditions relating to Buying Fund set forth herein on its
part to be performed or satisfied at or prior to the Closing Date.
(c) Seller shall have received on the Closing Date (i) a certificate, dated
as of the Closing Date, from an officer of Buyer, in such individual's capacity
as an officer of Buyer and not as an individual, to the effect that the
conditions specified in Sections 6.3(a) and (b) have been satisfied and (ii) a
certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary of Buyer certifying as to the accuracy and completeness of the
attached Governing Documents of Buyer and resolutions, consents and
authorizations of or regarding Buyer with respect to the execution and delivery
of this Agreement and the transactions contemplated hereby.
ARTICLE 7
TERMINATION OF AGREEMENT
SECTION 7.1. Termination. This Agreement may be terminated on or prior to
the Closing Date as follows:
(a) by mutual written consent of Xxxxxx and Xxxxx; or
(b) at the election of Seller or Buyer, to be effectuated by the
delivery by the terminating party to the other party of a written notice of
such termination:
(i) if the Closing Date shall not be on or before the Termination
Date, unless the failure to consummate the Reorganization is the result
of a willful and material breach of this Agreement by the party seeking
to terminate this Agreement;
(ii) if, upon a vote at the Shareholders Meeting or any final
adjournment thereof, the Required Shareholder Vote shall not have been
obtained as contemplated by Section 5.8; or
(iii) if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Reorganization and such order,
decree, ruling or other action shall have become final and
nonappealable.
SECTION 7.2. Survival After Termination. If this Agreement is terminated
in accordance with Section 7.1 hereof and the Reorganization of Selling Fund is
not consummated, this Agreement shall become void and of no further force and
effect with respect to the Reorganization and Selling Fund, except for the
provisions of Section 5.3.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement, and the covenants in this
Agreement that are required to be performed at or
17
prior to the Closing Date, shall terminate upon the consummation of the
transactions contemplated hereunder. The covenants in this Agreement that are
required to be performed in whole or in part subsequent to the Closing Date
shall survive the consummation of the transactions contemplated hereunder for a
period of one (1) year following the Closing Date.
SECTION 8.2. Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
SECTION 8.3. Binding Effect, Persons Benefiting, No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such Persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Without the prior written consent of the parties
hereto, this Agreement may not be assigned by any of the parties hereto.
SECTION 8.4. Obligations of Buyer and Seller.
(a) Xxxxxx and Xxxxx hereby acknowledge and agree that Buying Fund is a
separate investment portfolio of Buyer, that Buyer is executing this Agreement
on behalf of Buying Fund, and that any amounts payable by Buyer under or in
connection with this Agreement shall be payable solely from the revenues and
assets of Buying Fund.
(b) Xxxxxx and Buyer hereby acknowledge and agree that Selling Fund is a
separate investment portfolio of Seller, that Seller is executing this Agreement
on behalf of Selling Fund and that any amounts payable by Seller under or in
connection with this Agreement shall be payable solely from the revenues and
assets of Selling Fund. Xxxxx further acknowledges and agrees that this
Agreement has been executed by a duly authorized officer of Seller in his or her
capacity as an officer of Seller intending to bind Xxxxxx as provided herein,
and that no officer, trustee or shareholder of Seller shall be personally liable
for the liabilities or obligation of Seller incurred hereunder. Finally, Xxxxx
acknowledges and agrees that the liabilities and obligations of Selling Fund
pursuant to this Agreement shall be enforceable against the assets of Selling
Fund only and not against the assets of Seller generally or assets belonging to
any other series of Seller.
SECTION 8.5. Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by Xxxxxx and Xxxxx.
SECTION 8.6. Enforcement. The parties agree irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 8.7. Interpretation. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or a Schedule to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." Each representation and warranty contained in Article 3 or 4 that
relates to a general category of a subject matter shall be deemed superseded by
a specific representation and warranty relating to a subcategory thereof to the
extent of such specific representation or warranty.
SECTION 8.8. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
SECTION 8.9. Entire Agreement; Exhibits and Schedules. This Agreement,
including the Exhibits, Schedules, certificates and lists referred to herein,
and any documents executed by the parties simultaneously herewith or pursuant
thereto, constitute the entire understanding and agreement of the parties hereto
with
18
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, written or oral, between the parties with respect to such
subject matter.
SECTION 8.10. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to Seller:
AIM Variable Insurance Funds
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-7599
Attn: Xxxxxx X. Xxxx
(b) If to Buyer:
INVESCO Variable Investment Funds, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-7599
Attn: Xxxxxx X. Xxxx
SECTION 8.11. Representations by Seller Investment Adviser. In its
capacity as investment adviser to Seller, Seller Investment Adviser represents
to Buyer that to the best of its knowledge the representations and warranties of
Seller and Selling Fund contained in this Agreement are true and correct as of
the date of this Agreement. For purposes of this Section 8.11, the best
knowledge standard shall be deemed to mean that the officers of Seller
Investment Adviser who have substantive responsibility for the provision of
investment advisory services to Seller do not have actual knowledge to the
contrary after due inquiry.
SECTION 8.12. Representations by Buyer Investment Adviser. In its
capacity as investment adviser to Buyer, Buyer Investment Adviser represents to
Seller that to the best of its knowledge the representations and warranties of
Buyer and Buying Fund contained in this Agreement are true and correct as of the
date of this Agreement. For purposes of this Section 8.12, the best knowledge
standard shall be deemed to mean that the officers of Buyer Investment Adviser
who have substantive responsibility for the provision of investment advisory
services to Buyer do not have actual knowledge to the contrary after due
inquiry.
SECTION 8.13. Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of Seller, on behalf of Selling Fund, and
Xxxxx, on behalf of Buying Fund, and their respective successors and assigns.
The parties hereto expressly acknowledge and agree that this Agreement shall be
binding upon and inure to the benefit of those Delaware statutory trusts that
are the resulting entities in the permitted redomestications of funds set forth
on Schedule 3.5(d).
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AIM VARIABLE INSURANCE FUNDS, acting
on
behalf of AIM V.I. GLOBAL UTILITIES
FUND
By: /s/ XXXXXX X. XXXXXX
------------------------------------
INVESCO VARIABLE INVESTMENT FUNDS,
INC.,
acting on behalf of INVESCO
VIF -- UTILITIES FUND
By: /s/ XXXXXX X. XXXXXX
------------------------------------
A I M ADVISORS, INC.
By: /s/ XXXX X. XXXXXXXXXX
------------------------------------
INVESCO FUNDS GROUP, INC.
By: /s/ XXXX X. XXXXXXXXXX
------------------------------------
20
EXHIBIT A
EXCLUDED LIABILITIES OF SELLING FUND
None.
A-1
SCHEDULE 2.1
CLASSES OF SHARES OF SELLING FUND AND
CORRESPONDING CLASSES OF SHARES OF BUYING FUND
CLASSES OF SHARES OF SELLING FUND CORRESPONDING CLASSES OF SHARES OF BUYING FUND
--------------------------------- ----------------------------------------------
AIM V.I. Global Utilities Fund INVESCO VIF -- Utilities Fund
Series I Shares Series I Shares
Series II Shares Series II Shares
SCHEDULE 3.4
CERTAIN CONTINGENT LIABILITIES OF SELLING FUND
None.
SCHEDULE 3.5(D)
PERMITTED REDOMESTICATIONS OF FUNDS
SERIES OF INVESCO VARIABLE INVESTMENT FUNDS, INC. CORRESPONDING SERIES OF AIM VARIABLE INSURANCE FUNDS
(EACH A "CURRENT FUND") (EACH A "NEW FUND")
------------------------------------------------- ----------------------------------------------------
INVESCO VIF -- Core Equity Fund INVESCO VIF -- Core Equity Fund
INVESCO VIF -- Dynamics Fund INVESCO VIF -- Dynamics Fund
INVESCO VIF -- Financial Services Fund INVESCO VIF -- Financial Services Fund
INVESCO VIF -- Growth Fund INVESCO VIF -- Growth Fund
INVESCO VIF -- Health Sciences Fund INVESCO VIF -- Health Sciences Fund
INVESCO VIF -- High Yield Fund INVESCO VIF -- High Yield Fund
INVESCO VIF -- Leisure Fund INVESCO VIF -- Leisure Fund
INVESCO VIF -- Real Estate Opportunity Fund INVESCO VIF -- Real Estate Opportunity Fund
INVESCO VIF -- Small Company Growth Fund INVESCO VIF -- Small Company Growth Fund
INVESCO VIF -- Technology Fund INVESCO VIF -- Technology Fund
INVESCO VIF -- Telecommunications Fund INVESCO VIF -- Telecommunications Fund
INVESCO VIF -- Total Return Fund INVESCO VIF -- Total Return Fund
INVESCO VIF -- Utilities Fund INVESCO VIF -- Utilities Fund
SCHEDULE 4.4
CERTAIN CONTINGENT LIABILITIES OF BUYING FUND
None.
SCHEDULE 4.5(A)
PORTFOLIOS OF BUYER
INVESCO VIF -- Core Equity Fund
INVESCO VIF -- Dynamics Fund
INVESCO VIF -- Financial Services Fund
INVESCO VIF -- Growth Fund
INVESCO VIF -- Health Sciences Fund
INVESCO VIF -- High Yield Fund
INVESCO VIF -- Leisure Fund
INVESCO VIF -- Real Estate Opportunity Fund
INVESCO VIF -- Small Company Growth Fund
INVESCO VIF -- Technology Fund
INVESCO VIF -- Telecommunications Fund
INVESCO VIF -- Total Return Fund
INVESCO VIF -- Utilities Fund
SCHEDULE 4.5(B)
CLASSES OF SHARES OF BUYING FUND AND NUMBER OF SHARES
OF EACH CLASS BUYER IS AUTHORIZED TO ISSUE
NUMBER OF SHARES OF EACH CLASS
CLASSES OF SHARES OF BUYING FUND BUYER IS AUTHORIZED TO ISSUE
-------------------------------- ------------------------------
INVESCO VIF -- Utilities Fund
Series I Shares........................................... 100,000,000
Series II Shares.......................................... 100,000,000
SCHEDULE 5.1
PERMITTED COMBINATIONS OF FUNDS
AIM V.I. Global Utilities Fund into INVESCO VIF -- Utilities Fund
AIM V.I. New Technology Fund into INVESCO VIF -- Technology Fund
INVESCO VIF -- Telecommunications Fund into INVESCO VIF -- Technology Fund
INVESCO VIF -- Growth Fund into AIM V.I. Growth Fund
INVESCO VIF -- Yield Fund into AIM V.I. High Yield Fund
LSA Basic Value Fund into AIM V.I. Basic Value Fund
SCHEDULE 6.2(G)
TAX OPINIONS
(i) The transfer of the assets of Selling Fund to Buying Fund in exchange
solely for Buying Fund Shares distributed directly to Selling Fund Shareholders
and Buying Fund's assumption of the Liabilities, as provided in the Agreement,
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code and Selling Fund and Buying Fund will be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
(ii) In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by Selling Fund on the transfer of its assets
to Buying Fund solely in exchange for Buying Fund Shares and Buying Fund's
assumption of the Liabilities or on the distribution of Buying Fund Shares to
Selling Fund Shareholders; provided that, no opinion is expressed as to the
effect of the Reorganization on Selling Fund or any Selling Fund Shareholder
with respect to any asset as to which any unrealized gain or loss is required to
be recognized for Federal income tax purposes at the end of a taxable year (or
on the termination or transfer of a taxpayer's rights (or obligations) with
respect to such asset) under a mark-to-market system of accounting.
(iii) In accordance with Section 1032 of the Code, no gain or loss will be
recognized by Buying Fund upon the receipt of assets of Selling Fund in exchange
for Buying Fund Shares issued directly to Selling Fund Shareholders.
(iv) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by Selling Fund Shareholders on the receipt of Buying Fund Shares
in exchange for Selling Fund Shares.
(v) In accordance with Section 362(b) of the Code, the basis to Buying Fund
of the assets of Selling Fund will be the same as the basis of such assets in
the hands of Selling Fund immediately prior to the Reorganization.
(vi) In accordance with Section 358(a) of the Code, a Selling Fund
Shareholder's basis for Buying Fund Shares received by the Selling Fund
Shareholder will be the same as his or her basis for Selling Fund Shares
exchanged therefor.
(vii) In accordance with Section 1223(1) of the Code, a Selling Fund
Shareholder's holding period for Buying Fund Shares will be determined by
including such Selling Fund Shareholder's holding period for Selling Fund Shares
exchanged therefor, provided that such Selling Fund Shareholder held such
Selling Fund Shares as a capital asset.
(viii) In accordance with Section 1223(2) of the Code, the holding period
with respect to the assets of Selling Fund transferred to Buying Fund in the
Reorganization will include the holding period for such assets in the hands of
Selling Fund.
(ix) In accordance with Section 381(a)(2) of the Code, Buying Fund will
succeed to and take into account the items of Selling Fund described in Section
381(c) of the Code, subject to the conditions and limitations specified in
Sections 381 through 384 of the Code and the Treasury Regulations thereunder.
APPENDIX II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - UTILITIES FUND
Supplement dated January 16, 2004
to the Prospectus dated April 30, 2003
as supplemented November 20, 2003, December 4, 2003 and December 16, 2003
This supplement provides additional information concerning the matters discussed
in the supplement dated December 16, 2003 (the "Prior Supplement").
Your Fund's investment advisor, INVESCO Funds Group, Inc. ("INVESCO"), is an
indirect wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect
wholly owned subsidiary of AMVESCAP, A I M Advisors, Inc. ("AIM"), is the
investment advisor to the AIM Funds and INVESCO Funds.
As discussed in the Prior Supplement, on December 2, 2003 each of the Securities
Exchange Commission ("SEC") and the Office of the Attorney General of the State
of New York ("NYAG") filed civil proceedings against INVESCO and Xxxxxxx X.
Xxxxxxxxxx, in his capacity as the chief executive officer of INVESCO, and on
December 2, 2003 the State of Colorado filed civil proceedings against INVESCO.
The civil proceedings allege that INVESCO failed to disclose in the INVESCO
Funds' prospectuses and to the INVESCO Funds' independent directors that INVESCO
had entered into certain arrangements permitting market timing of the INVESCO
Funds.
In addition to these civil proceedings, the SEC and NYAG have issued subpoenas
and requested information from AIM relating to market timing activity by certain
investors in the AIM Funds.
The independent trustees of the AIM/INVESCO Funds have retained their own
independent counsel to conduct an investigation on behalf of the independent
trustees into the frequent trading arrangements and related issues raised by the
regulators. The independent trustees have created a special committee,
consisting of four independent trustees, to oversee the investigation and to
formulate recommendations for further board action. As part of the investigation
by the independent trustees, their independent counsel has been reviewing the
examination of INVESCO and AIM currently being conducted by management's outside
counsel.
AMVESCAP recently found, in its ongoing review, situations in which the
procedures designed to guard against the potential adverse impact of frequent
trading and illegal late trading through intermediaries were not completely
effective. These findings were based, in part, on an extensive economic analysis
by outside experts who examined the impact of these activities.
In light of these findings, AMVESCAP has agreed that any AIM or INVESCO Fund
harmed by the activities of accommodated market timers will receive full
restitution. In addition, AMVESCAP has retained outside counsel to undertake a
comprehensive review of AIM's and INVESCO's policies, procedures and practices,
with the objective that they rank among the most effective in the fund industry.
AMVESCAP has informed regulators of its most recent findings and is seeking to
resolve both the pending enforcement actions against INVESCO and the ongoing
investigations with respect to AIM.
The Prior Supplement identifies multiple lawsuits that have been filed against
certain INVESCO Funds, AIM Funds, INVESCO, A I M Management Group Inc., the
parent of AIM, AMVESCAP and certain related parties, primarily based upon the
allegations in the complaints described above, and that have been served as of
December 16, 2003. The following list identifies additional lawsuits that have
been served as of January 15, 2004:
o Xxxxxx X. Xxxxxxx, et al., v. INVESCO Advantage Health
Sciences Fund, et al., in the United States District Court,
District of Colorado (Civil Action No. 03-N-2559), filed on
December 17, 2003.
o Xxxxxx X. Xxxxx, Individually and On Behalf of All Others
Similarly Situated, v. INVESCO Advantage Health Sciences Fund,
et al., in the United States District Court, Southern District
of New York (Civil Action No. 03-CV-10045), filed on December
18, 2003.
o Xxxxxx Xxxxxxxx, Individually and On Behalf of All Others
Similarly Situated, v. AMVESCAP, PLC, et al., in the United
States District Court, District of Colorado (Civil Action No.
03-M-2604), filed on December 24, 2003.
o Xxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx v. INVESCO Funds Group,
Inc. and A I M Advisors, Inc., in the United States District
Court, District of Colorado (Civil Action No. 03-MK-2612),
filed on December 24, 2003.
The Xxxxxxx and Xxxxxxx lawsuits allege a variety of theories of recovery and
seek a variety of remedies, which are generally identified in the Prior
Supplement. The Xxxxxxxx lawsuit alleges as a theory of recovery the violation
of various provisions of the Employee Retirement Income Security Act ("ERISA")
and seeks as a remedy various corrective measures under XXXXX, among other
remedies identified in the Prior Supplement. The Xxxxxxx lawsuit seeks as a
remedy that the advisory agreement with AIM be rescinded and/or declared
unenforceable or void and that all advisory fees received during the past year
be refunded, among other remedies identified in the Prior Supplement.
More detailed information regarding each of the cases identified above is
provided in each fund's statement of additional information. Additional lawsuits
arising out of these circumstances and presenting similar allegations and
requests for relief may be filed against the funds, INVESCO, AIM, AMVESCAP and
related parties in the future. Information about any similar additional lawsuits
will be provided in the statement of additional information.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - UTILITIES FUND
Supplement dated December 16, 2003,
to the Prospectus dated April 30, 2003
as supplemented November 20, 2003 and December 4, 2003
The following supplement supercedes and replaces in its entirety, the supplement
dated December 4, 2003.
The Board of Directors of INVESCO Variable Investment Funds, Inc. ("IVIF"), on
behalf of INVESCO VIF Core Equity Fund, INVESCO VIF Dynamics Fund, INVESCO VIF
Financial Services Fund, INVESCO VIF Growth Fund, INVESCO VIF Health Sciences
Fund, INVESCO VIF High Yield Fund, INVESCO VIF Leisure Fund, INVESCO VIF Real
Estate Opportunity Fund, INVESCO VIF Small Company Growth Fund, INVESCO VIF
Technology Fund, INVESCO VIF Telecommunications Fund, INVESCO VIF Total Return
Fund and INVESCO VIF Utilities Fund (the "IVIF Funds"), voted to request
shareholders to approve the following items that will affect one or more of the
IVIF Funds:
- An Agreement and Plan of Reorganization which provides for the
redomestication of each of the IVIF Funds as funds of AIM Variable
Insurance Funds (the "Redomestication"), a Delaware statutory trust, and in
connection therewith, the sale of all of IVIF's assets and the dissolution
of IVIF as a Maryland corporation;
- A new advisory agreement between IVIF and A I M Advisors, Inc. (AIM);
- A new sub-advisory agreement between AIM and INVESCO Institutional (N.A.),
Inc.;
- The Election of sixteen directors to the Board of Directors of IVIF; and
- To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
The proposed Redomestication relates to an integration initiative announced on
March 27, 2003, by AMVESCAP PLC ("AMVESCAP"), the parent company of both AIM and
INVESCO Funds Group, Inc., with respect to its North American mutual fund
operations. AMVESCAP has recommended simplifying the organizational structure of
the funds within The AIM Family of Funds--Registered Trademark-- (the "AIM
Funds") and the INVESCO Family of Funds (the "INVESCO Funds") so that they are
all organized as Delaware statutory trusts, using as few entities as
practicable. This change should provide these Funds with greater flexibility in
conducting their business operations.
The Board of Directors of IVIF has called a meeting of IVIF's shareholders to be
held on or about March 26, 2004 to vote on these and other proposals. Only
shareholders of record as of the close of business on January 9, 2004 are
entitled to vote at the meeting. Proposals that are approved are expected to
become effective on or about April 30, 2004.
Effective April 30, 2004, A I M Distributors, Inc. (the "distributor") will be
IVIF Funds' distributor and will be responsible for the sale of the IVIF Funds'
shares. All references in this Prospectus shall refer to A I M Distributors,
Inc. The distributor's address is: A I M Distributors, Inc. 00 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000.
On December 2, 2003 each of the Securities and Exchange Commission ("SEC") and
the Office of the Attorney General of the State of New York ("NYAG") filed civil
proceedings against INVESCO Funds Group, Inc. ("INVESCO"), the investment
advisor of your Fund, and Xxxxxxx X. Xxxxxxxxxx, in his capacity as the chief
executive officer of INVESCO. In addition, on December 2, 2003, the State of
Colorado filed civil proceedings against INVESCO. Neither your Fund nor any
other INVESCO Fund has been named as a defendant in any of these proceedings.
The SEC proceeding, filed in the United States District Court for the District
of Colorado [Civil Action No. 03-N-2421 (PAC)], alleges that INVESCO failed to
disclose in the INVESCO Funds' prospectuses and to the INVESCO Funds'
independent directors that INVESCO had entered into certain arrangements
permitting market timing of the INVESCO Funds. The SEC alleges violations of
Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 under that Act, Section 206(1) and 206(2) of
the Investment Advisers act of 1940, and Sections 34(b) and 36(a) of the
Investment Company Act of 1940. The SEC is seeking injunctions, including
permanent injunctions from serving as an investment advisor, officer or director
of an investment company; an accounting of all market timing as well as certain
fees and compensation received; disgorgement; civil monetary penalties; and
other relief.
The NYAG proceeding, filed in the Supreme Court of the State of New York (New
York County), is also based on the circumstances described above. The NYAG
proceeding alleges violation of Article 23-A (the "Xxxxxx Act") and Section 349
of the General Business Law of the State of New York and Section 63(12) of the
State of New York's Executive Law. The NYAG is seeking injunctions, including
permanent injunctions from directly or indirectly selling or distributing shares
of mutual funds; disgorgement of all profits obtained, including fees collected,
and payment of all restitution and damages caused, directly or indirectly from
the alleged illegal activities; civil monetary penalties; and other relief.
The Colorado proceeding, filed in the Colorado District Court, in the City and
County of Denver, Colorado, is also based on the circumstances described above.
The Colorado proceeding alleges violations of Section 6-1-105(1) of the Colorado
Consumer Protection Act. The State of Colorado is seeking injunctions;
restitution, disgorgement and other equitable relief; civil monetary penalties;
and other relief.
No relief is being sought against your Fund or any of the INVESCO Funds in any
of these proceedings.
If INVESCO is unsuccessful in its defense of these proceedings, it could be
barred from serving as an investment advisor for any investment company
registered under the Investment Company Act of 1940, as amended (a "registered
investment company"). Similarly, if Xx. Xxxxxxxxxx is unsuccessful in his
defense of these proceedings, he could be barred from serving as an officer or
director of any registered investment company.
In addition to the complaints described above, multiple lawsuits, including
class action and shareholder derivative suits, have been filed against certain
INVESCO Funds, AIM Funds, INVESCO, AMVESCAP and certain related parties,
primarily based upon the allegations in the complaints described above. Such
lawsuits allege a variety of theories for recovery including, but not limited
to: (i) violation of various provisions of the Federal securities laws; (ii)
breach of fiduciary duty; and (iii) breach of contract. The lawsuits have been
filed in both Federal and state courts and seek such remedies as compensatory
damages; restitution, rescission; accounting for wrongfully gotten gains,
profits and compensation; injunctive relief; disgorgement; equitable relief;
interest and the payment of attorneys' and experts' fees. The following list
identifies such lawsuits that have been served as of the date of this
supplement:
o XXXXX XXXXXX, CUSTODIAN FOR XXXXX XXXXXX V. INVESCO ADVANTAGE HEALTH
SCIENCES FUND, ET AL., in the United States District Court, District
of Colorado (Civil Action Number 03-F-2456), filed on December 4,
2003.
o XXXX XXXXXXX X. INVESCO FUNDS GROUP, INC., ET AL., in the District
Court, City and County of Denver, Colorado (Case Number 03CV9268),
filed on December 5, 2003.
o X. XXXXX XXXXXX, DERIVATIVELY ON BEHALF OF INVESCO FUNDS GROUP, INC.
V. AMVESCAP PLC, INVESCO, INC., ET AL., in the United States District
Court, District of Colorado (Civil Action No. 03-MK-2406), filed on
November 28, 2003.
o XXXXXX XXXXXXXX AND XXXXXX XXXXXXXX X. INVESCO ADVANTAGE HEALTH
SCIENCES FUND, ET AL., in the United States District Court, Southern
District of New York (Civil Action No. 03-CV-9634), filed on December
4, 2003.
o XXXXXXX XXXXX X. INVESCO FUNDS GROUP, INC., ET AL., in the United
States District Court, District of Colorado (Civil Action No.
03-F-2441), filed on December 2, 2003.
More detailed information regarding each of the cases identified above is
provided in each fund's statement of additional information. Additional lawsuits
arising out of these circumstances and presenting similar allegations and
requests for relief may be filed against the funds, INVESCO, AMVESCAP and
related parties in the future. Information about any similar additional lawsuits
will be provided in the statement of additional information.
As a result of these developments, investors in the AIM and INVESCO Funds might
react by redeeming their investments. This might require the funds to sell
investments to provide for sufficient liquidity and could also have an adverse
effect on the investment performance of the funds.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - UTILITIES FUND
Supplement dated November 20, 2003
to the Prospectus dated April 30, 2003
Effective December 1, 2003, the following replaces in its entirety the
information appearing under the heading "FUND MANAGEMENT - PORTFOLIO MANAGER" on
page 6 of the Prospectus:
The following individual is primarily responsible for the
day-to-day management of the Fund's holdings:
o Xxxx X. Xxxxxx, Portfolio Manager, who has been responsible
for the fund since 2003 and has been associated with the
advisor and/or its affiliates since 1997.
PROSPECTUS | APRIL 30, 2003
--------------------------------------------------------------------------------
YOU SHOULD KNOW WHAT INVESCO KNOWS(R)
--------------------------------------------------------------------------------
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - UTILITIES FUND
A MUTUAL FUND SOLD EXCLUSIVELY TO INSURANCE COMPANY SEPARATE ACCOUNTS FOR
VARIABLE ANNUITY AND VARIABLE LIFE INSURANCE CONTRACTS.
TABLE OF CONTENTS
Investment Goals, Strategies, And Risks.........2
Fund Performance................................3
Fees And Expenses...............................3
Investment Risks................................4
Principal Risks Associated With The Fund........4
Temporary Defensive Positions...................5
Portfolio Turnover..............................5
Fund Management.................................6
Portfolio Manager...............................6
Share Price.....................................6
Taxes...........................................6
Dividends And Capital Gain Distributions........7
Voting Rights...................................7
Financial Highlights............................8
[INVESCO ICON]INVESCO(R)
The Securities and Exchange Commission has not approved or disapproved the
shares of this Fund. Likewise, the Commission has not determined if this
Prospectus is truthful or complete. Anyone who tells you otherwise is committing
a federal crime.
INVESCO Funds Group, Inc. ("INVESCO") is the investment advisor for the Fund.
Together with our affiliated companies, we at INVESCO direct all aspects of the
management of the Fund.
The Fund is used solely as an investment vehicle for variable annuity or
variable life insurance contracts issued by certain life insurance companies.
You cannot purchase shares of the Fund directly. As an owner of a variable
annuity or variable life insurance contract that offers the Fund as an
investment option, however, you may allocate your contract values to a separate
account of the insurance company that invests in shares of the Fund.
Your variable annuity or variable life insurance contract is offered through its
own prospectus, which contains information about that contract, including how to
purchase the contract and how to allocate contract values to the Fund.
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
[KEY ICON] INVESTMENT GOALS & STRATEGIES
[ARROWS ICON] POTENTIAL INVESTMENT RISKS
[GRAPH ICON] PAST PERFORMANCE
[INVESCO ICON] WORKING WITH INVESCO
--------------------------------------------------------------------------------
[KEY ICON] [ARROWS ICON] INVESTMENT GOALS, STRATEGIES, AND RISKS
FOR MORE DETAILS ABOUT THE FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK, PLEASE
SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
The Fund seeks capital growth. It also seeks current income. The Fund is
actively managed. The Fund invests primarily in equity securities that INVESCO
believes will rise in price faster than other securities, as well as in options
and other instruments whose values are based upon the values of equity
securities.
The Fund normally invests at least 80% of its net assets in the equity
securities and equity-related instruments of companies engaged in
utilities-related industries. These include, but are not limited to, companies
that produce, generate, transmit, or distribute natural gas or electricity, as
well as companies that provide telecommunications services, including local,
long distance, and wireless. At any given time, 20% of the Fund's assets is not
required to be invested in the sector. To determine whether a potential
investment is truly doing business in a particular sector, a company must meet
at least one of the following tests:
o At least 50% of its gross income or its net sales must come
from activities in the utilities sector;
o At least 50% of its assets must be devoted to producing revenues from the
utilities sector; or
o Based on other available information, we determine that its primary
business is within the utilities sector.
INVESCO uses a "bottom up" investment approach to create the Fund's investment
portfolio, focusing on company fundamentals and growth prospects when selecting
securities. In general, the Fund emphasizes companies that INVESCO believes are
strongly managed and will generate above-average long-term capital appreciation.
As a sector fund, the portfolio is concentrated in a comparatively narrow
segment of the economy. This means the Fund's investment concentration in a
sector is higher than most mutual funds and the broad securities markets.
Consequently, the Fund tends to be more volatile than other mutual funds, and
the value of its portfolio investments and consequently the value of an
investment in the Fund tend to go up and down more rapidly.
Governmental regulation, difficulties in obtaining adequate financing and
investment return, environmental issues, prices of fuel for generation of
electricity, availability of natural gas, risks associated with power marketing
and trading, and risks associated with nuclear power facilities may adversely
affect the market value of the Fund's holdings. The recent trend towards
deregulation in the utility industries presents special risks. Some companies
may be faced with increased competition and may become less profitable.
Normally, INVESCO seeks to keep the portfolio divided among the electric
utilities, natural gas, and telecommunications industries. Weightings within the
various industry segments are continually monitored, and INVESCO adjusts the
portfolio weightings depending on the prevailing economic conditions.
The Fund is subject to other principal risks such as potential conflicts,
market, foreign securities, liquidity, counterparty, lack of timely information,
and portfolio turnover risks. These risks are described and discussed later in
the Prospectus under the headings "Investment Risks" and "Principal Risks
Associated With The Fund." An investment in the Fund is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") or any other government agency. As with any mutual fund,
there is always a risk that an investment in the Fund may lose money.
[GRAPH ICON] FUND PERFORMANCE
The bar chart below shows the Fund's actual yearly performance (commonly known
as its "total return") for the years ended December 31 since inception. The
table below shows average annual total returns for various periods ended
December 31, 2002 for the Fund compared to the S&P 500 Index. The information in
the chart and table illustrates the variability of the Fund's total returns and
how its performance compared to a broad measure of market performance. Remember,
past performance does not indicate how the Fund will perform in the future.
The Fund's returns are net of its expenses, but do NOT reflect the additional
fees and expenses of your variable annuity or variable life insurance contract.
If those contract fees and expenses were included, the returns would be less
than those shown.
--------------------------------------------------------------------------------
VIF-UTILITIES FUND
ACTUAL ANNUAL TOTAL RETURN(1),(2)
================================================================================
[GRAPHIC OMITTED]
1996 1997 1998 1999 2000 2001 2002
12.76% 23.41% 25.48% 19.13% 5.28% (32.41%) (20.32%)
--------------------------------------------------------------------------------
Best Calendar Qtr. 12/98 17.18%
Worst Calendar Qtr. 9/01 (21.60%)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
AS OF 12/31/02
----------------------------------------------------
1 YEAR 5 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
VIF - Utilities Fund(1) (20.32%) (3.25%) 3.20%(2)
S&P 500 Index(3) (22.09%) (0.58%) 10.30%(2)
--------------------------------------------------------------------------------
(1) Total return figures include reinvested dividends and capital gain
distributions and the effect of the Fund's expenses.
(2) The Fund commenced investment operations on January 3, 1995. Index
comparisons begin on December 31, 1994.
(3) The S&P 500 Index is an unmanaged index considered representative of the
performance of the broad U.S. stock market. Please keep in mind that the
index does not pay brokerage, management or administrative expenses, all of
which are paid by the Fund and are reflected in its annual return.
FEES AND EXPENSES
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
VIF - UTILITIES FUND
Management Fees 0.60%
Distribution and Service (12b-1) Fees None
Other Expenses(1),(2),(3) 0.58%
-----
Total Annual Fund Operating Expenses(1),(2),(3) 1.18%
=====
(1) The Fund's actual Other Expenses and Total Annual Fund Operating Expenses
were lower than the figures shown because its custodian fees were reduced
under an expense offset arrangement.
(2) Certain expenses of the Fund were absorbed voluntarily by INVESCO pursuant
to a commitment between the Fund and INVESCO. This commitment may be
changed at any time following consultation with the board of directors.
After absorption, but excluding any expense offset arrangements, the Fund's
Other Expenses and Total Annual Fund Operating Expenses for the fiscal year
ended December 31, 2002 were 0.55% and 1.15%, respectively, of the Fund's
average net assets.
(3) Effective June 1, 2002, INVESCO is entitled to reimbursement from the Fund
for fees and expenses absorbed pursuant to a voluntary expense limitation
commitment between INVESCO and the Fund if such reimbursement does not
cause the Fund to exceed the expense limitation and the reimbursement is
made within three years after INVESCO incurred the expense. The voluntary
expense limitation may be changed at any time following consultation with
the board of directors.
EXPENSE EXAMPLE
The Example is intended to help you compare the cost of investing in the Fund to
the cost of investing in other mutual funds.
The Example assumes a $10,000 allocation to the Fund for the time periods
indicated and does NOT reflect any of the fees or expenses of your variable
annuity or variable life insurance contract. The Example also assumes a
hypothetical 5% return each year and that the Fund's operating expenses remain
the same. Although the actual costs and performance of the Fund may be higher or
lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$120 $375 $649 $1,432
[ARROWS ICON] INVESTMENT RISKS
BEFORE ALLOCATING CONTRACT VALUES TO THE FUND, YOU SHOULD DETERMINE THE LEVEL OF
RISK WITH WHICH YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE,
CAREER, INCOME LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable before you
allocate contract values to the Fund. The principal risks of any mutual fund,
including the Fund, are:
NOT INSURED. Mutual funds are not insured by the FDIC or any other government
agency, unlike bank deposits such as CDs or savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its performance, nor
assure you that the market value of your investment will increase. You may lose
the money you invest, and the Fund will not reimburse you for any of these
losses.
VOLATILITY. The price of Fund shares will increase or decrease with changes in
the value of the Fund's underlying investments.
[ARROWS ICON] PRINCIPAL RISKS ASSOCIATED WITH THE FUND
You should consider the special risk factors discussed below associated with the
Fund's policies in determining the appropriateness of allocating your contract
values to the Fund. See the Statement of Additional Information for a discussion
of additional risk factors.
POTENTIAL CONFLICTS
Although it is unlikely, there potentially may be differing interests involving
the Fund among owners of variable annuity and variable life insurance contracts
issued by different insurance companies, or even the same insurance company.
INVESCO will monitor events for any potential conflicts.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of the Fund's
investments. Certain stocks selected for the Fund's portfolio may decline in
value more than the overall stock market. In general, the securities of small
companies are more volatile than those of mid-size companies or large companies.
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including
currency, political, regulatory, and diplomatic risks. The Fund may invest up to
25% of its assets in securities of non-U.S. issuers. Securities of Canadian
issuers and American Depositary Receipts are not subject to this 25% limitation.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and
a foreign currency may reduce the value of the Fund's investment in a
security valued in the foreign currency, or based on that currency
value.
POLITICAL RISK. Political actions, events, or instability may result
in unfavorable changes in the value of a security.
REGULATORY RISK. Government regulations may affect the value of a
security. In foreign countries, securities markets that are less
regulated than those in the U.S. may permit trading practices that are
not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and
a foreign country could affect the value or liquidity of investments.
LIQUIDITY RISK
The Fund's portfolio is liquid if the Fund is able to sell the securities it
owns at a fair price within a reasonable time. Liquidity is generally related to
the market trading volume for a particular security. Investments in smaller
companies or in foreign companies or companies in emerging markets are subject
to a variety of risks, including potential lack of liquidity.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and some
derivatives transactions. It is the risk that the other party in the transaction
will not fulfill its contractual obligation to complete the transaction with the
Fund.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable,
incomplete, or inaccurate. This risk is more common to securities issued by
foreign companies and companies in emerging markets than it is to the securities
of U.S.-based companies.
PORTFOLIO TURNOVER RISK
The Fund's investments may be bought and sold relatively frequently. A high
turnover rate may affect the Fund's performance because it results in higher
brokerage commissions.
-------------------------------------------------
Although the Fund generally invests in equity securities of companies doing
business in the utilities sector, the Fund also may invest in other types of
securities and other financial instruments indicated in the chart below.
Although these investments typically are not part of the Fund's principal
investment strategy, they may constitute a significant portion of the Fund's
portfolio, thereby possibly exposing the Fund and its investors to the following
additional risks.
-----------------------------------------------------------------------------------------------
INVESTMENT RISKS
-----------------------------------------------------------------------------------------------
AMERICAN DEPOSITARY RECEIPTS (ADRS)
These are securities issued by U.S. banks that represent Market, Information, Political,
shares of foreign corpora tions held by those banks. Regulatory, Diplomatic,
Although traded in U.S. securities markets and valued in Liquidity, and Currency Risks
U.S. dollars, ADRs carry most of the risks of investing
directly in foreign securities.
------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
A contract under which the seller of a security agrees to Counterparty Risk
buy it back at an agreed-upon price and time in the future.
------------------------------------------------------------------------------------------------
[ARROWS ICON] TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or unsettled, we
might try to protect the assets of the Fund by investing in securities that are
highly liquid, such as high-quality money market instruments like short-term
U.S. government obligations, commercial paper, or repurchase agreements, even
though that is not the normal investment strategy of the Fund. We have the right
to invest up to 100% of the Fund's assets in these securities, although we are
unlikely to do so. Even though the securities purchased for defensive purposes
often are considered the equivalent of cash, they also have their own risks.
Investments that are highly liquid or comparatively safe tend to offer lower
returns. Therefore, the Fund's performance could be comparatively lower if it
concentrates in defensive holdings.
[ARROWS ICON] PORTFOLIO TURNOVER
We actively manage and trade the Fund's portfolio. Therefore, the Fund may have
a higher portfolio turnover rate than many other mutual funds. The Fund's
portfolio turnover rate was 102% for the fiscal year ended December 31, 2002.
The increase in the Fund's portfolio turnover rate was primarily due to a
restructuring of the Fund's portfolio as a result of a change in the Fund's
portfolio manager.
A portfolio turnover rate of 200%, for example, is equivalent to the Fund buying
and selling all of the securities in its portfolio two times in the course of a
year. A comparatively high turnover rate may affect the Fund's performance
because it results in higher brokerage commissions.
[INVESCO ICON] FUND MANAGEMENT
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT MANAGEMENT
COMPANY THAT MANAGES MORE THAN $332.6 BILLION IN ASSETS WORLDWIDE. AMVESCAP IS
BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND SOUTH AMERICA,
AND THE FAR EAST.
INVESTMENT ADVISOR
INVESCO, located at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, is the
investment advisor of the Fund. INVESCO was founded in 1932 and manages over $18
billion for 3,191,054 shareholder accounts in 48 INVESCO mutual funds as of
December 31, 2002. INVESCO performs a wide variety of other services for the
Funds, including administrative and transfer agency functions (the processing of
purchases, sales, and exchanges of Fund shares).
A wholly owned subsidiary of INVESCO, INVESCO Distributors, Inc. ("IDI") is the
Fund's distributor and is responsible for the sale of the Fund's shares.
INVESCO and IDI are subsidiaries of AMVESCAP PLC.
The Fund paid 0.60% of its average annual net assets to INVESCO for its advisory
services in the fiscal year ended December 31, 2002.
[INVESCO ICONS] PORTFOLIO MANAGER
The following individual is primarily responsible for the day-to-day management
of the Fund's portfolio holdings:
XXXXXXX X. XXXXXX, a vice president of INVESCO, is the portfolio manager of the
Fund. Xxxx joined INVESCO in 1991 and is a CFA charterholder. He holds an M.S.
in Finance from the University of Colorado - Denver and a B.S. in Business
Administration from Colorado State University.
[INVESCO ICON] SHARE PRICE
CURRENT MARKET VALUE OF FUND ASSETS
+ ACCRUED INTEREST AND DIVIDENDS
- FUND DEBTS,
INCLUDING ACCRUED EXPENSES
--------------------------
/ NUMBER OF SHARES
= YOUR SHARE PRICE (NAV)
The value of Fund shares is likely to change daily. This value is known as the
Net Asset Value per share, or NAV. INVESCO determines the market value of each
investment in the Fund's portfolio each day that the New York Stock Exchange
("NYSE") is open, at the close of the regular trading day on that exchange
(normally 4:00 p.m. Eastern time). Therefore, shares of the Fund are not priced
on days when the NYSE is closed, which generally is on weekends, most national
holidays in the U.S., and Good Friday.
NAV is calculated by adding together the current market price of all of the
Fund's investments and other assets, including accrued interest and dividends;
subtracting the Fund's debts, including accrued expenses; and dividing that
dollar amount by the total number of the Fund's outstanding shares.
Foreign securities exchanges, which set the prices for foreign securities held
by the Fund, are not always open the same days as the NYSE, and may be open for
business on days the NYSE is not. For example, Thanksgiving Day is a holiday
observed by the NYSE and not by overseas exchanges. In this situation, the Fund
would not calculate NAV on Thanksgiving Day (and INVESCO would not buy, sell, or
exchange shares for you on that day), even though activity on foreign exchanges
could result in changes in the value of investments held by the Fund on that
day.
[GRAPH ICON] TAXES
The Fund has elected to be taxed as a "regulated investment company" under the
provisions of Subchapter M of the Internal Revenue Code of 1986, as amended
("the Code"). If the Fund continues to qualify as a regulated investment company
and complies with the appropriate provisions of the Code, it will pay no federal
income taxes on the amounts it distributes.
Because the shareholders of the Fund are insurance companies (such as the one
that issues your contract), you would not be considered to be an owner of shares
of the Fund. Therefore, no discussion of the federal income tax consequences to
shareholders is included here. For information about the federal tax
consequences of purchasing the contracts, see the prospectus for your contract.
[GRAPH ICON] DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS ARE DISTRIBUTED TO
SHAREHOLDERS AT LEAST ANNUALLY.
The Fund intends to distribute substantially all of its net investment income,
if any, in dividends to its shareholders. For dividend purposes, net investment
income consists of all dividends or interest earned by the Fund's investments,
minus the Fund's expenses (including the advisory fee). All of the Fund's net
realized capital gains, if any, are distributed periodically, no less frequently
than annually. All dividends and distributions of the Fund are reinvested in
additional shares of the Fund at net asset value.
[INVESCO ICON] VOTING RIGHTS
Since the shares of the Fund are owned by your insurance company and not by you
directly, you will not vote shares of the Fund. Your insurance company will vote
the shares that it holds as required by state and federal law. Your contract
prospectus contains more information on your rights to instruct your insurance
company how to vote Fund shares held in connection with your contract.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Fund for the past five years. Certain information reflects
the financial results for a single Fund share. The total returns in the table
represent the annual percentages that an investor would have earned (or lost) on
an investment in a share of the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the financial statements, is
included in INVESCO Variable Investment Funds, Inc.'s 2002 Annual Report to
Shareholders, which is incorporated by reference into the Statement of
Additional Information. This Report is available without charge by contacting
IDI at the address or telephone number on the back cover of this Prospectus.
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
PER SHARE DATA
Net Asset Value - Beginning of Period $14.08 $21.06 $20.97 $17.78 $14.40
----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income(a) 0.19 0.00 0.17 0.22 0.25
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (3.05) (6.83) 0.87 3.17 3.41
----------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (2.86) (6.83) 1.04 3.39 3.66
----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.06 0.07 0.03 0.20 0.24
Distributions from Capital Gains 0.00 0.08 0.92 0.00 0.04
----------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.06 0.15 0.95 0.20 0.28
----------------------------------------------------------------------------------------------------
Net Asset Value - End of Period $11.16 $14.08 $21.06 $20.97 $17.78
====================================================================================================
TOTAL RETURN(b) (20.32%) (32.41%) 5.28% 19.13% 25.48%
RATIOS
Net Assets - End of Period ($000
Omitted) $31,204 $20,947 $12,300 $9,137 $6,993
Ratio of Expenses to Average Net
Assets(c)(d) 1.15% 1.15% 1.22% 1.20% 1.08%
Ratio of Net Investment Income to
Average Net Assets(d) 2.59% 1.13% 0.94% 1.15% 1.73%
Portfolio Turnover Rate 102% 33% 50% 40% 35%
(a) Net Investment Income aggregated less than $0.01 on a per share basis for the year ended December
31, 2001.
(b) Total Return does not reflect expenses that apply to the related insurance policies, and inclusion
of these charges would reduce the total return figures for the periods shown.
(c) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by INVESCO, which is before
any expense offset arrangements (which may include custodian fees).
(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the years ended December 31,
2002, 2001, 2000, 1999, and 1998. If such expenses had not been voluntarily absorbed, ratio of expenses
to average net assets would have been 1.18%, 1.37%, 1.41%, 1.53%, and 1.60%, respectively, and
ratio of net investment income to average net assets would have been 2.56%, 0.91%, 0.75%, 0.82%, and
1.21%, respectively.
APRIL 30, 2003
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - UTILITIES FUND
You may obtain additional information about the Fund from several sources.
FINANCIAL REPORTS. Although this Prospectus describes the Fund's anticipated
investments and operations, the Fund also prepares annual and semiannual reports
that detail the Fund's actual investments at the report date. These reports
include discussion of the Fund's recent performance, as well as the effect of
market and general economic trends and the Fund's investment strategy on the
Fund's performance. The annual report also includes the report of the Fund's
independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated April 30, 2003 is a
supplement to this Prospectus and has detailed information about the Fund and
its investment policies and practices. A current SAI for the Fund is on file
with the Securities and Exchange Commission and is incorporated in this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The current Prospectus, annual report, and semiannual report of the
Fund may be accessed through the INVESCO Web site at xxxxxxxxxxxx.xxx. In
addition, the Prospectus, annual report, semiannual report, and SAI of the Fund
are available on the SEC Web site at xxx.xxx.xxx.
To obtain a free copy of the current Prospectus, SAI, or semiannual report,
write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
00000-0000; or call 0-000-000-0000. Copies of these materials are also available
(with a copying charge) from the SEC's Public Reference Section at 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0102. Information on the operation of the
Public Reference Room, including information about duplicating fee charges, can
be obtained by calling 0-000-000-0000 or by electronic request at the following
E-mail address: xxxxxxxxxx@xxx.xxx. The SEC file numbers for the Fund are
811-8038 and 033-70154.
811-8038
APPENDIX III
MARKET OVERVIEW December 2002
After two years of declines in the stock market, investors had hoped to see
an improvement in 2002. Instead, the market continued downward, with the major
stock indexes registering their third consecutive annual loss for the first time
in 60 years.
There were a number of factors responsible for the year's swoon. First, a
series of corporate accounting scandals dominated the news well into the summer
months, tainting investor perception of the market. Furthermore, geopolitical
uncertainty persisted throughout the year to varying degrees, as threats of
terrorist attacks, a nuclear standoff between India and Pakistan, speculation
regarding U.S. intentions toward Iraq, and North Korea's refusal to obey a 1994
arms agreement all clouded the landscape. In addition, oil prices surged to
two-year highs by the end of 2002, pressured by strikes in Venezuela and
concerns over a potential war with Iraq.
Meanwhile, a generally weak economy and disappointing corporate earnings
were ongoing stories. Although a few rallies were ignited by hopes that a
recovery might be forthcoming -- most notably, a two-month surge that began in
October -- they could not be sustained in such an uncertain environment.
Meanwhile, investors flocked to investments with a defensive reputation.
Fixed-income securities advanced, benefiting from the flight-to-quality trend as
well as the Federal Reserve's decision to leave interest rates unchanged until
November, when a surprisingly steep 50-basis point cut was implemented. Gold
stocks and real estate investment trusts were other top performers. Conversely,
high-growth sectors, including technology and telecommunications, declined.
As the year came to a close, investors were still seeking direction. On the
one hand, the situation with Iraq remained a wild card, and doubts about the
resiliency of consumer spending began to emerge. On the other hand, a newly
elected Republican-majority Congress and Xxxxxxxxx Xxxx'x new economic plan
inspired hope for business-friendly fiscal policy going forward. Overall, few
economic analysts foresee a fourth year of broad stock declines, but it will
likely take some decisive and lasting signs of improvement before investors
regain confidence.
VIF-UTILITIES FUND
The line graph below illustrates, for the period from inception through
December 31, 2002, the value of a $10,000 investment in the fund, plus
reinvested dividends and capital gain distributions. The charts and other total
return figures cited reflect the fund's operating expenses, but the index does
not have expenses, which would, of course, have lowered its performance. (Past
performance is not a guarantee of future results.)(1),(2)
For the 12-month period ended December 31, 2002, the value of your shares
declined 20.32%, outperforming the 22.09% decline in the S&P 500 Index. (Of
course, past performance is not a guarantee of future results.)(1),(2)
LINE GRAPH: VIF - UTILITIES FUND
The line graph compares the value of a $10,000 investment in VIF -
Utilities Fund to the value of a $10,000 investment in the S&P 500 Index(2),
assuming in each case reinvestment of all dividends and capital gain
distributions, for the period since inception (1/95) through 12/31/02.
VIF-UTILITIES FUND S&P 500 INDEX(2)
1/95 $10,000 $10,000
12/95 $10,908 $13,753
12/96 $12,300 $16,909
12/97 $15,179 $22,549
12/98 $19,047 $28,997
12/99 $22,692 $35,096
12/00 $23,889 $31,902
12/01 $16,146 $28,112
12/02 $12,865 $21,902
Normally, the volatility in the broader market would have supported
utilities stocks, as they have historically been regarded as more defensive
investments. However, in 2002, utilities were hampered by some sector-specific
developments. At the heart of the group's weak showing were gas utilities, which
declined sharply as the market grew increasingly leery of any company with
trading operations. Following the Enron Corp (not a fund holding during the
period) scandal, the Federal Energy Regulatory Commission ordered all companies
that supplied power to California to preserve their records, spooking investors.
--------------------------------------------------------------------------------
VIF-UTILITIES FUND
AVERAGE ANNUALIZED TOTAL RETURN AS OF 12/31/02(1)
1 year (20.32%)
--------------------------------------------------------------------------------
5 years (3.25%)
--------------------------------------------------------------------------------
Since inception (1/95) 3.20%
--------------------------------------------------------------------------------
Telecommunications stocks were under pressure for most of the year, as the
slow economy hurt demand for telecom services. In addition, the sector absorbed
a serious blow when accounting irregularities at WorldCom Inc (not a fund
holding during the period ) surfaced, occupying headlines and fueling investors'
fears.
Although these conditions presented the fund with its share of challenges,
we managed to modestly outperform the broad market. During the early part of
2002, we decreased the fund's telecom weighting, selling our competitive local
exchange carriers (CLEC) position. Those telecom firms remaining in the
portfolio were limited to more defensive regional Bell operating companies
(RBOCs). Even though these firms endured sharp losses during the year, they
declined far less dramatically than the CLECs -- several of which filed for
bankruptcy protection in 2002.
Another key adjustment was our decision to place more emphasis on those
integrated electric utilities that offer competitive dividend yields and boast
strong balance sheets. This strategy was beneficial, as electrics soundly
outperformed their gas counterparts over the period.
Going forward, we are cautiously optimistic about the utilities sector.
November's elections resulted in a Republican-controlled Senate -- which had
many investors speculating that the regulatory environment might improve --
potentially providing a fundamental boost to the RBOCs. On the other hand, we
continue to worry about the debt carried by several companies within the
utilities sector, as this burden could lead to liquidity issues down the road.
As always, we will be monitoring this situation closely.
FUND MANAGEMENT
XXXXXXX X. XXXXXX, CFA
Vice President, INVESCO Funds Group. BS, Colorado State University; MS,
University of Colorado-Denver. Joined INVESCO in 1991. Began investment career
in 1991.
(1)TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
FOR THE PERIODS INDICATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE
SO THAT, WHEN REDEEMED, AN INVESTOR'S SHARES MAY BE WORTH MORE OR LESS THAN WHEN
PURCHASED. FUND RETURNS ARE NET OF EXPENSES, BUT DO NOT REFLECT THE ADDITIONAL
FEES AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE LIFE INSURANCE CONTRACT.
IF THOSE CONTRACT FEES AND EXPENSES WERE INCLUDED, THE RETURNS WOULD BE LESS
THAN THOSE SHOWN.
(2)THE S&P 500 INDEX IS AN UNMANAGED INDEX OF THE 500 LARGEST COMMON STOCKS (IN
TERMS OF MARKET VALUE), WEIGHTED BY MARKET CAPITALIZATION AND CONSIDERED
REPRESENTATIVE OF THE BROAD STOCK MARKET. THE INDEX IS NOT MANAGED; THEREFORE,
ITS PERFORMANCE DOES NOT REFLECT MANAGEMENT FEES AND OTHER EXPENSES ASSOCIATED
WITH THE FUND. INVESTORS CANNOT INVEST DIRECTLY IN ANY MARKET INDEX.
SECTOR FUNDS MAY BE MORE VOLATILE THAN DIVERSIFIED EQUITY FUNDS, AND ARE MOST
SUITABLE FOR THE AGGRESSIVE PORTION OF YOUR PORTFOLIO.
THE INDUSTRIES AND/OR SECTORS USED FOR PORTFOLIO SECURITIES CLASSIFICATION THAT
MAY BE USED THROUGHOUT THIS REPORT ARE THE GLOBAL INDUSTRY CLASSIFICATION
STANDARD WHICH WAS DEVELOPED BY AND IS THE EXCLUSIVE PROPERTY AND A SERVICE MARK
OF XXXXXX XXXXXXX CAPITAL INTERNATIONAL INC. AND STANDARD & POOR'S.
APPENDIX IV
CHARTER OF THE
GOVERNANCE COMMITTEES OF THE AIM FUNDS
AND THE INVESCO FUNDS
(ADOPTED DECEMBER 10, 2003)
The Boards of Directors/Trustees ("Boards") of The AIM Funds and The
INVESCO Funds (collectively, "Funds"), have established a Governance Committee
for each of the Funds. This Charter shall govern the membership, duties and
operations of the Governance Committee of each of the Funds. References in this
Charter to "the Committees" shall mean the collective Governance Committees of
all Funds.
Membership: Each member of the Committees shall be a director and
trustee of the Funds who is not an "interested person" of the Funds within the
meaning of the Investment Company Act of 1940, as amended ("1940 Act"). Each
member of the Committees shall also meet the director independence requirements
for serving on audit committees as set forth from time to time in the New York
Stock Exchange listing standards (currently, Section 303A.06), and as set forth
in rules promulgated by the Securities and Exchange Act (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
applicable to investment companies whose shares are listed for trading on a
national securities exchange (currently, Rule 10A-3(b)(1)(iii)) (members that
meet such requirements are referred to herein as the "audit committee
independent directors").
Chair and Vice Chair: The Committees shall have a Chair and Vice Chair.
The Chair shall set the agenda for, and preside at, each meeting of the
Committees and shall engage in such other activities on behalf of the Committees
as shall be determined from time to time by the Committees. The Vice Chair shall
act as Chair in the absence or inability to act of the Chair and shall engage in
such other activities on behalf of the Committees as shall be determined from
time to time by the Committees.
Lead Dis-interested Director: The directors/trustees of the Funds who
are not "interested persons" of the Funds, as defined in the 1940 Act
("dis-interested directors"), may appoint a dis-interested director as the "Lead
Dis-interested Director." The Lead Dis-interested Director shall from time to
time as requested by the Committees act as liaison with management on particular
issues. Such functions are not to interfere with any directors'/trustees'
communications with management (and vice versa) on any issue; nor are such
functions intended to interfere with the interaction between management and any
of the Committees, other committees of the Boards, or the chair or vice chair of
the Committees or of such other committees.
Recommendation as to Share Ownership: The Committees recommend that
each director/trustee of the Funds beneficially own, on an aggregate basis, a
minimum dollar amount of shares of the Funds. The recommended minimum dollar
amount shall be $100,000 or the lowest dollar amount in the highest dollar range
set forth from time to time in Item 13(b)(4) of Form N-1A and/or Item 22(b)(5)
of Schedule 14A, if the lowest dollar amount in the highest dollar range set
forth in such Items is greater than $100,000. For purposes of this
recommendation, (i) shares of the Funds beneficially owned by the
directors/trustees shall include, for those directors/trustees who have executed
a Deferred Compensation Agreement with respect to the Funds, shares of the Funds
in which the deferral accounts of such directors/trustees are deemed to be
invested under such Deferred Compensation Agreements,
and (ii) shares of the Funds beneficially owned by the directors/trustees shall
not include shares of AIM Select Real Estate Income Fund that are beneficially
owned by the directors/trustees.
Meetings: The Committees may meet separately or in conjunction with
meetings of the Boards of the Funds. Meetings of the Committees may be held in
person or by other means as permitted by the Bylaws of the Funds.
Duties: The duties of the Committees are:
(a) to nominate persons for election or appointment as
dis-interested directors (i) as additions to the Boards, (ii)
to fill vacancies which, from time to time, may occur in the
Boards and (iii) for election by shareholders of Funds at
meetings called for the election of directors;
(b) to nominate persons for appointment as members of each
committee of the Boards, including without limitation the
Committees, the Audit Committees, the Investments Committees
and the Valuation Committees, and to nominate persons for
appointment as chair and vice chair of each such committee;
(c) to review from time to time, the compensation, if any, payable
to the directors of the Funds and to make recommendations to
the Boards with respect thereto;
(d) to review and evaluate from time to time the functioning of
the Boards and the various committees of the Boards and to
make recommendations to the Boards with respect thereto;
(e) to select independent legal counsel to the dis-interested
directors and to review and approve the compensation paid to
independent legal counsel to the dis-interested directors; and
(f) provided that the Committees are comprised solely of
dis-interested directors and that each member of the
Committees is an audit committee independent director, to
review and approve the compensation paid to independent
counsel and other advisers, if any, to the Audit Committees of
the Funds.
Nomination of Dis-interested Directors: After a determination by the
Committees that a person should be nominated as an additional dis-interested
director, or as soon as practical after a vacancy occurs or it appears that a
vacancy is about to occur for a dis-interested director position on any of the
Boards, the Committees shall nominate a person for appointment by a majority of
the dis-interested directors to add to the Boards or to fill the vacancy. Prior
to a meeting of the shareholders of the Funds called for the purpose of electing
dis-interested directors, the Committees shall nominate one or more persons for
election as dis-interested directors at such meeting.
Evaluation by the Committees of a person as a potential nominee to serve as a
dis-interested director, including a person nominated by a shareholder, should
result in the following findings by the Committees:
(a) upon advice of independent legal counsel to the dis-interested
directors, that the person will qualify as a dis-interested
director and that the person is otherwise
2
qualified under applicable laws and regulations to serve as a
director/trustee of the Funds;
(b) that the person is willing to serve, and willing and able to
commit the time necessary for the performance of the duties of
a dis-interested director;
(c) with respect to potential nominees to serve as dis-interested
director members of the Audit Committees of the Funds, upon
advice of independent legal counsel to the dis-interested
directors, that the person: (i) is free of any material
relationship with the Funds (other than as a shareholder of
the Funds), either directly or as a partner, shareholder or
officer of an organization that has a relationship with the
Funds, (ii) meets the requirements regarding the financial
literacy or financial expertise of audit committee members, as
set forth from time to time in the New York Stock Exchange
listing standards and in any rules promulgated by the SEC that
are applicable to investment companies whose shares are listed
for trading on a national securities exchange, and (iii) is an
audit committee independent director;
(d) that the person can make a positive contribution to the Boards
and the Funds, with consideration being given to the person's
business experience, education and such other factors as the
Committees may consider relevant;
(e) that the person is of good character and high integrity; and
(f) that the person has desirable personality traits including
independence, leadership and the ability to work with the
other members of the Boards.
Consistent with the 1940 Act, the Committees can consider recommendations from
management in its evaluation process.
As long as any Fund relies on any of Rule 10f-3, Rule 12b-1, Rule 15a-4(b)(2),
Rule 17a-7, Rule 17a-8, Rule 17d-1(d)(7), Rule 17e-1, Rule 17g-1(j), Rule 18f-3
or Rule 23c-3, (i) a majority of the directors/trustees of the Fund shall be
dis-interested directors, (ii) the selection and nomination of any other
dis-interested directors shall be committed to the discretion of the existing
dis-interested directors, and (iii) any person who acts as legal counsel to the
dis-interested directors shall be "independent legal counsel," as defined in the
1940 Act.
In seeking out potential nominees and in nominating persons to serve as
dis-interested directors of the Funds, the Committees shall not discriminate
against any person based on his or her race, religion, national origin, sex,
physical disability and other factors not relevant to the person's ability to
serve as a dis-interested director.
Nomination of Committee Members: The Committees shall periodically
review the members of each committee of the Boards, including without limitation
the Committees, the Audit Committees, the Investments Committees and the
Valuation Committees. The Committees shall from time to time nominate persons to
serve as members of each committee of the Boards, as well as persons who shall
serve as the chair and vice chair of each such committee. Evaluation by the
Committees of a person as a potential committee member shall include the factors
set forth above under "Nomination of Dis-interested Directors," to the extent
that such factors are applicable or relevant. All such persons shall be
appointed by a majority of
3
the directors/trustees of the Funds. An individual may be nominated to serve on
more than one committee of a Board.
Nominees Recommended by Shareholders: The Committees shall consider
nominees recommended by a shareholder to serve as directors/trustees, provided:
(i) that such person is a shareholder of record at the time he or she submits
such names and is entitled to vote at the meeting of shareholders at which
directors/trustees will be elected; and (ii) that the Committees or the Board,
as applicable, shall make the final determination of persons to be nominated.
For each Fund other than INVESCO Variable Investment Funds, Inc. ("IVIFI"), the
procedures to be followed by shareholders in submitting such recommendations are
set forth in the Fund's Bylaws. For IVIFI, a shareholder who desires to
recommend a nominee shall submit a request in writing to the Chair of IVIFI's
Governance Committee. The Committees shall evaluate nominees recommended by a
shareholder to serve as directors/trustees in the same manner as they evaluate
nominees identified by the Committees.
Review of Compensation: At least annually, the Committees shall review
and recommend the amount of compensation, if any, payable to the directors of
the Funds and report its findings and recommendation to the Boards. Compensation
shall be based on the responsibilities and duties of the dis-interested
directors and such other directors and the time required to perform these
duties. The Committees shall also make recommendations to the Boards regarding
matters related to compensation including deferred compensation plans and
retirement plans for the dis-interested directors and such other directors, and
shall monitor any and all such retirement plans and deferred compensation plans.
Evaluation Function: The Committees shall consider, oversee and
implement any periodic evaluation process of the Boards and all committees of
the Boards.
Selection of Counsel: The Committees shall consider and oversee the
selection of "independent legal counsel," as defined in the 1940 Act, to the
dis-interested directors and recommend such counsel to the dis-interested
directors. In making such selection the Committees will examine and monitor such
legal counsel's client relationships, in accordance with any applicable rules
promulgated by the SEC, in order to ascertain continued independence.
Attendance at Annual Meetings. Of the Funds, only AIM Select Real
Estate Income Fund holds annual meetings of shareholders. The Funds' policy with
regard to director/trustee attendance at annual meetings of shareholders, if
any, is that directors/trustees are encouraged but not required to attend such
annual meetings.
Authority: The Committees shall have the resources and authority
appropriate to carry out their duties, including the authority to engage
independent counsel and other advisers, experts or consultants as they deem
necessary to carry out their duties, all at the expense of the appropriate
Funds. The Committees shall be responsible for reviewing and approving the
compensation paid to such counsel and other advisers.
Funding: The Funds shall provide for appropriate funding, as determined
by the Committees, in their capacity as committees of the Boards, for payment of
(i) compensation to any independent counsel or other advisers employed by the
Committees and (ii) ordinary administrative expenses of the Committees under the
authority set forth in this Charter.
4
Review of Charter: The Committees shall review this Charter at least
annually, and shall recommend any changes to the full Boards. This Charter may
be amended only by the full Boards, with the approval of a majority of the
dis-interested directors.
Maintenance of Charter: Each Fund shall maintain and preserve in an
easily accessible place a copy of the Committee Charter established for such
Fund and any modification to such Charter.
5
APPENDIX V
AIM VARIABLE INSURANCE FUNDS
AMENDED AND RESTATED
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this ____ day of _________________, 2004, by and
between AIM Variable Insurance Funds, a Delaware statutory trust (the "Trust")
with respect to its series of shares shown on the Appendix A attached hereto, as
the same may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Trust's Agreement and Declaration of Trust (the
"Declaration of Trust") authorizes the Board of Trustees of the Trust (the
"Board of Trustees") to create separate series of shares of beneficial interest
of the Trust, and as of the date of this Agreement, the Board of Trustees has
created seventeen separate series portfolios (such portfolios and any other
portfolios hereafter added to the Trust being referred to collectively herein as
the "Funds"); and
WHEREAS, the Trust and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor
for the Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Board of Trustees. The Advisor shall give the Trust
and the Funds the benefit of its best judgment, efforts and facilities in
rendering its services as investment advisor.
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;
1
APPENDIX V
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the AIM Funds and the INVESCO Funds (the "Funds")
AMENDED NOVEMBER 6, 2003
I. STATEMENT OF PRINCIPLES
Under the Xxxxxxxx-Xxxxx Act of 2002 and rules adopted by the Securities and
Exchange Commission ("SEC") ("Rules"), the Audit Committees of the Funds' (the
"Audit Committee") Board of Directors/Trustees (the "Board") are responsible for
the appointment, compensation and oversight of the work of independent
accountants (an "Auditor"). As part of this responsibility and to assure that
the Auditor's independence is not impaired, the Audit Committee pre-approves the
audit and non-audit services provided to the Funds by the Auditor, as well as
all non-audit services provided by the Auditor to the Funds' investment adviser
and to affiliates of the adviser that provide ongoing services to the Funds
("Service Affiliates") if the services directly impact the Funds' operations or
financial reporting. The SEC Rules also specify the types of services that an
Auditor may not provide to its audit client. The following policies and
procedures comply with the requirements for pre-approval and provide a mechanism
by which management of the Funds may request and secure pre-approval of audit
and non-audit services in an orderly manner with minimal disruption to normal
business operations.
Proposed services either may be pre-approved without consideration of specific
case-by-case services by the Audit Committee ("general pre-approval") or require
the specific pre-approval of the Audit Committee ("specific pre-approval"). As
set forth in these policies and procedures, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee. Additionally, any proposed services exceeding general
pre-approved cost levels or established amounts will also require specific
pre-approval by the Audit Committee.
The Audit Committee will annually review and pre-approve the services that may
be provided by the Auditor without obtaining specific pre-approval from the
Audit Committee. The term of any general pre-approval runs from the date of such
pre-approval through September 30th of the following year, unless the Audit
Committee considers a different period and states otherwise. The Audit Committee
will add to or subtract from the list of general pre-approved services from time
to time, based on subsequent determinations.
The purpose of these policies and procedures is to set forth the guidelines to
assist the Audit Committee in fulfilling its responsibilities.
II. DELEGATION
The Audit Committee may from time to time delegate pre-approval authority to one
or more of its members who are Independent Directors. All decisions to
pre-approve a service by a delegated member shall be reported to the Audit
Committee at its next-scheduled meeting.
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III. AUDIT SERVICES
The annual audit services engagement terms and fees will be subject to specific
pre-approval of the Audit Committee. Audit services include the annual financial
statement audit and other procedures such as tax provision work that is required
to be performed by the independent auditor to be able to form an opinion on the
Funds' financial statements. The Audit Committee will obtain, review and
consider sufficient information concerning the proposed Auditor to make a
reasonable evaluation of the Auditor's qualifications and independence.
In addition to the annual Audit services engagement, the Audit Committee may
grant general pre-approval for other audit services, which are those services
that only the independent auditor reasonably can provide. Other Audit services
may include services such as issuing consents for the inclusion of audited
financial statements with SEC registration statements, periodic reports and
other documents filed with the SEC or other documents issued in connection with
securities offerings.
IV. GENERAL PRE-APPROVAL OF NON-AUDIT SERVICES
The Audit Committee may provide general pre-approval of types of non-audit
services described in this Section IV to the Funds and its Service Affiliates if
the Committee believes that the provision of the service will not impair the
independence of the Auditor, is consistent with the SEC's Rules on auditor
independence, and otherwise conforms to the Audit Committee's general principles
and policies as set forth herein.
AUDIT-RELATED SERVICES
"Audit-related services" are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements or that are traditionally performed by the independent auditor.
Audit-related services include, among others, accounting consultations related
to accounting, financial reporting or disclosure matters not classified as
"Audit services"; assistance with understanding and implementing new accounting
and financial reporting guidance from rulemaking authorities; and agreed-upon
procedures related to mergers.
TAX SERVICES
"Tax services" include, but are not limited to, the review and signing of the
Funds' federal tax returns, the review of required distributions by the Funds
and consultations regarding tax matters such as the tax treatment of new
investments or the impact of new regulations. The Audit Committee will
scrutinize carefully the retention of the Auditor in connection with a
transaction initially recommended by the Auditor, the major business purpose of
which may be tax avoidance or the tax treatment of which may not be supported in
the Internal Revenue Code and related regulations. The Audit Committee will
consult with the Funds' Treasurer (or his or her designee) and may consult with
outside counsel or advisors as necessary to ensure the consistency of Tax
services rendered by the Auditor with the foregoing policy.
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ALL OTHER SERVICES
The Audit Committee may pre-approve non-audit services classified as "All other
services" that are not categorically prohibited by the SEC, as listed in Exhibit
1 to this policy.
V. SPECIFIC PRE-APPROVAL OF NON-AUDIT SERVICES
The Audit Committee may provide specific pre-approval of any non-audit services
to the Funds and its Service Affiliates if the Audit Committee believes that the
provision of the service will not impair the independence of the auditor, is
consistent with the SEC Rules on auditor independence, and otherwise conforms to
the Audit Committees' general principles and policies as set forth herein.
VI. PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS
Pre-approval fee levels or established amounts for services to be provided by
the Auditor under general pre-approval policies will be set annually by the
Audit Committee. Any proposed services exceeding these levels or amounts will
require specific pre-approval by the Audit Committee. The Audit Committee will
always factor in the overall relationship of fees for audit and non-audit
services in determining whether to pre-approve any such services.
VII. PROCEDURES
On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit
Committee for general pre-approval, a list of non-audit services that the Funds
or Service Affiliates of the Funds may request from the Auditor. The list will
describe the non-audit services in reasonable detail and will include an
estimated range of fees where possible and such other information as the Audit
Committee may request.
Each request for services to be provided by the Auditor under the general
pre-approval of the Audit Committee will be submitted to the Funds' Treasurer
(or his or her designee) and must include a detailed description of the services
to be rendered. The Treasurer or his or her designee will ensure that such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed at the
next regularly scheduled Audit Committee meeting of any such services rendered
by the Auditor.
Each request to provide services that require specific approval by the Audit
Committee shall be submitted to the Audit Committee jointly by the Fund's
Treasurer or his or her designee and the Auditor, and must include a joint
statement that, in their view, such request is consistent with the policies and
procedures and the SEC Rules.
Non-audit services pursuant to the de minimis exception provided by the SEC
Rules will be promptly brought to the attention of the Audit Committee for
approval, including documentation that each of the conditions for this
exception, as set forth in the SEC Rules, has been satisfied.
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On at least an annual basis, the Auditor will prepare a summary of all the
services provided to any entity in the investment company complex as defined in
section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of
the engagement and the fees associated with those services.
The Audit Committee has designated the Funds' Treasurer to monitor the
performance of all services provided by the Auditor and to ensure such services
are in compliance with these policies and procedures. The Funds' Treasurer will
report to the Audit Committee on a periodic basis as to the results of such
monitoring. Both the Funds' Treasurer and management of AIM will immediately
report to the chairman of the Audit Committee any breach of these policies and
procedures that comes to the attention of the Funds' Treasurer or senior
management of AIM.
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EXHIBIT 1
CONDITIONALLY PROHIBITED NON-AUDIT SERVICES (NOT PROHIBITED IF THE FUND CAN
REASONABLY CONCLUDE THAT THE RESULTS OF THE SERVICE WOULD NOT BE SUBJECT TO
AUDIT PROCEDURES IN CONNECTION WITH THE AUDIT OF THE FUND'S FINANCIAL
STATEMENTS)
o Bookkeeping or other services related to the accounting records or
financial statements of the audit client
o Financial information systems design and implementation
o Appraisal or valuation services, fairness opinions, or contribution-in-kind
reports
o Actuarial services
o Internal audit outsourcing services
CATEGORICALLY PROHIBITED NON-AUDIT SERVICES
o Management functions
o Human resources
o Broker-dealer, investment adviser, or investment banking services
o Legal services
o Expert services unrelated to the audit
o Any other service that the Public Company Oversight Board determines by
regulation is impermissible
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